If this is a FPLOE, that means there are a set amount of hours specified in the contract, and the govt pays a fixed dollar amount. For example, $80,000 for 1500 hours of work, for nine months.   Because under a firm-fixed-price level-of-effort contract, the contractor is contractually  obligated to deliver the specified level of effort for the firm-fixed price, for a specified period of time. See FAR 16.207-1.  If the contractor cannot provide the hours specified (the level of effort) during the stated period of time, then the contractor will be in breach of contract.

However,  upon further discussion and clarification with the questioner, the contract in question is a actually firm fixed price contract, not a FPLOE. The absences of the contractors personnel for military leave are immaterial to the government in a FFP contract, since there are no negative impacts on performance.  No invoice adjustments should be considered or made, and the COR's should refrain from monitoring timecards like its a labor hour contract.  Also the government should not make claims against the contractor for absent personell in a FFP contract.