FAR 52.216-29—Time-and-Materials/Labor-Hour Proposal Requirements—Other Than Commercial Acquisition With Adequate Price Competition.
Plain-English Summary
FAR 52.216-29 is a solicitation provision used when the Government contemplates awarding a time-and-materials (T&M) or labor-hour (LH) contract, but the acquisition is not a commercial acquisition with adequate price competition. Its purpose is to force offerors to present clear, fixed hourly rates that already include wages, overhead, general and administrative expenses, and profit, so the Government can evaluate labor pricing on a consistent basis before award. The provision also requires the offeror to identify whether each fixed hourly rate applies to work performed by the prime contractor, subcontractors, and/or divisions, subsidiaries, or affiliates under common control. In addition, it requires the offeror to structure those rates using separate rates, blended rates, or a combination of both, depending on how the labor will be performed. Practically, this provision helps the contracting officer compare offers, understand how labor is priced across the contractor team, and reduce ambiguity about which labor sources are covered by each rate. It is especially important in T&M and LH buys because labor pricing drives most of the contract value and because the Government needs enough detail to evaluate realism, completeness, and consistency in the proposed hourly rates.
Key Rules
Applies to T&M and LH buys
This provision is used when the solicitation contemplates a time-and-materials or labor-hour contract. It is specifically prescribed for noncommercial acquisitions where there is not adequate price competition.
Fixed hourly rates required
Offerors must propose fixed hourly rates, not variable or open-ended labor pricing. Each rate must include wages, overhead, general and administrative expenses, and profit.
Identify covered labor sources
The offeror must state whether each hourly rate applies to labor performed by the offeror, subcontractors, and/or divisions, subsidiaries, or affiliates under common control. This makes the pricing structure transparent to the Government.
Separate, blended, or mixed rates
The offeror may establish rates using separate rates for each labor category and performer, blended rates across multiple performers, or a combination of both. The chosen structure must clearly match how the work will actually be performed.
Common-control affiliates included
If labor is transferred between divisions, subsidiaries, or affiliates under common control, the offeror must address those entities in the rate structure. The provision treats those internal sources as part of the pricing analysis, not as an afterthought.
Responsibilities
Contracting Officer
Insert this provision when prescribed by FAR 16.601(f)(1) for the applicable T&M or LH solicitation. Evaluate whether the offeror’s proposed hourly rates are complete, understandable, and structured in a way that allows comparison and award decision-making.
Offeror/Contractor
Submit fixed hourly rates that include wages, overhead, G&A, and profit, and clearly identify which labor sources each rate covers. Choose and explain a rate structure using separate rates, blended rates, or a combination that aligns with the planned performance approach.
Subcontractors
Provide labor pricing information to the prime or offeror as needed so the offeror can build compliant fixed hourly rates for subcontracted labor categories.
Divisions, Subsidiaries, and Affiliates Under Common Control
Support the offeror’s pricing by identifying labor that will be performed internally and helping ensure those labor sources are properly reflected in the proposed rate structure.
Agency
Use the provision in solicitations where required and ensure the acquisition file supports the use of a T&M or LH contract structure with the required labor-rate proposal detail.
Practical Implications
Offerors need to build labor rates carefully because the Government expects the proposed hourly rate to be fully loaded; leaving out overhead, G&A, or profit can make the proposal noncompliant or misleading.
The distinction between separate and blended rates matters in evaluation and administration. A blended rate may simplify pricing, but it can also hide differences in labor mix if the contractor does not explain the basis clearly.
Contractors should map each labor category to each performer early, especially when work will be split among the prime, subs, and affiliated entities. Late changes in staffing plans can create pricing inconsistencies.
Contracting officers should watch for vague rate descriptions, missing identification of subcontractor or affiliate labor, and rate structures that do not match the proposed staffing approach.
Because this is for noncommercial acquisitions without adequate price competition, the Government is relying heavily on the proposal’s labor-rate structure to understand cost and risk, so clarity and internal consistency are critical.
Official Regulatory Text
As prescribed in 16.601 (f)(1) , insert the following provision: Time-and-Materials/Labor-Hour Proposal Requirements—Other Than Commercial Acquisition With Adequate Price Competition (Nov 2021) (a) The Government contemplates award of a Time-and-Materials or Labor-Hour type of contract resulting from this solicitation. (b) The offeror must specify fixed hourly rates in its offer that include wages, overhead, general and administrative expenses, and profit. The offeror must specify whether the fixed hourly rate for each labor category applies to labor performed by- (1) The offeror; (2) Subcontractors; and/or (3) Divisions, subsidiaries, or affiliates of the offeror under a common control; (c) The offeror must establish fixed hourly rates using- (1) Separate rates for each category of labor to be performed by each subcontractor and for each category of labor to be performed by the offeror, and for each category of labor to be transferred between divisions, subsidiaries, or affiliates of the offeror under a common control; (2) Blended rates for each category of labor to be performed by the offeror, including labor transferred between divisions, subsidiaries, or affiliates of the offeror under a common control, and all subcontractors; or (3) Any combination of separate and blended rates for each category of labor to be performed by the offeror, affiliates of the offeror under a common control, and subcontractors. (End of provision)