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PROMISE RISK TO CONTRACTORS RISK TO GOVERNMENT CASH FLOW PROGRESS PAYMENTS ADMINISTRATION

COST- REIMBURSEMENT. FIXED-PRICE. Best Effort Low High As Incurred None Max Government Max: 6/10/15 % CPFF Contracts. Shall Deliver High Low On Delivery % of Actual Min Government NO Limit. Contract Category Characteristics. PROMISE RISK TO CONTRACTORS RISK TO GOVERNMENT

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PROMISE RISK TO CONTRACTORS RISK TO GOVERNMENT CASH FLOW PROGRESS PAYMENTS ADMINISTRATION

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  1. COST- REIMBURSEMENT FIXED-PRICE Best Effort Low High As Incurred None Max Government Max: 6/10/15 % CPFF Contracts Shall Deliver High Low On Delivery % of Actual Min Government NO Limit Contract Category Characteristics PROMISE RISK TO CONTRACTORS RISK TO GOVERNMENT CASH FLOW PROGRESS PAYMENTS ADMINISTRATION FEE/PROFIT

  2. Mission Support Planning Contract Types - Major Systems Continuum User Needs & Technology Opportunities TYPICAL CONTRACT TYPE CHANNEL Pre-Systems Systems Acquisition Sustainment Acquisitions B A C CPFF FFP (LOE) FPI FFP FPI FFP CPFF CPAF CPIF FOC IOC Concept Refinement Technology Development System Development & Demonstration Production and Deployment Operations & Support Concept Decision Design Readiness Review FRP Decision Review LRIP/IOT&E ILL DEFINED RQMT ... WELL ... DEFINED RQMT CE PDRR EMD PRODUCTION or DEPLOYMENT WORK STATEMENT TYPE CHANNEL

  3. Reliability of Cost Estimate and Confidence of Outcome FFP or FFP/EPA 0 - 10 % CPFF 30 % + CPIF 20 - 30 % FPIF 10 - 20 % Rules of Thumb

  4. Distribution of Cost OutcomesDoes Not Follow a Bell Shaped Curve

  5. Distribution of Cost Outcomes Does Not Follow a Bell Shaped Curve There is limited potential for under run, but infinite potential for overrun.

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