Level of Effort

[Vern Edwards]

What is a "level of effort", as in "level of effort contract"?

[Voyager]

The number of labor-hours to be performed by specified classes of employees over a given period of time.

[C Culham]

The amount of effort expressed in a contract to be utilized by a contractor to accomplish the contract.  Effort level can be stated in minutes, hours, days, weeks, months or maybe even years.

[Don Mansfield]

So, effort is time spent working?

[C Culham]

Nope.    Example - Work can not be clearly defined.  There is agreed to sideboards by the parties on the effort with it acknowledged that the effort will accomplish the intended result.  Contract is for 6 months yet the effort needed to accomplish the result in the stated 6 months is only 3 months because folks won't be "working" on weekends, holidays, inclement weather, fire prevention levels, birthdays, fish runs, etc. etc. 

[Jamaal Valentine]

Within FAR, level of effort could be whatever the parties agree upon.

I used to work in manufacturing and we viewed it as the total amount of labor mix, time, and resources necessary to complete a task. This is my imperfect memory of something learned many years ago.

A level-of-effort contract should be distinguished from a labor-hour contract. If so, a level-of-effort contract is not simply:

Hourly rates prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are- 

(1) Performed by the contractor;

(2) Performed by the subcontractors; or

(3) Transferred between divisions, subsidiaries, or affiliates of the contractor under a common control.

[bosgood]

Well, there's this:  "A type of contract stating the work in terms of an amount of effort (usually labor-hours or labor-years) to be performed by specified classes of employees over a given period of time.  There are four types of level-of-effort contracts:  the FIXED-PRICE LEVEL-OF-EFFORT CONTRACT, the TIME-AND-MATERIALS CONTRACT, the LABOR-HOUR CONTRACT, and the TERM CONTRACT.  See Cibinic & Nash, Formation of Government Contracts 1173-80 (3d ed. 1998)."  - The Government Contracts Reference Book, 3d ed.

I'm a bit out of date in my copies of these, including my 4th ed. copy of Formation, but the level-of-effort contracts discussion is on pp. 1317-1330 of that ed.

But I doubt that's exactly what you're looking for, as you have those materials, too.

[Retreadfed]

1 hour ago, bosgood said:

A type of contract stating the work in terms of an amount of effort (usually labor-hours or labor-years) to be performed by specified classes of employees over a given period of time.  There are four types of level-of-effort contracts:  the FIXED-PRICE LEVEL-OF-EFFORT CONTRACT, the TIME-AND-MATERIALS CONTRACT, the LABOR-HOUR CONTRACT, and the TERM CONTRACT. 

This seems to contradict the notion that the government does not buy hours under T&M/LH contracts.

[ji20874]

57 minutes ago, Retreadfed said:

This seems to contradict the notion that the government does not buy hours under T&M/LH contracts.

But a T&M/LH contract does not buy hours -- the notion is error --  a T&M/LH contract buys a job where the number of hours needed is unknown, and the contractor agrees to provide its best effort to compete the job within the agreed-upon ceiling price.

[Vern Edwards]

My question was: What is a "level of effort", as in "level of effort contract"? The question was not what is a level of effort contract?

The phrase "level of effort" appears 21 times in FAR, but FAR does not define the term.

The answer to my question requires, first, a definition of "effort", then, a definition of "level", which is presumably some kind of measure. 

So, first, what is "effort", as in "level of effort contract"?

FAR does not define "effort".

There are four kinds of things we must learn in order to learn "contracting";

1. concepts,
2. principles,
3. rules,
4. processes,
5. procedures, and
6. techniques.

My question is about a concept.

We either know what we're talking about when we talk about "level of effort" or we don't.

 

 

 

 

[C Culham]

24 minutes ago, Vern Edwards said:

Carl said it's not time spent working,

I did say this.  To clarify "effort" could mean more than time such as materials, equipment

 

24 minutes ago, Vern Edwards said:

because work cannot be defined.

But I did not say this.   My post may have implied it but my use of "work defined" was to set the parameters of why a level of effort type contract (per the FAR) is needed.  My apology for the confusion.

33 minutes ago, Vern Edwards said:

And are T&M and L-H contracts level of effort contracts?

Yes in a general view they are as they require level of effort.   But doesn't every contract?   It would seem the difference between any contract is with regard to how the cost or pricing of the the effort will be paid to the contractor.   

58 minutes ago, Vern Edwards said:

The phrase "level of effort" appears 21 times in FAR.

No biggy but I got 34 results back in my search.

[Don Mansfield]

2 hours ago, Retreadfed said:

This seems to contradict the notion that the government does not buy hours under T&M/LH contracts.

I don't think Formation is right on this point. I would not consider T&M/LH contracts to be "level of effort" contracts. I agree with @ji20874's description.

But this is beside the point.

[Vern Edwards]

8 minutes ago, C Culham said:

No biggy but I got 34 results back in my search.

