Back‑to‑Basics (BtB) Contracting Certification 2025 – 400 Free Practice Questions to Pass the Exam

A Cost-Plus Incentive Fee (CPIF) contract is designed to provide financial incentives for contractors to control costs while still delivering the project effectively. Key elements of such a contract include a target cost, which is the cost the contractor aims to achieve; a target fee, which is the profit the contractor hopes to earn given that the actual costs align with the target; and minimum and maximum fees, which establish the boundaries for the fees the contractor can receive based on the actual project costs.

A fixed-price stipulation, however, does not fit within the framework of a CPIF contract. In contrast to fixed-price contracts, where the contractor is paid a set amount regardless of the actual costs incurred, the CPIF structure relies on cost reimbursements along with an incentive fee determined by the cost performance. This introduces a flexible cost structure that incentivizes cost efficiency, making a fixed-price stipulation inconsistent with the fundamental nature of the CPIF contract.

Thus, the correct answer reflects that a fixed-price stipulation is not an element of a CPIF contract, emphasizing the distinct characteristics and purpose of such contracts in fostering cooperation and cost management between contractors and contract managers.