FPIF Contracts and Point of Total Assumption

In FPIF Contracts and Point of Total Assumption, you'll learn ...

• The wide range of contract types and their relative risks to the buyer and seller
• What is a fixed-price incentive firm target (FPIF) contract
• Application & limitations of FPIF contracts

Overview

Credit: 1 PDH

Length: 17 pages

A wide selection of contract types is available to government buyers and contractors to provide necessary flexibility in acquiring the large variety and volume of supplies and services required by agencies. These contract types are listed in the Federal Acquisition Regulation (FAR) Part 16, and they vary according to (1) the degree and timing of the responsibility assumed by the contractor for the costs of performance; and (2) the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals.

Contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss); to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts, in which the contractor’s responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.

One such “in between” contract is the focus of this course: the fixed-price incentive firm target (FPIF) contract. One characteristic that differentiates FPIF contracts from other contract types is a cost trigger called “point of total assumption.”

This course is intended for engineers – employed in either the private sector or government – who work with federal contracts.