Time and Material Contracts - Actual Skills Must Match Billings

Time and Materials contracts are agreements to provide specific labor skill levels at fixed negotiated rates (and materials at actual costs). The Government pays a fixed rate for each hour of labor provided by the contractor. Historically, auditors have limited their reviews to ascertaining whether the hours billed under the contract are traceable to timekeeping records.

Recently we were alerted to an instance where the auditors took their analysis deeper and checked to see if the contractor employees who actually worked on the project, had the requisite skills and qualifications for the position being billed the Government. Where the qualifications did not meet the standards for the position, the auditor questioned the entire cost.

It will be interesting to see how this issue is resolved. Although by all accounts the Government was pleased with the work performed by the under-qualified individuals, the Government was nevertheless overcharged for the level of skills delivered.

Contractors with Time and Material contracts should self-assess any vulnerabilities in this area.