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Risk that the user will not be fully satisfied because of judgmental acceptance criteria.
Costs of performance after the first year because they cannot be estimated with confidence.
The market prices at risk are severable and significant. The risk stems from industry-wide contingencies beyond the contractor's control. The dollars at risk outweigh the administrative burdens of an FPEPA.
A ceiling price can be established that covers the most probable risks inherent in the nature of the work. The proposed profit sharing formula would motivate the contractor to control costs to and meet other objectives.
Judgmental standards can be fairly applied by an Award-fee panel. The potential fee is large enough to both:
The Government needs a firm commitment from the contractor to deliver the supplies or services during subsequent years. The dollars at risk outweigh the administrative burdens of an FPRP.
A fixed-price, ceiling on upward adjustment, and a formula for adjusting the price up or down based on:
Provide an acceptable deliverable at the time, place and price specified in the contract.
Provide an acceptable deliverable at the time and place specified in the contract at the adjusted price.
Provide an acceptable deliverable at the time and place specified in the contract at or below the ceiling price.