Recommend a cost-plus-fixed-fee type contract


Problem: You have a requirement for the development of a special type of drone. Because this is for research and development (R&D) in a highly complex area, you believe a cost-reimbursement type contract is appropriate. The technology is so new and revolutionary, you don't believe an incentive contract is appropriate and are going to recommend a cost-plus-fixed-fee (CPFF) type contract. Which statement below is correct?

  • An incentive can never be used with a cost type contract.
  • The contractor must have an adequate accounting system.
  • The contractor must always be a small business when awarding a contract for research and development.
  • Only Time and Materials (T&M) type contracts can be awarded for research and development.

Please provide FAR/DFAR reference with an answer in proper format.

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Business Law and Ethics: Recommend a cost-plus-fixed-fee type contract
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