Carl, I downloaded FAR as of FAC 2024-03 in pdf form from acquisition.gov. I did an Adobe Acrobat full search for "level of effort" (unhyphenated) and got 21 mentions. I searched for "level-of-effort" (hyphenated) and got nine mentions. 

I did the search several times. I cannot explain the discrepancy in our counts, and I'm not interested. The key point is that FAR does not define "level of effort".

Now, do you have or want to propose an answer to my question: What is a level of effort?

All, Let's not get distracted. I'm looking for an answer to my question.  If this thread becomes a typical Wifcon all-over-the-map free-for-all, then I'll leave the thread. It's not easy for me to type here, and I won't be bothered.

Focus, dammit. What is a level of effort?

What is an "effort" How is it measured?

It's okay to propose your own answer, but if you don't have an answer, don't post. 

[C Culham]

@Vern Edwards I can answer but I won't as it is my belief you have now taken the thread beyond intent of Beginners.  

As to count of references I am sorry you were offended.  As I said "no biggy".

[Vern Edwards]

@C CulhamI wasn't offended. I just explained how I got my number. It's not an issue with me, and the difference in our counts is not important to me.

11 hours ago, C Culham said:

I can answer but I won't as it is my belief you have now taken the thread beyond intent of Beginners.

I'm the Beginner here. 

I have never seriously thought about the meaning of "effort" in "level of effort." But something has come up that has made me ask myself the question: What does "effort" mean? What is a unit of "effort"? It seems to me that those are questions that you must be able to answer if you are going to state a "level of effort". And I have spent several days trying to come up with a suitable answer.

Is an hour a legitimate unit of effort, even if the work of one hour is more difficult than the work of the next hour or the previous hour? In such a case, is the amount of effort in each hour the same? And, if not, then is an hour a true unit? Are we confusing a pricing technique with an appropriate term of specification?

I'm looking for answers and I'm trying to prompt thought. And you are going to refuse to answer because you think I posted my question in the wrong category?

[Vern Edwards]

@All:

Never mind. I should not have come to Wifcon for discussion of this matter.

[formerfed]

Vern,

I scanned through an old physics textbook as well as some PM training material.  I combined two excerps to come up with this: 

Effort is the physical or mental energy exerted to achieve a purpose or result. It can be measured in various ways, depending on the context. In a physical sense, effort can be measured by the amount of force or energy expended to perform a task. In a mental sense, effort involves applying skills and knowledge and can be measured by the level of concentration, determination, or perseverance required to accomplish a goal. Effort can also be measured by the time and resources invested in a particular endeavor.

[C Culham]

1 hour ago, Vern Edwards said:

And you are going to refuse to answer because you think I posted my question in the wrong category?

That is not the reason.  It is because you digressed.  

1 hour ago, Vern Edwards said:

Are we confusing a pricing technique with an appropriate term of specification

This exemplifies my concern.  I brought up the thought of pricing (and cost) by posting a rhetorical thought and was chastised for doing so.

1 hour ago, Vern Edwards said:

@All:

Never mind. I should not have come to Wifcon for discussion of this matter.

You should and can.  Yet do you not have to accept the territory and the even the rules in doing so as frustrating as it may seem to you?

Level of effort is what one or many put into a task to accomplish it.  The measures of the effort comes in many forms like time and stuff and each of the forms has a level, dare I say quantity, that contributes to the effort to achieve success.

[Vern Edwards]

@formerfed

9 hours ago, formerfed said:

Effort is the physical or mental energy exerted to achieve a purpose or result.

Thanks! So effort is expended energy𑁋exertion.

Government contracts typically, though not always, measure effort in units of hours. Let me pose a scenario and ask a question.

Three men are hired to dig up the stump of a gigantic tree. They have one axe and one shovel. The location and position of the stump are such that only one man can get at the stump at a time to dig earth away and cut roots. So one man at a time digs and cuts while the other two watch and wait for their turn. They change places once an hour. After nine hours of that process a tractor is able to pull out the stump. Each man spent a total of three hours digging and cutting and six hours watching.

Have the three men exerted nine hours of effort or 27 (3 x 9) hours?

 

[C Culham]

20 minutes ago, Vern Edwards said:

Have the three men exerted nine hours of effort or 27 (3 x 9) hours?

They have exerted 27 hours of effort for which measurement for the purpose of payment will only be nine hours. 

[Vern Edwards]

@C Culham

37 minutes ago, C Culham said:

They have exerted 27 hours of effort for which measurement for the purpose of payment will only be nine hours.

I did not state the basis for pricing and payment; I'm not interested in the basis for pricing and payment at this time; and I did not ask about pricing and payment.

I am only interested in and asking about the meaning of the term "effort".

Thanks for your response, but I asked formerfed and I'll wait for his. He defined effort as exerted energy.

 

[C Culham]

39 minutes ago, Vern Edwards said:

I did not state the basis for pricing and payment; I'm not interested in the basis for pricing and payment at this time; and I did not ask about pricing and payment.

