In spite of efforts in some quarters to expand use of T&M and labor hour contracts (see article above) other parts of the government want to take steps to lessen their use.  Implementing an earlier Department of Defense Inspector General report calling for better guidance on certain types of service contracts, DOD Director of Defense Procurement Deidre Lee instructed procurement officials to take steps – both before and after awards – “to ensure the government receives good value” from such contracts.  The September 13 memo told procurement officials of the need for “increased vigilance and oversight” of service contracts intended to be let on a cost-reimbursement or time and material basis.  Specifically, agencies should appoint contracting officer representatives where, for example, the COR can verify categories of labor and reasonableness of hours worked and materials used on T&M contracts.  When preparing requirements for a follow-on contract for cost type and T&M contracts, agency personnel should work with the COR “to determine if any portion can be broken out and ordered on a fixed price basis.”  Lee indicated that the experience gained on the prior contract should serve as a background to reasonably price the follow-on effort on a fixed price basis.  The memo states that fixed price contracts can result in cost savings and efficiencies.

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