Time-and-Materials Contract
T&M
A contract paying fixed hourly labor rates plus materials at cost, used when the scope can't be firmly estimated.
A Time-and-Materials (T&M) contract pays for labor at fixed hourly rates (which include wages, overhead, G&A, and profit) plus materials at cost. It is used when it is not possible to estimate the extent or duration of work at the time of award. Because T&M provides no positive profit incentive to control cost, it requires government surveillance and is used only when no other type is suitable. T&M and labor-hour contracts are common for IT staff augmentation work performed by SDVOSBs.
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