Procurement management planning for the project.

You are working in a project management office for a Fortune 500 company. Your job is to provide advice to project teams which undertake a variety of large and small projects. One day, you are contacted by Neil, a novice project manager who is part of a team working on an extremely large and complex software project. The project is of such a great scale that the team expects to contract a lot of the work out to third party vendors.
“I could use some advice,” Neil sighs. “The lead project manager for the project has assigned me to handle procurement management planning for the project. As she suggested, I put together a team of people to work on developing our procurement approaches.”
“The team has been debating the kinds of contracts we should be putting together for the project. We are going to need to hire at least one vendor to handle some complex software development for some key subsystems. Joe, the representative from the finance department, is adamant that all of the procurement contracts we create will be what he called ‘firm fixed price’ contracts. He said the company has been burned too many times by cost overruns on vendor contracts, and the CFO has had enough.”
“Neither the lead project manager nor I have had much experience with procurement. We thought it would be best to talk with you before we discuss this with Joe again. How do you think we should respond?”
What advice would you give Neil?