Can a LEVEL OF EFFORT task order be modified to increase the labor hour costs?
Looking for legal sites and come up with 5252.216-9122 para (j) and NAVASUP Level of Effort (JAN 1992) para (h).
Yes, a level of effort task order can be modified to reallocate contract funding from an ODC CLIN to a labor hour CLIN. But if the proposed modification were to reflect a renewal for a further period of performance, that action would need to be a new acquisition. Since the contractor in your scenario is nearing completion within the existing period of performance, reallocating funding for additional labor hours represents an adjusted expenditure plan to finish the existing work effort. I would not consider it a renewal of the period of performance.
FAR 16.306(d) indicates that a CPFF contract comes in two forms; term and completion. Usually a Level of Effort arrangement is indicative of a CPFF-term arrangement. While the FAR explicitly permits adding funds on CPFF-completion, it is less obvious with a CPFF-term. But I believe the language still permits a modification to increase labor hours on a CPFF-term as long as it is within the period of performance and the fixed fee amount isn't altered.
FAR subpart 16.3 reveals that cost contracts are appropriate when cost estimates aren't sufficiently accurate to warrant a fixed-price contact. So in general terms, any modification to increase the original funding estimate on a cost contract isn't an issue as long the contract's scope and fixed fee amount aren't impacted.