Enron Federal Solutions signed a 10-year contract with the Army to operate utility systems at Fort Hamilton and make capital improvements upfront. After Enron's parent company collapsed and EFSI defaulted, the Army terminated the contract. EFSI sued for payment of the capital improvements it had completed, but the court ruled against them. The court found the contract clearly put all financial risk on EFSI—if you default, you don't get paid for work done, even if the government benefited from it.
Fixed-price contracts shift risk to you as the contractor. If you default for any reason, you may lose all compensation for completed work, regardless of the government's benefit.
Capital improvements and upfront costs are especially risky under fixed-price terms. Make sure your contract explicitly protects you if the project is terminated early or if circumstances change.
Review termination clauses carefully before signing. Understand what happens to your payment if you default, and negotiate protection for work already completed and accepted.