FAR 52.216-31—Time-and-Materials/Labor-Hour Proposal Requirements—Commercial Acquisition.
Plain-English Summary
FAR 52.216-31 is a solicitation provision used in commercial acquisitions when the Government is considering award of a time-and-materials (T&M) or labor-hour (LH) contract. It tells offerors what their pricing proposal must include and how labor rates must be presented so the Government can evaluate the offer on a consistent basis. The provision requires fixed hourly rates for each labor category and makes clear that those rates must already include wages, overhead, general and administrative expenses, and profit. It also requires the offeror to state whether each fixed hourly rate applies to work performed by the prime contractor, subcontractors, and/or divisions, subsidiaries, or affiliates under common control. In practice, this provision helps the contracting officer compare offers, understand who will perform the work at each rate, and avoid ambiguity about whether a proposed rate covers only the prime’s labor or also lower-tier or affiliated entities. Because T&M and LH contracts are highly sensitive to labor pricing and labor source, the provision is important for proposal preparation, price evaluation, and later administration of the contract.
Key Rules
T&M or LH contemplated
The solicitation must inform offerors that the Government is contemplating award of a time-and-materials or labor-hour contract. This sets the pricing context and signals that labor rates, not just total price, will be a central part of the evaluation.
Fixed hourly rates required
Offerors must propose fixed hourly rates for each labor category. The rates are not open-ended estimates; they must be stated as fixed rates in the offer.
Rates must be fully loaded
Each fixed hourly rate must include wages, overhead, general and administrative expenses, and profit. Offerors should not separate these elements out in a way that leaves the hourly rate incomplete or unclear.
Identify labor source coverage
For each labor category, the offeror must state whether the fixed hourly rate applies to labor performed by the offeror, subcontractors, and/or divisions, subsidiaries, or affiliates under common control. This prevents confusion about which entities are covered by the proposed rate.
Applies per labor category
The required rate and source identification must be provided for each labor category, not just as a general statement for the entire proposal. The Government needs category-by-category pricing to evaluate the offer properly.
Responsibilities
Offeror / Contractor
Submit fixed hourly rates for each labor category and ensure each rate includes wages, overhead, G&A, and profit. Clearly state whether each rate applies to work performed by the offeror, subcontractors, and/or common-control affiliates, subsidiaries, or divisions.
Contracting Officer
Include this provision when a commercial acquisition contemplates award of a T&M or LH contract. Use the required rate and labor-source information to evaluate proposals and determine whether the offer is sufficiently clear and complete.
Agency / Solicitation Team
Structure the solicitation so offerors understand the labor categories and pricing format expected under a T&M or LH commercial acquisition. Ensure the provision is inserted when prescribed by FAR 16.601(f)(3).
Practical Implications
Offerors should build fully burdened hourly rates up front; leaving out overhead, G&A, or profit can make the proposal noncompliant or misleading.
The labor-source statement matters because the same rate may not be appropriate for the prime, a subcontractor, or an affiliate; ambiguity here can create evaluation and administration problems.
Contracting officers should check that each labor category has a fixed rate and a clear applicability statement, not just a general pricing narrative.
This provision is about proposal requirements, not contract performance terms by itself, but errors at the proposal stage can affect award eligibility and later billing expectations.
A common pitfall is assuming subcontractor or affiliate labor can be priced the same way as prime labor without explicitly saying so; the provision requires that distinction to be stated.
Official Regulatory Text
As prescribed in 16.601 (f)(3) , insert the following provision: Time-and-Materials/Labor-Hour Proposal Requirements—Commercial Acquisition (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. (End of provision)