What does FAR Subpart 16.703 pertain to?

FAR Subpart 16.703 specifically addresses the requirements for time-and-materials (T&M) contracts. This type of contract is distinctive because it allows for the payment of labor based on hourly rates and the reimbursement of materials at cost. The subpart outlines critical provisions that ensure such contracts include appropriate safeguards, such as a ceiling price, that prevent the government from incurring excessive costs. It emphasizes the need for careful estimation of labor and material costs before entering into these contracts due to their inherently less predictable nature.

In the context of federal procurement, time-and-materials contracts are often used when it's not feasible to accurately estimate the extent or duration of the work required. The specifications laid out in Subpart 16.703 provide a necessary framework to ensure both the government and the contractor have clear expectations and obligations, helping manage risks associated with these types of agreements.