Which contract type guarantees that the price will not change during the contract term?

Which contract type guarantees that the price will not change during the contract term?

• A. Firm fixed price
• B. Fixed price with escalation
• C. Open Market Procurement
• D. Blanket Contract

Answer: (A)

Price certainty through a fixed price contract is what this item is testing. A firm fixed price contract sets one price for the entire term, so the amount paid does not change due to supplier costs or market swings. The price stays the same unless there’s a formal change to the contract scope, handled by a modification or change order. This arrangement puts cost risk on the seller and gives the buyer predictable budgeting. In contrast, a fixed price with escalation allows adjustments under specified conditions (like inflation or commodity price changes), so the price can change during the term. Open Market Procurement relies on current market prices, which fluctuate, so there is no guarantee of a constant price. A blanket contract is a long-term agreement with pre-negotiated terms and rates for recurring needs, but it does not automatically lock every price for every order for the entire term.

Price certainty through a fixed price contract is what this item is testing. A firm fixed price contract sets one price for the entire term, so the amount paid does not change due to supplier costs or market swings. The price stays the same unless there’s a formal change to the contract scope, handled by a modification or change order. This arrangement puts cost risk on the seller and gives the buyer predictable budgeting.

In contrast, a fixed price with escalation allows adjustments under specified conditions (like inflation or commodity price changes), so the price can change during the term.

Open Market Procurement relies on current market prices, which fluctuate, so there is no guarantee of a constant price.

A blanket contract is a long-term agreement with pre-negotiated terms and rates for recurring needs, but it does not automatically lock every price for every order for the entire term.