XL EagleCPFF (Cost-Plus-Fixed-Fee)
CPFF stands for Cost-Plus-Fixed-Fee. A cost-plus-fixed-fee contract reimburses allowable costs and pays a fee that is fixed when the contract is signed. If costs run over, the fee stays the same dollar amount. The fee only changes if the scope of work changes.
Federal law caps the fee on these contracts. In general it is 15 percent of estimated cost for research and development and 10 percent for other work. Because the fee is fixed, the contractor has little incentive to pad costs but also little reward for saving money.
Why it matters to a small contractor
CPFF shows up on research, engineering and support work, not much on mowing or cleaning. If a prime brings you in on a CPFF job, expect to share labor rates, timesheets and receipts.
Example
Estimated cost is $500,000 with a $35,000 fixed fee. Costs come in at $540,000. The contractor gets $540,000 plus the same $35,000.
CPFF: common questions
Does the fee drop if I come in under budget?
No. The fee stays the same dollar amount. You just get reimbursed less cost because you spent less.
Can the fee go above the cap?
No. The statutory fee limits apply to the fee set at award, and contracting officers cannot exceed them.
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