A Cost-Plus Fixed Fee contract does NOT include which of the following?

In a Cost-Plus Fixed Fee contract, the contractor is reimbursed for their allowable incurred costs and is paid an additional fee that is fixed at the outset of the contract. The actual costs incurred by the contractor are a crucial component of this type of contract because they dictate the financial reimbursements the contractor will receive. However, since the focus of this question is on what is not included, it’s important to understand the role of each option.

The contract does specify boundaries and requirements, such as the completion date, which establishes when the project or deliverable should be finished. Additionally, a target cost might be set, which serves as a guideline for controlling costs, even though it is not the primary determining factor for payment under the contract. The minimum fee is included in the contract to ensure the contractor receives a specified amount regardless of the actual costs incurred, thus providing a baseline for profit.

In contrast, the actual costs incurred are inherent to the nature of a Cost-Plus Fixed Fee contract. They are what the contractor will be reimbursed for, and by their nature, they are central to the financial structure of this contract type. Thus, the actual costs incurred do indeed comprise a fundamental aspect of this contract approach, distinguishing it from the elements that