Fixed Price Service Contract Law and Legal Definition

Fixed-Price service contract refers to a contract for services, or supplies that involves the furnishing of services, when a fixed-price contract is contemplated and the contract amount is expected to exceed unreasonably. A contracting officer may insert a clause in such solicitations and contracts when the contract amount is expected to be at or below the simplified acquisition threshold and inclusion is in government's interest.

In Hughes Communications Galaxy v. United States, 998 F.2d 953, 959 (Fed. Cir. 1993), it was held that the Federal Acquisition Regulation (FAR) requires government entities entering into certain fixed price service contracts to include a price adjustment clause specifying that the government will compensate service contractors for increasing wages and fringe benefits resulting from compliance with Department of Labor wage and fringe benefits determinations .