Which of the following is NOT an element of a Fixed-Price Incentive Firm Contract?

A Fixed-Price Incentive Firm Contract is a type of agreement commonly used in procurement where the seller is compensated based on the agreed target cost and is incentivized to control costs. This contract typically includes certain core elements, which help define how the pricing structure operates.

The target cost is a predetermined cost that establishes the basis for the contractor's profit and loss. The ceiling price represents the maximum price that can be charged to the buyer under the contract, ensuring that costs do not exceed a specified limit. The fee adjustment formula lays out how adjustments to the profit or fee will be made based on the costs incurred versus the target cost, providing an incentive for the contractor to manage costs effectively.

Conversely, a variable pricing structure suggests that prices can change based on a range of factors, which does not align with the fixed-price concept. A Fixed-Price Incentive Firm Contract specifically aims to provide a level of price stability and predictability, as it doesn't allow for fluctuating prices based on market conditions or other variables. Hence, the variable pricing structure is not a characteristic of this type of contract.