Glossary term
Cost-Plus-Fixed-Fee (CPFF)
A cost-reimbursement contract where the contractor is repaid allowable costs plus a negotiated fee that does not vary with actual cost.
Under a cost-plus-fixed-fee contract the government reimburses allowable, allocable, and reasonable costs and pays a fixed fee negotiated at award. It is used when requirements cannot be defined precisely enough for a fixed price — typically research and development. Cost-reimbursement contracts require the contractor to have an accounting system deemed adequate by DCAA, which is a meaningful barrier for firms that have only performed fixed-price work.
Categories
- contract-types
Related terms
- Firm-Fixed-Price (FFP)A contract type where the price is set at award and does not change regardless of the contractor's actual costs.
- DCAAThe Defense Contract Audit Agency — the government's auditor for contract costs and accounting systems.
- Indirect RateThe rate at which overhead, fringe, and general and administrative costs are allocated to contracts.