A cpif pricing arrangement provides for the initially

This preview shows page 157 - 159 out of 286 pages.

A CPIF pricing arrangement provides for the initially negotiated fee to be adjusted later by the fee adjustment formula based on the relationship of total allowable costs to total target costs, which is intended to incentivize the contractor to manage the contract effectively. At award, this contract type includes a target cost, target fee, minimum and maximum fees, and fee adjustment formula. After contract performance, the fee
CON091 CONFUN 14 Module 3 v2.8R payable to the contractor is determined in accordance with the formula. When the total allowable costs are less than the target cost, the formula provides for increases in fee above the target fee, up to the maximum fee. When the total allowable costs exceed the target cost, the formula provides decreases in fee below the target fee, down to the minimum fee. [FAR 16.405-1(a)] Cost-Plus-Award-Fee A CPAF pricing arrangement is a cost-reimbursement contract type that provides for a fee that consists of a base amount that is fixed at contract award, if applicable and at the discretion of the contracting officer, and an award-fee amount that the contractor may earn in whole or in part during contract performance to motivate the contractor to provide exceptional performance [FAR 16.405-2]. Unlike other incentive contract types (i.e., FPIF, FPIS, and CPIF), CPAF contracts use subjective criteria to evaluate the contractor’s performance rather than objective targets. The performance evaluation criteria and other procedures for evaluating the award-fee are stated in the award-fee plan that is included in the contract. [FAR 16.401(e)] Cost-Plus-Fixed-Fee A CPFF pricing arrangement is a cost-reimbursement contract type that includes a negotiated fee that is fixed at the time of contract award. The fixed fee does not vary based on actual costs incurred, but can be adjusted as a result of changes in the contract requirements. As discussed earlier, this contract type provides the least incentive for the contractor to control costs. There are two basic forms of a CPFF cost arrangement: completion and term. [FAR 16.306] The completion form describes the scope of work by stating a definite goal or target, and normally requires the contractor to complete and deliver a specified end product within the estimated cost as a condition of payment of the entire fixed fee. In the event that the work cannot be completed within the estimated cost, the Government may require more effort without an increase in fee, provided the Government increases the estimated cost. [FAR 16.306(d)(1)] The term form describes the scope of work in general terms and obligates the contractor to a specified level of effort for a stated time period. Under this form, if the contractor has expended the specified level of effort and performance is considered satisfactory, the contractor receives the entire fixed fee at the end of the stated time period. A new acquisition is necessary if additional periods of performance are required.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture