Concepts in Contracting
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What are the main concepts behind FPI, FPP, and FFP contracts?
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The solution is a short narrative that explains concepts in contracting including Fixed Price Project, Firm Fixed Price, and Fixed Price Incentive.
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The acronyms FPP, FFP, and FPI refer to contracting procedures primarily used by the U.S. federal government, particularly the Department of Defense. These stand for Fixed Price Project, Firm Fixed Price, and Fixed Price Incentive. The latter two, FFP and FPI, are actually subcategories of FPP.
FPPs (Fixed Price Projects) are one of two overarching contract types, the other being cost-reimbursement. In general, fixed price contracts are risky for the contractor (the individual or private company) and safe for the contracting entity (a government agency). With cost-reimbursement type contracts, the burden of risk is opposite; with the contractor in a much more secure position. Fixed price contracts compel the contractor to ...
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