New Rules Planned for Time and Materials Contracts The Federal Acquisition Regulation councils are asking for public comment on how to implement new authority to use time-and-materials and labor hour contracts. The Services Acquisition Reform Act passed by Congress last year authorizes the use of those contract types for the procurement of commercial services. In an advanced notice of proposed rulemaking published in the Sept. 20 Federal Register, the FAR councils solicited comments and set a public meeting on the issue Oct. 19 in Washington. The notice said OMB’s Office of Federal Procurement Policy “seeks to better understand how T&M and LH contracts are used commercially and when their use is in the best interest of the Government.” Among other things, the law permits the use of T&M and labor hour contracts for types of commercial services that are commonly sold to the public on that basis. The FAR councils said they need to determine what services qualify and what terms and conditions are usually placed on those types of contracts in the commercial sector. The law requires that a contracting officer execute a determination and finding that no other contract type is suitable before proceeding with a T&M or labor hour contract. The law says T&M or labor hour contracts should be used only in situations where it is impossible to predict how long the work will take or what it will cost. In the congressional conference report on the legislation, the conferees state that a fixed-price contract “remains the preferred option for the acquisition of either commercial or non-commercial items.’’ Some procurement officials have resisted T&M and labor hour contracts because they believe those arrangements give the contractor no incentive to hold down costs. The notice is FR Doc 04-21040. Comments are due Nov. 19.