Procurement can generally be categorized between Fixed Price and Cost Reimbursable.
Fixed Price
Fixed Price Plus Incentive Fee (FPIF) – 10000$ is paid plus for every month the work finished earlier than schedule 1000$ will be paid
Fixed Price plus Award fee (FPAF) – 10000$ plus every month performance exceeds planned value 1000$ is awarded with the max award of 10000$
Fixed Price Economic Price Adjustment – 10000$/ year plus a price will increase based on Consumer Price Index.
Purchase Order – generally used for commodities
Time and Material –
100$ /hr plus cost
Cost Reimbursable
Cost Contract – Seller receives no profit. Used by non profit organization
Cost Plus Fees (CPF) or Cost plus Percentage of Cost (CPPC) – Cost plus 10% as fees
Cost Plus Fixed fee (CPFF) – Cost plus 10000$ in fees
Cost Plus Incentive Fee (CPIF) – Cost plus variable fee. Original estimate is done (target cost) and target fee is determined. The seller gets percentage of saving if actual cost is less than target cost based on Seller/Buyer ratio.
Cost Plus Award Fee (CPAF) – Cost plus fee plus award based on performance.
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