Firm-Fixed-Price Contracts

A Firm-Fixed-Price (FFP) contract is a type of agreement where a buyer pays a set price for a product or service, regardless of the costs incurred by the seller. This means the seller takes on the financial risk, as they must deliver within the agreed budget. FFP contracts are common in government procurement and other industries because they provide price certainty for the buyer and incentivize the seller to control costs and complete the work efficiently. If the seller goes over budget, they cannot charge the buyer more than the fixed price.