Can we issue a labor hours MOD to a Firm Fixed Price contract? If we write a D&F supporting the use of Labor Hours, if we have a negotiated unit price and we have a set quantitiy that they cannot exceed? We would also issue the MOD with language stating that they would have to prove the hours woked and that we would take a credit for any hours not used.
Combining contract types (hybrids) under a single instrument is authorized by FAR 16.102(b). A labor hour contract is a subset of time and materials type contracts, so all the justifications need to be in place to use this contract arrangement.
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The biggest risk to the Government on hybrid contracts is that the contractor moves costs normally included in the FFP portion over to the labor hour portion- so it is critical that the accumulation of costs and accounting records, and their supporting processes, properly segregate costs, and allow the Government complete access to those records as well as full transparency.