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    The SOW has a 9 month base, a 3 6 month options. See below for more info from the SOW. What I am trying to figure out is what is the appropriate contract type: FFP/FPPLOE/LH? A lot of things I've read have been contradictory and our preference is that the contractor would invoice based on actual hours worked. Though I think it may not be FFP since actual hours are not for certain over the life of the contract. Which then leaves us with a FFP LOE or LH. I'm leaving towards LH since we are not certain how many hours may actually be needed. Plus, LOE stipulates that the government "pays the contractor a fixed dollar amount," which is not happening here. I think LH would allow for invoicing based on the hourly fully burdened rate negotiated from the IDIQ? The Base IDIQ specifically states that LH task orders may be issued, but the preference is for FFP. Thanks! The SOW includes: "(Work hours for this contract must be flexible to meet the demands of COVID-19 caseloads. With adequate notice (no less than 7 days), the contractor may need to extend to accommodate 24/7 operations, or may be reduced to a single 8-hour shift per day. The contractor shall provide on-site support, with typical start and end times of 0600 EST and end times no later than 1800 EST hours, during the typical Monday thru Friday work week. Work hours on Saturday and Sunday will be from 0700 EST to 1900 EST. The contractor shall coordinate the specifics of individual and teamwork schedules with the task order Contracting Officer Representative. (U) Between the hours of 6:00AM ET and 2:00PM ET, the contractor shall have one FTE for the labor category and job title, Staff Officer, at NCE. (U) Between the core hours of 0600 ET and 1000 ET, Monday to Friday, the contractor shall have six individuals per shift for the labor category and job title, Case Manager at either location (NCE or NCW). There will be two shifts Monday to Friday during core hours, the morning shift from 0600 ET to 0200PM ET and the evening shift from 0200 ET to 1000 ET. Between the core hours of 0700 ET and 1900 ET, Saturday and Sundays, the contractor shall have six individuals per shift for the labor category and job title, Case Manager, at either location (NCE or NCW). Case Managers may be asked to support surge capabilities by extending their shifts, if necessary, as requested by Government oversight (Team Lead). (U) The government may increase the staffing to support the mission objectives of the subject Task Order. The increase may include 2 Level 3 Staff Officer positions and 2-4 Level 3 Case Managers pending mission requirements based on COVID-19 conditions. Additionally, shifts may be adjusted to support 24/7 operations with or without additional staffing. If the government increases the number of contract personnel, the additional personnel should begin work as soon as possible and no later than 30 calendar days after formal notice by the government. The following chart is representative of the anticipated needs for the contract; actual hours may vary based on changing mission requirements. "


    Answer

    I agree that a labor hour (LH) contract is appropriate when the labor hours and/or labor mix required to do the work are highly uncertain and speculative in nature.  On the other hand, a Fixed-Price Level of Effort (FPLOE) may be appropriate when the level of effort can be identified and agreed to in ADVANCE of contract award.  According to FAR 16.207, this contract type is suitable for research and development investigations or studies.  Another limitation with an FPLOE (see FAR 16.207-3(c)) is that it type can only be used when ”there is reasonable assurance that the intended result cannot be achieved by expending less than the stipulated effort."  In the AAP background information, you mentioned that it is not known how many hours it will take to perform the work.  Therefore, it doesn't seem likely that you'll be able to reach agreement in ADVANCE on the total amount of effort that will be required for the task order.  Also, the FAR states that an FPLOE works best when the effort expended culminates in the contractor submitting a deliverable at the end of the contract such as a research study or report.  Based on your background information, it sounds like the work that will be performed is more open ended without a deliverable or report at the end.  For these reasons, it doesn't look like the FPLOE would be suitable to use for the task order in question.    

    One alternative to awarding the entire task order as LH might be to set up an FFP CLIN or CLINs for the core hours by labor category in the task order.  You would need to be able to reach agreement on a minimum number of core hours for each labor category with the contractor.  Then, set up a LH CLIN or CLINs for surge and/or over-and-above hours for any of the labor categories in the task order as appropriate.  The Government would need to be reasonably certain that the core hours as negotiated are the minimum necessary to perform the work that will be required under the task order.  One issue with this approach is that you probably will not be able to obtain the contractor's actual hours worked under the FFP CLINs unless progress payments will be allowed for the task order. 

    The reason LH is not preferred is because the Government assumes the risks inherent with a LH contract, benefiting if the actual cost is lower than the expected cost, or losing if the work cannot be completed within the expected cost of performance.  Also, there is greater chance of the government overpaying or not getting what we paid for on a LH contract unless the Government has robust surveillance to ensure efficient performance by the contractor.  Finally, it is highly recommended that you contact your local Contracting Officer and acquisition legal counsel for their interpretation and advice on the best way to move forward.

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