16.207-1
Description
A firm-fixed-price, level-of-effort term contract requires contractors to provide a set amount of effort over a specified period in exchange for a fixed payment, even if the work scope is only generally defined.
Overview
FAR 16.207-1 describes the essential characteristics of a firm-fixed-price, level-of-effort (LOE) term contract. This contract type obligates the contractor to deliver a specified amount of effort (such as labor hours) over a defined period, even though the exact nature of the work may only be described in general terms. In exchange, the government agrees to pay a fixed dollar amount, regardless of the actual results achieved, as long as the required level of effort is provided. This structure is typically used when the precise outcomes or deliverables cannot be clearly defined at the outset, but the government needs a certain amount of professional or technical effort applied to a problem or requirement.