Which type of contract gives both the seller and the buyer flexibility to deviate from performance with financial incentives?

Which type of contract gives both the seller and the buyer flexibility to deviate from performance with financial incentives?
A . Cost Plus Incentive Fee (CPIF)
B . Fixed Price Incentive Fee (FPIF)
C . Cost Pius Award Fee (CPAF)
D . Time and Material (T&M)

View Answer

Answer: B

Explanation:

Fixed Price Incentive Fee Contracts (FPIF).

This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed upon metrics. Typically such financial incentives are related to cost, schedule, or technical performance of the seller. Performance targets are established at the outset, and the final contract price is determined after completion of all work based on the seller’s performance. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the work.