What contract type price is not subject to adjustments based on contractor's cost experience?

What contract type price is not subject to adjustments based on contractor's cost experience?

• A. Firm Fixed Price (FFP)
• B. Cost Plus Award Fee (CPAF)
• C. Cost Plus Incentive Fee (CPIF)
• D. Time and Materials (T&M)

Answer: (A)

The main idea is that a Firm Fixed Price contract fixes the price at award and does not adjust for what the contractor actually spends. Because the price is locked in, cost performance or cost experience doesn’t change it—the contractor bears the risk of overruns and keeps any savings. In contrast, cost-type contracts like Cost Plus Incentive Fee or Cost Plus Award Fee include fees that can vary based on performance or cost outcomes, and Time and Materials bases costs on actual hours and materials used, both of which are adjustable with cost experience. So, the price that is not subject to adjustments based on the contractor’s cost experience is the firm fixed price.

The main idea is that a Firm Fixed Price contract fixes the price at award and does not adjust for what the contractor actually spends. Because the price is locked in, cost performance or cost experience doesn’t change it—the contractor bears the risk of overruns and keeps any savings. In contrast, cost-type contracts like Cost Plus Incentive Fee or Cost Plus Award Fee include fees that can vary based on performance or cost outcomes, and Time and Materials bases costs on actual hours and materials used, both of which are adjustable with cost experience. So, the price that is not subject to adjustments based on the contractor’s cost experience is the firm fixed price.