Does a Cost-Plus Incentive Fee contract include a fee adjustment formula?

A Cost-Plus Incentive Fee (CPIF) contract is designed to provide the contractor with an allowance for costs incurred during the project, along with an additional fee that can vary based on the contractor’s performance. The fee adjustment formula is a key feature of this type of contract. It is typically structured to incentivize the contractor to keep costs down and complete the work efficiently.

The underlying premise is that as the contractor minimizes costs while meeting the project objectives, they can earn a higher fee. This fee adjustment formula establishes a relationship whereby the total fee paid increases or decreases based on predetermined conditions related to the cost performance and other project metrics. Hence, it is accurate to state that a Cost-Plus Incentive Fee contract does include this fee adjustment formula as a fundamental part of its structure, making the answer true.