Cost Plus Fixed Fee (CPFF, FAR 16.306) reimburses the contractor for all allowable costs plus a fixed fee (profit) negotiated at award. The fee does not vary with actual costs — overruns do not increase the fee, and underruns do not decrease it. Maximum fee: 10% of estimated cost for R&D, 7% for other contracts. Requires an adequate accounting system.
is a contract type concept federal contractors and grant writers run into across solicitations, regulations, and award filings
Cost Plus Fixed Fee describes a specific contract structure that the federal government uses. The contract type controls risk allocation, payment timing, reporting cadence, and how performance is measured — all of which affect whether the work is profitable and whether it fits a contractor's capability profile. Knowing whether a solicitation is structured as a Cost Plus Fixed Fee versus another vehicle is one of the first signals of how the government expects the work to be executed and what kind of contractor they're trying to attract. Misreading the contract type can mean either over-pricing risk you don't actually carry or under-pricing risk you do. The related terms above name the adjacent vehicles Cost Plus Fixed Fee most commonly competes with or rolls up under.
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