A firm fixed price (FFP) contract is an agreement where the buyer agrees to pay a specified price when the items or services have been delivered and accepted. This type of contract provides certainty in pricing for both the buyer and the supplier, ensuring that the supplier bears the risk of cost overruns. Incentive contracts (Option A) provide additional payments based on performance, fixed price incentive (Option B) includes some flexibility in final costs, and cost contracts (Option D) reimburse the supplier for allowable costs plus a fee.
References:
* Types of Contracts in Supply Management
* Procurement and Contract Management Literature