What are the main concepts behind cost and cost reimburse contracts including CPFF, CPAF, CPIF types?
The contract types used by the U.S. Federal Government fall into two categories: fixed-price and cost/cost-reimbursement. Common fixed price contracts include Firm-Fixed-Price (FFP), Fixed-Price Incentive (FPI), and Fixed-Price with Award-Fee (FPAF). These provide for a price which normally is not subject to adjustment, compelling the contractor to provide a product or complete a specific project for a pre-set price.
Cost/cost-reimbursement contracts are more flexible for the contractor. These include Cost-No-Fee (CNF), Cost-Plus-Fixed-Fee (CPFF), Cost-Plus-Award-Fee (CPAF), and Cost-Plus-Incentive-Fee (CPIF). Cost/cost-reimbursement contracts provide payments (cost reimbursements) to the contractor for all legitimate costs incurred in the course of completing the contract, along with a fee representing contractor profit (except with CNF). A cost-reimbursable contract gives the project flexibility to redirect a contractor whenever the scope of work cannot be precisely known and defined at the start and needs to be altered, or when high risks may exist in the effort.
Cost-No-Fee (CNF) - In cost-no-fee contracts, sometimes simply called cost contracts, ...