Rick is the project manager for TTM project. He is in the process of procuring services from vendors. He makes a contract with a vendor in which he precisely specify the services to be procured, and a

Question

Options

• AFirm Fixed Price
• BFixed Price Incentive Fee
• CCost Plus Fixed Fee Contract
• DFixed Price with Economic Price Adjustment

• A
  94% (32)
• B
  3% (1)
• C
  3% (1)

Explanation

Rick has prepared a Firm Fixed Price contract (FFP). In such contracts, the buyer must precisely specify the product or services to be procured, and any changes to the procurement specification can increase the costs to the buyer. This is the most commonly used contract type. Answer option B is incorrect. In Firm Price Incentive Fee (FPIF) contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the Answer option D is incorrect. Fixed Price with Economic Price Adjustment (FP-EPA) is intended to protect both buyer and seller from external conditions beyond their control. Answer option C is incorrect. Cost Plus Fixed Fee Contracts charge back all project costs to the seller and include a fixed fee upon completion of the contracts.

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