backyard room additions easy house additions home addition with basement third lake home addition construction buffalo grove md kitchen and bath buffalo grove .. Chicago Drug testing

FFP vs. CPFF Contracts

SBIR Corner: FFP vs. CPFF contracts:

In the SBIR/STTR world, the single most important decision you need to make is whether you are going to bid a job as Firm Fixed Price (FFP) or as Cost plus Fixed Fee (CPFF). These are two very different contract types and the decision to use one contract type over the other is very important to the overall success of a program. If your sponsor gives you a choice on the matter, the decision to go with one contract type over the other should be well thought out prior to submitting your proposal.

A Firm Fixed Price (FFP) contract is a lot like the tag price you would find on a pair of sneakers. If the price tag on the sneakers is $54.99, then the consumer will pay $54.99 for those sneakers. No more. No less. The profit margin of those sneakers to the manufacturer is built into that price and is transparent to the buyer. Likewise, if a FFP contract to research XYZ, is $99,999, then the Government is going to pay you $99,999 for that body of research. They will not pay you any more and they will not pay you any less. It is critical in this kind of contract to nail down exactly what you are and are not going to do for that price. You do this by writing a specific Statement of Work and by carefully reviewing your deliverables during contract negotiations.

A word to the wise. This isn't to say that you can put a proposal together to do XYZ in which your cost is $50,000 and you sell it to the Government for $99,999. That could be considered defective pricing in accordance with the Federal Acquisition Regulation (FAR) guidelines and it also exceeds the statutory maximum profit you can make on a contract such as this.

A Cost plus Fixed Fee (CPFF) contract is a contract type that reimburses you for fair and reasonable expenses up to a certain amount (a ceiling of some sort) and then pays you a prenegotiated fixed fee above any beyond your expenses. Accordingly, your profit margin or "fee" as one should call it, is exactly that renegotiated fixed fee. No more. No less. Depending on the billing method, your fee may be paid to you as one lump sum, or on some prorated basis where you earn a portion of the fee each billing cycle. In the end, if the job is done satisfactorily, the entire fixed fee amount will have been paid or will be payable to the contractor. If your total cost on the job is less than the ceiling, then your fee will not change, if your cost on the job is more than the ceiling, then your fee will not change either. It is essential to remember that you will not receive any more or any less fee than the renegotiated amount hence the terminology "fixed fee." So, for example, if your cost ceiling is 90,000 and your fixed fee is $9,000 for a total contract value of $99,000, you will be reimbursed for your cost incurred up to, but not exceeding, $90,000 and you will receive $9,000 as a fee. If you spend more than $90,000 (and this doesn't get you in hot water with your sponsor - i.e. a default situation) you may not be reimbursed for the amount that you go over $90,000 but you will get your $9,000 fee. If you only spend $80,000 you will be reimbursed for $80,000 and you will still receive $9,000 since your fee is, you got it? fixed!

Lisa DeMaio is the president and founder of Virtual Contract Manager, LLC, which is a one-stop "information shop" for and about the Contract Management Community and the SBIR (Small Business Innovative Research) Program. Let Virtual Contract Manager coach you on how to integrate the SBIR program into your existing business. Come visit Virtual Contract Manager and get a wealth of FREE SBIR information on our Free Articles Page and to sign up for our content-rich monthly newsletter which features one article a month on the SBIR program. Let Virtual Contract Manager help you tap the federal market and help fund your research or innovative technology. http://www.virtualcontractmanager.com/

In The News:

Want to Grow Your Business? Make an Irresistible Offer

My clients and many of my readers are small and... Read More

Creating a Paperless Office

When working from home, it is usual to find that... Read More

Looking into the Future for Profits

How to identify future solutions and opportunities?Your power page, if... Read More

432 Page Franchise Report by the FTC

The Federal Trade Commission is upgrading the franchise law and... Read More

Growing Your Small Business Through Alliances and Joint Ventures

-- Beyond Cold Calling, "Warm" Calling and Sending E-mails --Many... Read More

Banking and Company Credit Card Policies for Small Business

Does your small business have a banking and credit card... Read More

How to Compete with the Big Guns?!

Many small business startups fail within the first 2 years... Read More

Image of Your Franchise Automotive Outlet is So Important

Image of your franchise automotive outlet is so important. Some... Read More

20 Great Ways to Market Your Business Locally

Whether your target audience is in your neighborhood or across... Read More

The Truth About Government Grants for Your Business

Free money! Receive up to $25,000 that never has to... Read More

Where To Get Money For a Franchise Idea

How often have you thumbed through a business opportunity magazine,... Read More

Be Nice to Your Payroll Department

Ok, so next to the taxman, your company payroll department... Read More

Equipment Maintenance Manual for Mobile Cleaning Business Outline

Service Cleaning Businesses must maintain their equipment in order to... Read More

How to Find Success in the Import Export Business

Take advantage of world politics today and start your own... Read More

Collaborative Negotiating: A Win-Win Strategy

COLLABORATIVE NEGOTIATING:Collaborative negotiating is a win-win strategy that can focus... Read More

Is It Recess Yet?! Confessions of a Self Employed Workaholic

I have a confession to make. My name is Caroline... Read More

Pressure Washing Heavy Equipment

One of the best ways to make money in the... Read More

Financial Fundamentals - What Every Small Business Owner Should Know!

Business owners rarely go into business to deal with the... Read More

Specialty Advertising in C-Stores

It appears the mini-blimp indoor theme and concept is making... Read More

The Step Zero Effect

The key to organizational focus and helping those who need... Read More

More Business Card Marketing

If you are worried about how many different business cards... Read More

Credit Repair Business Opportunities - Huge Profit Potential!

In the world today, many people are further in debt... Read More

Do You Microbifer in Your Cleaning Business?

Microfiber cleaning towels have been around for about ten years... Read More

Combating Over Regulation of Small Business

Many small businesses do quite well due to the blood,... Read More

Small Business - Big Business...Whats the Diff?

Small Business, Big Business ? What's the Diff?Well a lot... Read More

induction street high bay led lighting fixtures Pete's produce ..
induction street high bay led lighting fixtures Pete's produce ..