In CPFF contract pricing, which statement is true?

In CPFF contract pricing, which statement is true?

• A. Reimbursed costs plus fixed fee
• B. Fixed price throughout
• C. Ceiling price exists
• D. No risk to buyer

Answer: (A)

In CPFF pricing, the contractor is paid for allowable costs incurred to perform the work, plus a fixed fee that does not vary with actual costs. This combination—reimbursed costs plus a fixed, predetermined fee—defines the arrangement and distinguishes it from fixed-price contracts, where the price is set upfront and not tied to the contractor’s costs. While many CPFF agreements include a ceiling (not-to-exceed) price to cap total reimbursement, the essential concept you’re testing is that costs are reimbursed and a fixed fee is added. The other statements don’t fit: a CPFF contract is not fixed-price, and there is inherent risk to the buyer because costs can rise up to the ceiling; the presence of a ceiling price is a separate feature, not the defining pricing mechanism.

In CPFF pricing, the contractor is paid for allowable costs incurred to perform the work, plus a fixed fee that does not vary with actual costs. This combination—reimbursed costs plus a fixed, predetermined fee—defines the arrangement and distinguishes it from fixed-price contracts, where the price is set upfront and not tied to the contractor’s costs. While many CPFF agreements include a ceiling (not-to-exceed) price to cap total reimbursement, the essential concept you’re testing is that costs are reimbursed and a fixed fee is added. The other statements don’t fit: a CPFF contract is not fixed-price, and there is inherent risk to the buyer because costs can rise up to the ceiling; the presence of a ceiling price is a separate feature, not the defining pricing mechanism.