CPPB Domain II Sourcing Practice Test

The concept here is an incentive-based pricing structure that still reimburses costs, but with a mechanism that caps risk. A CPIF contract pays the contractor’s costs plus an incentive fee tied to cost performance, with the possibility of sharing cost savings or overruns around a target cost and within a ceiling. The pricing form that mirrors that idea—linking cost performance to an incentive while using a fixed-price framework to limit risk—is Fixed Price Incentive. It blends a target cost with a sharing formula and a ceiling price, so the contractor has an incentive to stay efficient, yet the overall price can’t balloon beyond the ceiling. The other options aren’t pricing forms that establish this kind of incentive-based, cost-reimbursed arrangement: boilerplate is just standard language, price in effect at time of shipment is a delivery/payment term, and proposal risk isn’t a pricing method.