In a firm fixed price contract, if the supplier increases its contract price in anticipation of rising costs, and the anticipated conditions do not occur, then the purchaser has paid too high a price for the good or service.

Question

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In a firm fixed price contract, the price is agreed upon at the beginning of the contract and cannot be increased unless there are specific conditions agreed upon in the contract, such as changes in scope or unforeseen circumstances. If the supplier increases the price without meeting these conditions, and the anticipated cost increase does not occur, then the purchaser has paid too much for the good or service.

In a Firm Fixed Price Contract, If the Supplier Increases