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Starting during 2002 award-fee cost plus contracts became more numerous than fixed fee cost plus contracts. The distribution of annual contract values by sector category and award types indicates that cost plus contracts in the past had the largest importance in research, followed by services and products.
Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a "markup") to the product's unit cost. Essentially, the markup percentage is a method of generating a particular desired rate of return. [1][2] An alternative pricing method is value-based pricing.
The Final Price of the contract is expressed as follows: Final Price = Actual Cost + Final Fee. Note that if Contractor Share = 1, the contract is a Fixed Price Contract; if Contractor Share = 0, the contract is a cost plus fixed fee (CPFF) contract. [4] For example, assume a CPIF with: Target Cost = 1,000; Target Fee = 100; Benefit/Cost ...
On 1 July 2021, the USAF awarded Raytheon a cost-plus-fixed-fee contract for the engineering and manufacturing development stage of the LRSO program, with options that could take the contract to about US$2 billion. DefenseNews reported that the USAF could buy more than 1,000 AGM-181 missiles, which are projected to have a range in excess of ...
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The point of total assumption (PTA) is a point on the cost line of the profit-cost curve determined by the contract elements associated with a fixed price plus incentive-Firm Target (FPI) contract above which the seller effectively bears all the costs of a cost overrun. The seller bears all of the cost risk at PTA and beyond, due to a dollar ...
[2]: 31–2 In 1966 as the value of the contract approached $1 billion, the contract was renegotiated to lower the management fee commensurate with the increased scope and award the fee percentage based upon the contractor's performance, a cost-plus-award-fee contract.
On 8 August 2008, the USAF Space and Missile Systems Center increased the "cost plus award fee" contract with BLS for US$1.656 billion to extend the period of performance through the 30 September 2008 . In addition, a US$557.1 million option was added to cover FY10. [14]