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Topics: Aerospace and Defense
CPIF type of contract
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As per PMBOK6 glossary, the definition of CPIF type contract is as follows:

"A type of cost-reimbursable contract where the buyer reimburses the seller for the seller's allowable costs (allowable costs are defined by the contract), and the seller earns its profit if it MEETS DEFINED PERFORMANCE CRITERIA".

The definition must clarify that the seller will give INCENTIVE fee if the CRITERIA FOR INCENTIVE is met. However, the fee for meeting the CORE criteria has to be paid even if the incentive criteria is NOT met.
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Good point. Well observed.

I think, ultimately it is up to the people negotiating the contract to put a clause "the seller will give INCENTIVE fee if the CRITERIA FOR INCENTIVE is met. However, the fee for meeting the CORE criteria has to be paid even if the incentive criteria is NOT met. " = as you propose into the contract, rather than it is up to PMI to modify the glossary entry in the PMBOK(R) Guide, 6th Edition.

To everyone interrested in the fascinating topics of CPIF contracts I can recommend
"Understanding the Mechanics of CPIF Contracts By Jeffrey R. Cuskey ". Google this.
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Interesting distinction, but in my experience there is no core fee in such contracts. Costs are reimbursed, including some calculation of allowable general and administrative (G&A) and overhead changes. ALL profit (fee) earnings are incentive-based. On rare occasion, I have seen variations which include a core profit allocation and additional awards for achievement of certain milestones, but these are by far in the minority. I think that the bottom line is that Falko's comment is well taken - it all depends on the contractual language of the specific contract in question. As a matter of definition, the existing one seems adequate, though it might be prudent to note that a multitude of incentive fee, award fee, split profit, and other variations in contracting language exist, and careful attention should be paid to the specifics of that language.

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