 

1 hour ago, Vern Edwards said:

Government contracts typically, though not always, measure effort in units of hours.

I played off of your mention of "measure".   So in your scenerio if you are not worried about measure and as you say payment then why do you care about parsing the hours? 

 The effort was as noted, shovel, axe, tractor, and time digging, chopping, and watching, the level of each does not matter because you are not doing anything with the level of the effort exerted to accomplish the removal of the stump.  

[Vern Edwards]

Please, Carl.

You have said that you think the three men exerted 27 hours of effort. Thank you for your response.

I am waiting for formerfed's response because he gave a coherent definition of effort as exerted energy, and I want to pursue that thought by engaging with him.

Agains, thanks for your response.

[formerfed]

2 hours ago, Vern Edwards said:

Each man spent a total of three hours digging and cutting and six hours watching.

Have the three men exerted nine hours of effort or 27 (3 x 9) hours?

I don’t believe it’s 27.   It seems like the three exerted a total of nine hours (3 x 3) hours.   The time watching isn’t expending energy or exerting for the stump removal.

[Vern Edwards]

@formerfed

Thanks!

Your response is entirely consistent with your definition of "effort" as exerted energy.

The reason I asked my OP question is that contracts like the FFP/LOE/Term (FAR 16.207) and the CPFF Term form (FAR 16.306(d)(2)) often, if not always, specify the level of effort in terms of hours. That's the only set of rules and guidance in FAR about LOE contracts. That's a convenient unit of measurement, easy to use, but it gives rise to issues. Is "hour", without additional definition, a true unit of effort? Any old contiguous 60 minutes counts?

The first contracts I negotiated as a GS-05 Copper Cap trainee in the mid-1970s were sole source ("selected source") FFP/LOE lump sum contracts under the old Armed Services Procurement Regulation (ASPR) for research (but not development). We specified LOE in terms of hours, but defined "hour" in the contract as an hour of "productive labor" (physical and mental) devoted to pursuit of the contract objective by persons with specified qualifications𑁋 sometimes by specific persons (Dr. So-and-so). But we did not explicitly define "effort". In any team endeavor, some people must wait for other people to complete their work before can do theirs. I was taught that we did not count "wait time" or "idle time" or "down time" towards fulfillment of the LOE. 

Our FFP/LOE lump sum contracts did not include hourly rates, and the contractor did not bill on the basis of hourly rates. The contractor was entitled to payment of the lump sum upon delivery of the LOE and an acceptable report. There was a clause providing for acceptance of the work and payment of full price, without adjustment, if the contractor's actual hours inadvertently fell short of or exceeded the LOE by no more than five percent, as long as the research report was acceptable.

Because the price was lump sum, there was no monthly billing. If the contract term was lengthy the contractor might receive progress payments based on costs. The work of administrative and support personnel ("ancillary" or "support") were expressly excluded from the hours that counted toward delivery of the LOE. Their costs, and the costs of materials, were negotiated and included in the lump sum price. Today I call such LOE contracts "project LOE contracts." The contractor is hired to perform a specific task with a specific scope to the LOE within a specific time.

But there are also what I call "support service staffing LOE contracts", under which the LOE specifies the amount of staff the contractor must provide to perform some support function during a certain period. Those contracts account for very large number of annual actions and percentages of contract obligations. Yer FAR says nothing about them and published guidance is minimal.

A recent article, Bodner and Midboe, "Speeding Up Services Procurements: Strategy and Tools to Award Quickly, Survive Protest, and Execute Efficiently," Public Contract Law Journal, Vol. 53, No. 1, Fall 2023, pp. 1-94, addresses those kinds of LOE contracts at length, and the authors say what I considered to be surprising things about the idea of "level of effort" and hours. See Section II.B., "Describing the Government's Contractor Workforce Needs," 16 - 49. See, especially, Section B.1., "Total Hours: An Essential Element of Any LOE Service Competition," pp. 17 - 21.

I have also read some RFPs posted to SAM.gov that seek to procure such services. They are often advertised as LOE contracts, but they do not conform to the descriptions in FAR 16.207 and 16.306(d)(2). I have also read several court, board, and GAO decisions that involve what are called LOE contracts. And I have read some old GAO reports congressional hearing transcripts. The article, the RFPs, the decisions, the reports, and the transcripts have led me to question whether I have always known what I was talking about when I have talked about LOE contracts. It also explained some of the questions and comments I have seen at Wifcon.

FAR does not explicitly address such LOE contracts, nor did the ASPR before it. I have not found any published comprehensive guidance. (What's the difference between a project statement of work and an LOE support services statement of work, if any?) The article I cited above is exclusively about support service LOE contracts, which are nowhere mentioned in FAR or in any agency FAR supplement. However, I have learned that NASA appears to have been a pioneer in their use.

It is what I read in that article and in those RFPs, decisions, reports, and hearings that prompted me to ask my OP question: What is a level of effort?