Fixed Price Incentive Successive Targets Illustration.docx
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- Monitoring & Evaluation Services for the Caribbean Basin Security Initiative (CBSI) Federal contract opportunity
- Solicitation number
- sol-517-11-000004
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FPI Successive Targets example
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| File | Type | Posted |
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| SOL-517-11-000004_Questions.docx | DOCX document | |
| Info sheet_CBSI projects to be evaluated.pdf | ||
| CBSI M_E RFP Amended.pdf | ||
| Am 01 RFA-517-11-000004.docx | DOCX document | |
| RFA-517-11-000003_am03 final.docx | DOCX document | |
| SOL-517-11-000004_Questions.docx | DOCX document | |
| SF1449_SOL-517-11-000004.pdf | ||
| SOL-517-11-000004_Attachments.pdf | ||
| Attachment_CBSI Juvenile Justice Sector Assessment - Final Report.pdf | ||
| USAIDEvaluationPolicy.pdf | ||
| Youth_Needs_Assessment_Author_EDC.pdf | ||
| RFP for CBSI_Final.docx | DOCX document |
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A basic example of a Fixed-Price Incentive (Successive Targets) contract is as follows:
Initial Target Cost $15,000,000 Initial Target Profit $1,200,000 Initial Target Price $16,200,000 Initial Share Ratio 95/5 Ceiling on Firm Target Profit $1,350,000 Floor on Firm Target Profit $1,050,000 Price Ceiling $19,500,000 At the production point (The point where the Contractor can provide draft scopes of work based on USAID-provided key questions) in the contract, if the cost is $14,500,000, the firm target profit would be determined as follows:
Initial Target Cost $15,000,000 Negotiated Cost $14,500,000 Difference $500,000 (decrease) Contractor’s Share $25,000 (increase) Initial Target Profit $1,200,000 Firm Target Profit $1,225,000 At this point, there are two alternatives: Using the negotiated cost of $1,450,000 and the firm target profit as guides, a firm-fixed-price may be negotiated. If this is not possible, or if the parties agree that uncertainties under the remaining part of the contract make this unfeasible, a fixed-price incentive with firm targets may be negotiated. The ceiling price cannot be increased at this point but it may be decreased where firm target costs are lower than initial target costs. With a revised ceiling price of $16,700,000 and a new share ratio of 60/40 negotiated, the following is established:
Target Cost $14,500,000 Target Profit $1,225,000 Target Price $15,725,000 Ceiling Price $16,700,000 Share Ratio 60/40 The final settlement at contract completion would be done as for the firm target contract.
If the parties negotiated an estimated cost of $17,000,000 at the production point, firm target profit would be determined as follows:
Initial Target Cost $15,000,000 Negotiated Cost $17,000,000 Difference $2,000,000 (increase) Contractor’s Share $100,000 (decrease) Initial Target Profit $1,200,000 Firm Target Profit $1,100,000 If a FFP contract was not appropriate, and a sharing formula of 75/25 was negotiated, a firm incentive agreement could be set up as follows:
Target Cost $17,000,000 Target Profit $1,100,000 Target Price $18,100,000 Ceiling Price $19,500,000 Share Ratio 75/25
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