Which of the following contract types offers a fixed amount regardless of the incurred costs?

A Firm-Fixed-Price contract is designed to provide a specific price for the entire contract without regard to the actual costs incurred by the contractor. This means that once the contract is awarded, the contractor agrees to deliver the goods or services for the fixed price, taking on the risk of any cost overruns. The client benefits from the certainty of knowing exactly what they will pay, regardless of how much the contractor ends up spending to fulfill the contract.

This type of contract is favorable in situations where the scope of work can be clearly defined, allowing the contractor to provide a competitive price without the variability of costs impacting the final amount owed. Since the contractor bears the risk of costs exceeding the original estimate, this incentivizes efficiency and cost control on their part, making it a popular choice in fixed-price arrangements.

In contrast to other contract types such as Cost-Plus-Fixed-Fee, which compensates the contractor for costs incurred plus a fixed fee, and Time-and-Materials or Cost-Reimbursement contracts, which do not set a fixed price and can vary based on the actual expenses, a Firm-Fixed-Price contract maintains a stable cost structure for both parties involved.