Which of the following is NOT a characteristic of Cost-Plus-Fixed-Fee contracts?

Cost-Plus-Fixed-Fee (CPFF) contracts are structured such that the contractor is reimbursed for their allowable costs, plus a fixed fee for their services. This structure inherently implies that the contractor does not bear the full risk of the costs, as they are guaranteed reimbursement for their expenses.

The correct response highlights that CPFF contracts do not involve full contractor risk because the contractor is protected against cost overruns and is compensated for all allowable expenses. This makes the contract advantageous in situations where project costs cannot be accurately estimated ahead of time, allowing for flexibility in uncertain situations.

The characteristics of CPFF contracts include a predetermined fee that remains fixed regardless of the actual costs incurred within the contract. They also usually focus on deliverables, ensuring that work performed meets the specified requirements. Thus, the emphasis is on achieving the project deliverables rather than merely minimizing cost or risk, aligning the contractor's interests with the project's success.

In contrast, the options that describe the contract characteristics within the other choices accurately reflect the nature of CPFF contracts, emphasizing the financial arrangement and the management of uncertainties inherent in various projects.