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Fixed Price Incentive (Successive Targets)

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Definition Edit

A Fixed Price Incentive (Successive Targets) (FPI(S)) contract is an incentive contract that operates in the same way as an fixed price FPI (firm target) contract except that one or more revisions in the target cost and target profit may be made during performance.

A fixed-price incentive (successive targets) contract is appropriate when: (1) available cost or pricing information is not sufficient to permit the negotiation of a realistic firm target cost and profit before award; (2) sufficient information is available to permit negotiation of initial targets; and (3) there is reasonable assurance that additional reliable information will be available at an early point in the contract performance so as to permit negotiation of either (i) a firm fixed price or (ii) firm targets and a formula for establishing final profit and price that will provide a fair and reasonable incentive.[1]

References Edit

  1. Acquisition Community Connection, "Fixed Price Incentive (Successive Targets) FPI(S)" (full-text).

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