What characterizes a Firm Fixed Price contract?

A Firm Fixed Price contract is characterized by a structure that establishes a set price for a defined scope of work at the time of contract signing. This type of contract means that the contractor assumes the risk of cost overruns, as the price is fixed irrespective of the actual expenses incurred to complete the project. Consequently, the contractor is not obligated to share detailed project costs, leading to a limited information access model, which supports the notion of "not open-book."

This lack of required transparency regarding cost breakdown is what sets Firm Fixed Price contracts apart from others that might permit or require sharing of financial details. The other options suggest elements that are inconsistent with the fundamental principles of a Firm Fixed Price contract, such as price flexibility based on project changes or labor rate-based pricing, both of which imply a different contractual approach.