1. What is CPFF?

CPFF (Cost Plus Fixed Fee) is a contract pricing arrangement where the buyer pays the supplier for allowable costs plus a fixed fee. This provides the supplier with a guaranteed profit margin while covering all incurred costs.

2. How Does the Calculator Work?

The calculator uses the CPFF formula:

Where:

• \( Cost \) — Actual costs incurred ($)
• \( Fee\% \) — Fixed fee percentage (%)

Explanation: The equation calculates the total contract price by adding the actual costs to a predetermined fixed fee percentage of those costs.

3. Importance of CPFF Calculation

Details: CPFF calculations are crucial for contract pricing, budget planning, and ensuring fair compensation for suppliers while maintaining cost control for buyers.

4. Using the Calculator

Tips: Enter the actual cost amount in dollars and the fixed fee percentage. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What types of contracts use CPFF pricing?
A: CPFF is commonly used in government contracts, research and development projects, and situations where costs are difficult to estimate accurately.

Q2: How is the fee percentage determined?
A: The fee percentage is typically negotiated between the buyer and supplier based on project complexity, risk, and market conditions.

Q3: What costs are typically included?
A: Allowable costs usually include direct labor, materials, subcontracts, and other directly attributable expenses as defined in the contract.

Q4: Are there limitations to CPFF contracts?
A: CPFF contracts require careful cost monitoring and auditing to prevent cost overruns and ensure only allowable costs are reimbursed.

Q5: How does CPFF differ from fixed-price contracts?
A: Unlike fixed-price contracts where the price is set, CPFF contracts reimburse actual costs plus a fixed fee, transferring less risk to the supplier.