Councils propose rules for time-and-materials, labor-hour contracts

Federal officials proposed new rules changing how the government buys and defines time-and-materials and labor-hour contracts.

In separate but related rulemakings published yesterday in the Federal Register, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council offered the new rules that would require agencies to better explain the use of these types of contracts.

Time-and-materials and labor-hour contracts are generally used for large IT integration projects for agencies. Fixed-price contracts also are used.

The first rule builds on an Office of Federal Procurement Policy recommendation issued last September that stated agencies should perform a determination and findings analysis demonstrating that the time-and-materials or labor-hour contract is justified.

Under OFPP's proposal, an agency will be able to sign a time-and-materials or labor-hour contract if it proves that a fixed-price contract is unsuitable.

A second rule proposes amending the Federal Acquisition Regulation on payments for time-and-materials and labor-hour contracts for noncommercial-item contracts.

The proposal specifies that the 'allowable cost' and payment clause is included in time-and-materials contracts and is only applicable 'to the portion of the contract that provides for reimbursement of materials at actual cost,' the notice said. 'This change is being made to ensure that appropriate rights and responsibilities are provided in T&M contracts with respect to reimbursement for material cost.'

A public meeting on both rules will be held in Washington Oct. 18; comments are due to the FAR secretariat by Nov. 25.

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