Fixed Price in Public Procurement Law

A fixed price is an unchangeable price for the entire contract term, offering planning certainty but carrying the risk of cost increases.

Definition: A fixed price is a contractually agreed price that remains unchangeable for the entire duration of the procurement contract and cannot be adjusted upwards or downwards, irrespective of changes in wage, material, or other cost factors.

Last updated: January 2026 · Legal basis: BVergG 2018, VOB/A, VOB/B

What is a fixed price?

The fixed price is the simplest and most widely used price form in public procurement: the contractor performs the service at the price stated in the offer, which cannot be amended afterwards. It contrasts with variable price forms such as the cost-reimbursement contract or price-escalation clauses, which permit adjustment to market changes.

The fixed price gives the contracting authority maximum planning certainty: the procurement budget is fixed, and cost increases are, as a rule, borne by the contractor. Conversely, the contracting authority bears the risk of having paid too much if market prices fall.

Significance in the procurement procedure

The choice of price form – fixed price, lump sum, or variable price – is part of the fundamental design of the procurement documents and significantly influences the allocation of risk between the contracting authority and the contractor.

Distinction from the lump-sum price

Fixed price and lump-sum price are frequently confused, but denote different concepts. The fixed price refers to the price's immutability over the term. The lump-sum price denotes a form of remuneration in which all services included in the bill of quantities are settled by a single total amount – irrespective of actual quantity variations. A fixed price can be, but does not have to be, a lump-sum price.

Price-escalation clauses as an exception

For long contract terms or cost components prone to fluctuation (e.g. energy prices, construction materials), the contracting authority may provide for price-escalation clauses. These permit a defined adjustment of the contract price upon a change in certain indices (e.g. the Statistik Austria construction-cost index). Price-escalation clauses must already be provided for in the procurement documents; a subsequent agreement is problematic under procurement law.

Allocation of risk under a fixed price

Under a fixed price, the calculation risk lies with the contractor. In the case of unforeseen cost increases – which are not based on change orders by the contracting authority or on service changes – there is, as a rule, no claim to price adjustment. Exceptions apply only in extraordinary, unforeseeable circumstances that shake the contractual basis (frustration of contract; in Austria: § 1295 ABGB; in Germany: § 313 BGB).

Related terms

Last updated: January 2026 All information without warranty. For legally binding advice, please consult a law firm specialising in public procurement law.