Examples
Worked examples
- Is an instance
A pharmaceutical company pays a university 200,000 GBP fixed-price for a defined preclinical study, regardless of actual cost.
- Is an instance
A university policy requires departmental review and PI sign-off for any fixed-price residual over 25 percent.
Counter-examples
Looks similar, but isn't
- Not an instance
A cost-reimbursement R01 is not fixed-price.
- Not an instance
A milestone-payment grant that itemises payment per milestone may be a variant but is distinct from a single fixed-price.
Editorial commentary
Fixed-price agreements are common in industry-funded research, some foundation grants, and certain service-style contracts (e.g., clinical trials). The recipient may retain a surplus if costs come in below the fixed price (subject to institutional policy on use of residual funds) and absorbs overruns. The model rewards efficiency but demands accurate cost forecasting at proposal stage. Residual balances over a threshold (e.g., 25 percent of award) typically trigger institutional review.
The opposite of cost reimbursement
Fixed-price and cost reimbursement are genuinely opposite mechanisms, not points on a spectrum: under fixed-price, the sponsor’s payment obligation is set in advance and does not move with actual spend, so all cost-overrun risk sits with the recipient; under cost-reimbursement, the sponsor pays actual allowable costs as incurred (up to a ceiling), so cost risk sits largely with the sponsor and the recipient’s burden is instead documentation and allowability. Fixed-price is common where the funder wants budget certainty and the scope is well-defined (industry-sponsored studies, Horizon Europe lump-sum actions); cost-reimbursement dominates open-scope federal research grants, where scope and true cost are harder to fix in advance.
Fixed-price at the subaward level
The same logic applies one level down: a prime issuing a subaward can structure it as fixed-amount rather than cost-reimbursement, but under 2 CFR 200.333 this requires prior written federal-agency approval and is capped at $500,000 per subaward (raised from $250,000, effective for subawards issued on or after 22 April 2024) — secondary-sourced against converging eCFR mirrors, re-verify directly if this becomes load-bearing after roughly a year.
References
- FAR Part 16 Fixed-price contracts; AAU and AAMC guidance on fixed-price residuals.
Also known as
Fixed-price contract · Fixed-fee grant · Firm fixed-price
Machine-readable encodings
Use in your systems
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