16.602
Labor-hour contracts
Labor-hour contracts are a type of time-and-materials contract where only labor is provided, and all T&M contract rules and limitations apply.
Overview
- FAR 16.602 defines labor-hour contracts as a specific type of contract similar to time-and-materials (T&M) contracts, but with the key distinction that the contractor does not supply materials—only labor. This section directs contracting professionals to related FAR sections for rules on application, limitations, and use in commercial services.
Key Rules
- Labor-Hour Contract Definition
- Labor-hour contracts are a variant of T&M contracts where only labor is provided by the contractor; materials are not included.
- Application and Limitations
- The same rules and limitations that apply to T&M contracts (see FAR 12.207(b), 16.601(c), and 16.601(d)) also apply to labor-hour contracts.
- Commercial Services Use
- FAR 12.207(b) provides specific guidance on using labor-hour contracts for certain commercial services.
Responsibilities
- Contracting Officers: Must ensure labor-hour contracts are used only when appropriate, following the same application and limitation rules as T&M contracts, and reference relevant FAR sections for compliance.
- Contractors: Must understand that only labor is to be provided under these contracts and comply with all applicable T&M contract requirements.
- Agencies: Should oversee proper contract type selection and ensure adherence to FAR limitations and documentation requirements.
Practical Implications
- This section clarifies when and how labor-hour contracts can be used, emphasizing their similarity to T&M contracts but without material provision. Contractors and contracting officers must be vigilant about compliance with the referenced FAR sections, as improper use or documentation can lead to audit findings or contract disputes.