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Fixed-price incentive contract

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Definition Edit

The formula for a fixed-price incentive contract focuses upon "the relationship of total final negotiated cost to total target cost"[1] and can include either (1) the target cost, the target profit, and the price ceiling, in the case of firm-target incentives[2] or (2) the initial target cost, the initial target profit, the ceiling price, and the initial profit adjustment formula that is used at an agreed-upon point during performance to establish the target profit, in the case of successive-target incentives.[3]

References Edit

  1. 48 C.F.R. §16.403(a).
  2. Id. §16.403-1(a).
  3. Id. §16.403-2(a)(1).

See also Edit

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