Reference

Federal Contract Types Explained for SDVOSBs

The contract type decides who carries the cost risk, what accounting you need, and how the limitations on subcontracting are measured against your award. These plain-English pages take one type at a time — what it is, who bears the risk, when the government uses it, and the SDVOSB-specific angle — organized the way the FAR organizes them (Part 16), each tied to the controlling provision and cross-linked to the glossary, calculators, and how-to guides.

Last updated Update cadence: Quarterly, plus on FAR amendment

Compiled from: Federal Acquisition Regulation (Title 48 CFR, Part 16 — Types of Contracts) · 13 CFR § 125.6 — Limitations on subcontracting · FAR Part 31 cost principles and FAR Subpart 16.5 ordering procedures

Change log (1)
  1. LaunchedPublished the federal contract types reference covering the pricing and delivery arrangements an SDVOSB encounters on set-asides — firm-fixed-price (FFP), fixed-price with economic price adjustment (FP-EPA), fixed-price incentive (FPIF), the cost-reimbursement family (CPFF, CPIF, CPAF), time-and-materials and labor-hour, the indefinite-delivery vehicles (IDIQ, requirements, definite-quantity), and letter contracts — each with a who-carries-the-risk callout, a key-features table, an SDVOSB-specific angle tying the type to the limitations on subcontracting, common pitfalls, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source FAR Part 16 citations, and cross-links into the glossary, regulation explainers, how-to guides, FAQ, and the limitations-on-subcontracting and price-to-win calculators.

Fixed-Price

Firm-Fixed-Price (FFP)A firm-fixed-price contract sets one price that does not change regardless of the contractor's cost — the type an SDVOSB sees on the vast majority of set-asides.
Fixed-Price with Economic Price Adjustment (FP-EPA)A fixed-price contract that allows the price to move up or down under a defined formula when specified costs — like labor rates or commodity prices — change.
Fixed-Price Incentive (FPIF)A fixed-price contract that adjusts profit by a formula tying final price to final cost, with a ceiling price the contractor cannot exceed.

Cost-Reimbursement

Cost-Plus-Fixed-Fee (CPFF)A cost-reimbursement contract that pays the contractor's allowable costs plus a negotiated fee that is fixed in dollars and does not vary with actual cost.
Cost-Plus-Incentive-Fee (CPIF)A cost-reimbursement contract where the fee is adjusted by a formula tying it to how final cost compares to a target cost, between a minimum and maximum fee.
Cost-Plus-Award-Fee (CPAF)A cost-reimbursement contract paying allowable costs plus a base fee and an award fee earned through the government's subjective evaluation of performance.

Time-Based

Time-and-Materials (T&M)A contract that pays fixed hourly labor rates (which include profit) plus the actual cost of materials, capped by a not-to-exceed ceiling.
Labor-Hour (LH)A variation of time-and-materials in which the contractor supplies only labor at fixed hourly rates and the government provides materials — no materials are billed.

Indefinite-Delivery

Indefinite-Delivery, Indefinite-Quantity (IDIQ)A contract that provides for an indefinite quantity of supplies or services, within stated limits, ordered via task or delivery orders over a fixed ordering period.
Requirements ContractAn indefinite-delivery contract under which the government fills all of its actual requirements for specified supplies or services from one contractor during the contract period.
Definite-Quantity ContractAn indefinite-delivery contract for a definite quantity of supplies or services, delivered against orders placed when and where the government later directs.

Other

Letter Contract (Undefinitized Contract Action)A preliminary written instrument that authorizes the contractor to begin work immediately while the final terms — including price — are negotiated and definitized later.

Know the type, then run the numbers

The contract type drives your self-performance math. The limitations-on-subcontracting calculator turns it into a number — and the weekly Brief turns certification into a stream of set-aside opportunities.

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