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I can't change the title of this thread, but a more appropriate title would have been Can Time-and-Material Contracts be considered non-severable. We do a lot of R&D contracting. For some reason, most of these contracts are T&M. I have a few questions about this. Can Time-and-Materials contracts be non-severable? My rationale is that they cannot be non-severable because the contractor has provided something of value to us with every hour of labor that is provided to us. Additionally, I have read that Time-and-Materials contracts should not have express deliverables. I specified research contracts because many of our contracts have only a research report due at the end of the POP as the only deliverable. I don't agree with the program offices' rationale that their contract should be non-severable, since, according to them, without receiving a deliverable (their research report) they have not received anything of value. I don't think this is the appropriate contract type for this effort, but if it was used, I don't think the deliverable should have been there in the first place since this contract type only requires the contractor's best effort and the research was of importance to the government. I think each hour of labor is a deliverable under a T&M contract. Isn't their labor or effort what we are paying? It seems to me that T&M contracting is not appropriate for R&D contracting but I will inquire about that in a separate thread.
This question has probably been asked many times. I'll be happy if someone can provide me with a link to a previous thread that answers it. The FAR differentiates between cost reimbursement contracts and Time-and-Materials / LH contracts. T&M contracts at my agency include the Limitation of Funds clause, which does not specifically make mention of T&M contracts. I would venture to say that most of our T&M contracts are incrementally funded, and the funded amount is less than the contract ceiling price. My question is this: If the government and a contractor have agreed on a ceiling price under a T&M contract. By definition of the ceiling price, the government has told the contractor it will pay up to the ceiling amount for the contractor's best effort and the contractor cannot exceed the ceiling, except at its own risk. This leads me to believe that the government has created an obligation up to the contract's ceiling price and that an equivalent amount of funds must be obligated against the contract to keep from being anti deficient. How can we limit this obligation by simply stating in the contract that we have obligated only "X" amount of dollars (less than the ceiling) and telling the contractor that it cannot exceed this amount? I ask this because I'm seeing contracts with a ceiling price - the price that we agreed the work might cost - but then the contracts in question include language titled Obligated Amount that notify the contractor that there is less money than the ceiling price on the contract and that they cannot exceed the obligated amount, except at their price. Doesn't this contradict the stated and agreed upon ceiling price? If incremental funding is permissible, what is the appropriate method of stating this in the contract, versus the ceiling price?