Overview
This section establishes a fundamental regulatory distinction by clarifying that time-and-materials (T&M) and labor-hour (LH) contracts do not fall under the category of fixed-price contracts.
Key Rules
- Legal Classification: T&M and LH contracts are explicitly excluded from being identified or treated as fixed-price arrangements.
- Distinct Contract Types: By separating these categories, the FAR ensures that the specific authorities and limitations governing T&M/LH contracts (found in Subpart 16.6) are applied rather than those governing fixed-price contracts (found in Subpart 16.2).
Practical Implications
- Risk Allocation: Because these are not fixed-price, the government assumes a higher degree of risk, necessitating more rigorous oversight of contractor performance and hours worked.
- Administrative Requirements: Contracting officers must fulfill specific "Determination and Findings" (D&F) requirements to justify the use of these contract types, as they lack the cost-control incentives inherent in fixed-price contracting.