Cost-Plus Fixed Fee (CPFF)

CPFF is a federal contract type where the customer reimburses the contractor for all allowable costs and pays a separate, pre-negotiated fixed fee on top. The fee is a flat dollar amount, not a percentage, so profit does not climb when costs run over. The three big federal contract families in aerospace are CPFF, CPIF (cost-plus incentive fee), and FFP (firm fixed price). EMD work is almost always CPFF or CPIF because the technical risk is too high to fix the price. For Finance hires, indirect-rate management, EVMS compliance, DCAA incurred-cost audits, and FAR/DFARS allowability rules are the daily reality. Roles where this matters: Finance, Contracts, Program Management, FP&A.