Reference · Contract vehicles & pricing
Firm-fixed-price contract
Firm-Fixed-Price (FFP) contract
A firm-fixed-price (FFP) contract sets a single price that does not change regardless of the contractor's actual cost. The contractor carries the cost risk and keeps any savings, so FFP suits well-defined requirements with predictable cost.
What it is
The price is fixed at award. If the work costs more than expected, the contractor absorbs it; if less, the contractor keeps the difference. It is the government's preferred type when the requirement is clear.
Why it exists
It gives both sides price certainty and gives the contractor the strongest incentive to control cost, with minimal administrative burden.
Who it applies to
Contractors on well-defined supplies or services — commercial-item buys under FAR Part 12 are typically firm-fixed-price.
Frequently asked
What is a firm-fixed-price contract?
A firm-fixed-price contract sets one price that does not change with the contractor's actual costs. The contractor bears the cost risk and keeps any savings, which is why it is used for well-defined requirements where cost is predictable.
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