CHAPTER 13
Cost-Plus-Incentive-Fee Contract
In response to government budget cuts over the past decade, FPI and CPIF contracts have once again become popular. CPIF contracts enable the government to drive down costs while securing high-quality products or services. These contracts offer contractors financial incentives that fluctuate depending on the quality of performance and cost control achieved.
DEFINITION
A CPIF contract is a cost-reimbursement contract that offers a negotiated target fee that adjusts up or down depending on how well the contractor performs. These fee adjustments are computed using a formula based on an association between target cost and total allowable costs, provided in FAR 16.304. The CPIF contract type involves a ...
