A cost plus percentage of cost contract or CPPC is a cost reimbursement contract containing some element that obligates the non-state entity to pay the contractor an amount, undetermined at the time the contract was made and to be incurred in the future, based on a percentage of future costs. CPPC Contracts are prohibited for non-state entities.

Why? (2 C.F.R §200.324 (d))

• There is no incentive to control costs


• The contractor has a financial interest in increasing the cost of performance 

How do you know you're using a CPPC?

• Payment is at a predetermined rate


• Rate is applied to actual performance costs Contractor's entitlement is uncertain at the time of contracting Rate increases with increased performance