FPIF contracts - does buyer have to audit seller's invoices?

Submitted by happyinlove505 on Tue, 01/29/2013 - 07:19

I am really confused with explanations given in the RMC and Crowe textbooks regarding FPIF contracts.

From one point of view, these are fixed price contracts that assume additional incentive fee for meeting some objectives. And this implies that buyer should not care what are the actual costs of the seller

But from another point of view, there is a buyer/seller share ratio for cost overruns. So, buyer has to audit those invoices to verify and agree on sharing the costs overruns.

 

 

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sspawar

Tue, 01/29/2013 - 10:02

I agree with you.
Initially it seems fixed price and a fix incentive contract makes it differentfrom CPIF .
But bsr makes it cost oriented and thus it becomes a type of Cpif .
When we solve any PTA based problem there is a target cost an important parameter is nothing but cost based contract factor.
This thing I raised in this forum that FPIF and CPIF are identical.

happyinlove505

Tue, 01/29/2013 - 10:30

 Thank you for your response :)

I see now that it is not something crystal clear.

I have a feeling I should not dig too much this subject and just memorize the PTA formula :)

Actually, I am also concerned with PTA, but this is probably a reason to start another topic :)