Contract Types: FFP, T&M, CPFF Flashcards
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Read the first 7 Contract Types: FFP, T&M, CPFF flashcards as text
A contracting officer wants to use a T&M contract. What special approval is required under FAR 16.601(d)?
Answer: Determination and Findings (D&F) that no other contract type is suitable
FAR 16.601(d) requires the contracting officer to execute a Determination and Findings (D&F) justifying that no other contract type is suitable before awarding a T&M contract.
In a CPFF completion form contract, what happens to the fixed fee if the work is completed before the estimated cost is fully expended?
Answer: The contractor still receives the full fixed fee
Under a CPFF completion form, the contractor earns the full fixed fee upon completion of the specified end product, regardless of actual costs.
Which of the following best describes the 'term' form of a CPFF contract?
Answer: The contractor performs a level of effort over a specified period for the fixed fee
In a CPFF term contract, the fee is earned for performing a specified level of effort over a stated time period, not for delivering a defined end product.
Under an FFP contract, how does the contractor maximize profit?
Answer: By reducing costs below the contract price
Because the price is fixed, a contractor earns more profit by controlling and reducing its actual costs below the contract price.
Which contract type provides the LEAST incentive for contractor cost control?
Answer: CPFF
CPFF provides the least incentive for cost control because the contractor is reimbursed for all allowable costs and receives the same fixed fee regardless of efficiency.
Material costs in a Time-and-Materials contract are reimbursed at:
Answer: Actual cost plus a material handling percentage if allowed by the contract
T&M contracts reimburse materials at actual cost; a material handling percentage (not to exceed actuals) may be added if specified in the contract.
When a requirement has well-defined specifications and stable pricing can be established, FAR policy favors which contract type?
Answer: Firm-Fixed-Price
FAR 16.103(b) states that firm-fixed-price contracts are preferred when specifications are definitive and a fair and reasonable price can be established at the outset.