Yes, Android is 100% free and open source.
"Android is the first free, open source, and fully customizable mobile platform."
^ very first line from this page:
http://source.android.com/
Also, I don't know how anything could be open source and not free, and I have never seen anything open source that had costs involved with the exception of things that were built FROM open source projects and sold (i.e. Linux distros like RedHat, SuSe, etc)