Certified Public Procurement Officer (CPPO) Practice Test 2025 - Free CPPO Practice Questions and Study Guide

The scenario described involves a university incentivizing a contractor to complete a project ahead of schedule by offering an additional amount. This aligns with the characteristics of a fixed-price incentive contract. In such contracts, the contractor is paid a predetermined price for the project but can earn additional benefits or shares in the cost savings if they successfully meet certain performance criteria, such as completing the project early.

In this case, the additional $50,000 serves as an incentive for the contractor to deliver the project more efficiently and promptly. This form of pricing encourages contractors to improve their performance, ensuring that both the contractor and the university benefit from the early completion.

On the other hand, a fixed-price with redetermination would involve renegotiating the contract price after specific milestones or periods, rather than providing an immediate incentive. Cost sharing typically refers to arrangements where the costs incurred are shared between parties, and cost plus fixed fee involves paying the contractor for their costs plus a fixed fee, which does not include performance-based incentives for early completion.