Which contract type is described as a contract with a negotiated fee fixed at inception and reimbursement of allowable costs?

Which contract type is described as a contract with a negotiated fee fixed at inception and reimbursement of allowable costs?

• A. Cost-Plus-Fixed-Fee Contract (CPFF)
• B. Cost-Plus-Incentive-Fee Contract (CPIF)
• C. Firm-Fixed-Price Contract (FFP)
• D. Time-and-Materials Contract (T&M)

Answer: (A)

This describes a cost-reimbursement arrangement with a fixed fee. In this setup, the contractor is paid for allowable costs actually incurred, and on top of those costs a fee is added that is negotiated at the start and does not change as costs fluctuate. The fixed fee provides the contractor with a guaranteed profit regardless of the final cost outcome, while the reimbursement covers the legitimate, allowable expenses tied to performing the work. This fits because the key elements are reimbursing allowable costs and adding a fee that is fixed at inception. It does not align with an incentive-based fee (where the total fee can vary based on cost performance), a firm price (where the price is fixed and cost reimbursement isn’t the mechanism), or a time-and-materials setup (which reimburses labor and material costs according to rates, often with a different structure).

This describes a cost-reimbursement arrangement with a fixed fee. In this setup, the contractor is paid for allowable costs actually incurred, and on top of those costs a fee is added that is negotiated at the start and does not change as costs fluctuate. The fixed fee provides the contractor with a guaranteed profit regardless of the final cost outcome, while the reimbursement covers the legitimate, allowable expenses tied to performing the work.

This fits because the key elements are reimbursing allowable costs and adding a fee that is fixed at inception. It does not align with an incentive-based fee (where the total fee can vary based on cost performance), a firm price (where the price is fixed and cost reimbursement isn’t the mechanism), or a time-and-materials setup (which reimburses labor and material costs according to rates, often with a different structure).