Does T&M require a guaranteed minimum?

[govt2310]

FAR 16.601 address T&M contract type, and FAR 16.602 addresses Labor-Hour contract type.  I do not see any requirement here to include a guaranteed minimum in these contract types.  Yet I see examples of solicitations in the past that include a guaranteed minimum.  Is there any requirement to include a guaranteed minimum?  If you don't have a guaranteed minimum, is the contract illusory, as the agency could just order nothing?

[Retreadfed]

1 hour ago, govt2310 said:

If you don't have a guaranteed minimum, is the contract illusory, as the agency could just order nothing?

What do you mean by this sentence?  Do you believe that work is only done under a T&M contract pursuant to orders issued by the government?

[ji20874]

Minimums and maximums are a construct of indefinite-quantity contracts, not T&M contracts.  A T&M contract under FAR subpart 16.6 does not require a minimum or maximum that the Government may later order; rather, it simply specifies the ceiling that the contractor cannot exceed in performing the work.

I think you are asking about indefinite-quantity contracts specifically, not T&M contracts generally.  YES, an indefinite-quantity contract requires a minimum and a maximum, regardless of whether the orders will be FFP, T&M, or any other arrangement.

[Vern Edwards]

T&M is a pricing arrangement, not an ordering arrangement.

The government hires a contractor to do a job, the cost or which is uncertain.  The parties agree that the contractor will make its best effort to complete the job within a ceiling price, and the government will pay an hourly labor rate and reimburse the cost of materials.

If the parties combine a time-and-materials contract with an indefinite-quantity contract, then the government must promise to buy a minimum amount of work.

[govt2310]

Ah, that's it: T&M is a pricing arrangement, not an ordering arrangement.  Thank you.