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Q. If you have fixed price labor rates on a cost reimbursement term task order, can the contractor bill the government for overtime worked by employees who are not paid for the overtime worked?
A. We would assume you have a Time-and-Materials or Labor-Hour contract, using a "Payments" clause similar to that in the FAR at 52.232-7 "Payments Under Time-and- Materials and Labor-Hour Contracts." This Payments clause envisions the payment of fixed hourly billing rates as specified in the contract for "direct labor hours performed." However, the clause goes on to say "the Contractor shall substantiate vouchers by evidence of actual payment and by individual daily job timecards, or other substantiation approved by the Contracting Officer." It would be our position that the Contractor has to make actual payments for the overtime hours in order to bill you for those hours. We would encourage you, however, to consult with your legal counsel concerning the proper interpretation of the actual language in your contract. Your attorney may want to research pertinent Contract Appeals Board decisions.
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Q. Is there contract language, developed by and/or found to be acceptable to, the FTA that limits a bus manufacturer's liability for inordinate increases in the cost of raw material for components of our end product? With the recent rise in steel prices, we feel it prudent to incorporate force majeure type clauses in our bids that are FTA compliant.
A. FTA recognizes there are times when unusual inflationary risks may call for fixed price contracts with economic price adjustment provisions. There is some general guidance on the use of fixed price contracts with economic price adjustments in the FTA Best Practices Procurement Manual (BPPM), Section 2.4.3.1, "Fixed Price Contracts." The BPPM does not suggest specific contract language. The BPPM may be accessed online here.
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