Cost Plus Fixed Fee Contract

A Cost Plus Fixed Fee (CPFF) contract is an agreement where a contractor is reimbursed for their actual costs of work, such as labor and materials, plus an additional fixed amount as profit. This fixed fee does not change, regardless of project costs, providing a clear profit for the contractor. This type of contract is often used when project costs are uncertain or hard to estimate, as it allows for flexibility while ensuring the contractor is fairly compensated for their efforts without incentivizing unnecessary spending.