Federal activity overview — Cost-Plus-Incentive-Fee CLIN
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A contract line item that reimburses the contractor for allowable costs plus a fee that is adjusted by a formula based on the relationship of total allowable costs to target cost. The fee adjustment formula provides a positive or negative incentive for the contractor to manage costs effectively, sharing cost overruns and underruns between the government and contractor.
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Ask about CPIFIncludes target cost, target fee, minimum and maximum fee, and a fee adjustment formula (share ratio). For example, a 70/30 share ratio means the government bears 70% of cost overruns while the contractor bears 30%. The fee adjusts within the min/max range based on actual vs. target costs.
When a cost-reimbursement contract is appropriate but the government wants to create a stronger incentive for cost control than CPFF provides. Used in development contracts, major system acquisitions, and programs where cost targets can be reasonably estimated but uncertainty remains too high for fixed pricing.
FAR 16.405-1 — Cost-Plus-Incentive-Fee Contracts
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Bureauify. (2026). Cost-Plus-Incentive-Fee CLIN — Federal Contract Intelligence. Bureauify Federal Intelligence. Retrieved , from https://bureauify.com/glossary/cpif-clin
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