16.600
Scope
Time-and-materials and labor-hour contracts are distinct from fixed-price contracts and require different regulatory treatment and oversight.
Overview
FAR 16.600 defines the scope of time-and-materials (T&M) and labor-hour contracts, clarifying that these are not fixed-price contracts. This distinction is crucial because T&M and labor-hour contracts involve different risk allocations, payment structures, and oversight requirements compared to fixed-price contracts. The section serves as a foundational reference for understanding the unique characteristics and regulatory treatment of these contract types within federal procurement.
Key Rules
- Contract Type Distinction
- Time-and-materials and labor-hour contracts are explicitly not considered fixed-price contracts, which affects how they are administered and regulated.
- Applicability
- This section applies to any contract where the government pays for labor at specified hourly rates and, in the case of T&M contracts, for materials at cost plus a handling fee.
Responsibilities
- Contracting Officers: Must correctly identify and apply the appropriate contract type and ensure compliance with regulations specific to T&M and labor-hour contracts.
- Contractors: Should understand the implications of working under T&M or labor-hour contracts, including billing, documentation, and oversight requirements.
- Agencies: Must provide oversight to ensure proper use and administration of these contract types.
Practical Implications
- This section exists to prevent confusion between contract types and to ensure proper application of FAR rules.
- It impacts daily contracting by guiding the selection and administration of contract types, especially when requirements cannot be fully defined.
- Common pitfalls include misclassification of contract type, leading to compliance issues and potential disputes.