• Hourly rates will be paid at the rate specified in the contract and blended rates (combined prime, subcontractor and/or interdivisional rates) may be used
• Hourly rates will be paid only for contract labor meeting labor qualifications specified in the contract
• Material, subcontracts not included as part of the labor schedule and other direct costs will be based on actual costs and other direct costs should be listed in the contract by type of expense (e.g. travel, computer usage, etc.)
• Indirect cost, as applicable, will be reimbursed at a fixed amount prescribed in the contract on a pro rata basis over the contract period
• For labor hours, including subcontract hours reimbursed at the hourly rate in the schedule, access to original time cards (electronic or paper), contractor timekeeping procedures and labor distribution reports showing distribution of labor between jobs and contracts will apply
• Access to invoices, proof of payment and subcontract agreements for any material and subcontract costs that are reimbursed on an actual cost basis

The guidance also alludes to a contract clause that allows reimbursement to the government for any payments later found to be not payable under the terms of the contract and requires submission of a final voucher within one year of contract completion. The guidance reminds auditors that for contractors with incurred cost audit activity (i.e. submitted an incurred cost proposal) the DOD T&M/LH commercial contracts should be part of their overall audit coverage and the vouchers should be governed by the same billing system applied to other work. Also the contracts should be included in the universe for transaction testing for system reviews and the employees charging time should be included in the universe for floor checking. At contractor locations where DCAA has no current incurred cost audit scrutiny, audits are limited to provisional approval of vouchers, floor checks and audits of final vouchers. Auditors are told to consider reviewing the first voucher submitted to DCAA then review subsequent vouchers on a randomly selected basis (08-PPD-014(R)).

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