In the _____ contract, if the supplier can demonstrate actual cost savings through production efficiencies, lean production activities, or substitution of materials, the resulting savings from the initial price targets are shared between the supplier and the purchaser at a predetermined rate.
A)time and materials
B)cost plus fixed fee
C)fixed-price with incentives
D)firm fixed price
E)fixed-price with escalation

Question

Quizplus · Accepted Answer

The described contract structure is that of a fixed-price with incentives contract, where the supplier and purchaser have established price targets but there is room for cost savings to be shared if the supplier can demonstrate actual efficiencies or material substitutions. The other answer choices do not involve the same type of cost-sharing incentives based on actual performance.

In the _____ Contract, If the Supplier Can Demonstrate Actual