Time and Material Contracts Words by Bill Lindsey Lyrics by Fred Marks

1. Time and Material Contracts Words by Bill Lindsey Lyrics by Fred Marks

2. Time and Material Contracts When someone says “trust me”, do you really?

3. What is a Time and Material Contract? • It is a contract which provides for the acquisition of supplies or services on the basis of direct labor hours at specified, fixed, hourly rates that include wages, overhead, profit, and general and administrative expenses, and materials AT COST.

4. What is Time? Time is a dimension in which events can be ordered from the past through the present into the future, and also the measure of durations of events and the intervals between them.

5. Time is Linear It can be defined It can be measured Its your Contract, you define it and you measure it using generally accepted methods. Do your research!

6. Examples of how to define time “Regular working hours " shall mean 8:00 AM to 4:00 PM, Monday through Friday, excluding legal holidays in the Commonwealth of Virginia “Overtime Working Hours” shall mean hours other than regular hours and eight (8) hours on Saturdays “Premium overtime working hours” shall mean hours in excess of eight (8) hours on Saturday and all day Sundays and legal holidays in the Commonwealth of Virginia “Holidays" as used in this Contract, shall mean legal holidays of the Commonwealth of Virginia “Kardash” A unit of time being the 72 days length of Kim Kardashian’s marriage. .

7. Does Time also include: • Travel Time? • Lunch Time? • Break Time? • Administrative Time? • Non-Productive Time?

8. What are Materials? • “Materials” are those durable and tangible items that are necessary to accomplish the work as further defined in this Contract. • “Materials” Should not include rental of special purpose machinery which the Contractor requires to accomplish the work as further defined in this Contract

9. Unallowable Expenses • There are a number of costs that are deemed to be unallowable for government contracts. These costs should not be included in your proposal cost estimates, as they will not be reimbursable. Some of the major unallowable costs include: • Airfare costs in excess of the lowest customary standard coach fare. • Advertising and public relations. • Alcoholic beverages. • Bad debts. • Entertainment costs. • Fines and penalties. • Goodwill. • Lobbying. • Losses on other contracts.

10. Are there other elements to a Time and Materials Contract that are hidden? • Set up Charges? • Administration Fee? • Permit Costs? • Mobilizing Costs? • Rental of Specialized equipment?

11. Two Main Types of Time and Material Contracts • Repair Contracts or Special Purpose Contracts • Yearly Contract for different types of Maintenance, such as Painting, Electrical Work, Welding, Landscape Services.

12. Repair Contracts – Its all in the definition! • Repair • Overhaul • Reconditioned • Refurbished • Rebuilt

13. T & M are Unit Price Contracts • Based on historical data, or, • Based on a serious estimate of anticipated needs • Estimated Quantities should reflect the scope of the Contract in Dollars • Unit Prices should be sufficient to determine a low bidder

14. Special Purpose Clauses • Unit Prices for Bid Comparison Purposes Only Clause • Extra Work Clause

15. Sample Unit Price Clause • The "Estimated Total Contract Price " is solely for the purpose of facilitating the comparison of Bids and of computing damages in the event of a default by the successful bidder in the agreement created by the acceptance of his Bid. We make no representation as to what the actual quantities of Work will be and shall not be held responsible even though the estimated quantities are not even approximately correct. Insofar as the Contractor's compensation is based upon the work performed, it will be computed from the actual quantities of Work performed, whether greater or less than the estimated quantities.

16. Extra Work Clause Sample • When it is necessary for the Contractor to use any item of material during the performance of this Agreement, the Contractor shall first submit to us for its approval the name of the item, the identifying number therefore, if any, the quantity needed, the name of the proposed supplier and the proposed purchase price or if supplied by the Contractor the price that we are to be billed. We shall have the option of a) approving same; or b) supplying said material to the contractor itself provided it is of equal quality to that the Contractor proposed to supply.

18. Pitfalls • Repair and General Labor Contracts • 1. You have to know ahead of time the workers are competent and can do the job. • 2. You have to know they can work under your competent surpervisi0m.

19. Contract AdministrationsThe Key to Success • Who is your Contract Administrator? • Have you provided them with the Contract? • Can the Contract be measured? – How? • How do you manage billing disputes or errors?

20. Executive Memorandum March 4, 2009 The Administration prefers fixed-price contracts as opposed to high-risk varieties. Time & Materials/Labor Hours contracts identified as HIGH RISK. Federal Agencies are directed to cut these high-risk contracts by 10%.

21. What’s the Risk?Show me the MoneyFY 2000-2008 Sole Source Contracts $73B to $173B Cost Reimbursement $71B to $135B T & M Contracts $ 8B to $ 29B

22. OMB Letter to Senator LiebermanJuly 8, 2011 Cost-reimbursement contracts are appropriately used in circumstances where the agency is not able to define its needs. A risk of wasteful spending occurs when agencies pay expenses as incurred versus a fixed price. This risk exists with T & M contracts which have long been recognized in government-wide policy as the least favored contract type.

23. How do you avoid Risk in a T&M Contract! Do your research! Ask for the quality of labor you require. Technical people with certifications and commendations to their satisfactory work. Do your research, Get quality Contract Administrators to tell you how the work is progressing, along with problems and solutions. They should know the trade practices and the Scope of Work.

24. Answer:You research!!!! Ask Questions of what is usual in that particular industry. Interview Potential Vendors for how they bill and charge for repairs (Usually an industry will have methods in common) Not all industries bill and charge the same way Interview Potential Bidders staff for more information

25. Contract Administration-Key to SuccessWhat’s Success? The desired service was provided. The desired service was provided at a reasonable cost. The desired service was measured and documented. The risk was managed.

26. Contract Administrator Who is it? Do they know what is being purchased? Are they independent of the Contractor? Are they experienced and/or trained to administer contracts? Are they empowered to make decisions? Has the Buyer and Contract Administrator met each other?

27. The ContractDoes the Contract Administrator have a copy of the Ageement with the following? Business name, address, phone, fax & email contacts. The Contractor’s signatory. Scope, specifications, plans, drawings, etc. Terms and Conditions. Rates/Fees per Unit. Bid document with all addendums. Insurance Certificate. Bonds.

28. Performance MeasurementWhat’s the Mechanism? Mutually Agreed for Work Assignment. Mutually Agreed for Timely Performance. Mutually Agreed for Determining Quality. Mutually Agreed for Submitting Invoices.

29. Disputes and ClaimsWhat’s the Mechanism? Is there a disputes clause for performance issues? Is there a disputes clause for billing errors? Is there an identification of who resolves disputes? How is the Buyer involved in resolving disputes?

30. Contract AdministrationWhere’s the Magic Begins with the Buyer developing common-sense solicitations. Proceeds with the Selection of qualified Contractors. Ends with the assignment of talented contract administrators’ that not only know their business, but also the Contractor’s business.

31. Questions Fred Marks, CPPO, VCO (516) 221-8550 fmarks@mindspring.com Bill Lindsey, CPPO, C.P.M. (804) 693-1210 blindsey@gloucesterva.info