CHAPTER 12
Fixed-Price-Incentive Contract
Fixed-price-incentive (FPI) contracts have experienced a resurgence in the past several years as a result of government budget cuts. This contract type can be used to drive down costs while securing high-quality products or services by incentivizing the contractor to perform optimally and to control costs. In large efforts where the product or service is achievable within a specified budget, FPI is an excellent contract type; however, considerable time and costs are involved in its administration.
An FPI contract includes profit rather than fee, which is specific to cost-type contracts. Profit is the amount of money a contractor realizes once the cost of performance is deducted from the amount to be ...
