ODCs and labor hour contracts?

See FAR 16.602 for your answer.  When you read this citation, remember that ODCs are "materials" as that term is defined in para. (b)(1)(ii) of the clause at FAR 52.232-7.

ji20874 said:

See FAR 16.602 for your answer.  When you read this citation, remember that ODCs are "materials" as that term is defined in para. (b)(1)(ii) of the clause at FAR 52.232-7.

So what you are saying is that if materials are acquired via means other than purchasing them outright, i.e., subcontracting, travel, indirect costs, etc., then "materials" can be billed on a labor hour contract?

I was taught that "materials or ODCs" could only be included on a T&M contract not a labor hour.

From 52.232-7 (b)(1)(ii)

 (A) Direct including supplies transferred between divisions, subsidiaries, or affiliates of the Contractor under a common control;

                     (B) Subcontracts for supplies and incidental services for which there is not a labor category specified in the contract;

                     (C) Other direct costs (e.g., incidental services for which there is not a labor category specified in the contract, travel, computer usage charges, etc.); and

                     (D) Applicable indirect costs.

Paula C said:

if materials are acquired via means other than purchasing them outright, i.e., subcontracting, travel, indirect costs, etc., then "materials" can be billed on a labor hour contract?

I'm confused by this statement.  If materials are not acquired by purchasing them, how has the contractor incurred a cost that can be billed to the government?

Paula C said:

Can ODCs be charged on a labor hour contract? If so, what kind of ODCs? I thought that is what you would use a time and materials contract for?

Both T&M and L-H contracts use the same payment clause, FAR 52.232-7. So how do you tell the difference between them? The answer is to look at the contract schedule.

The Schedule of a T&M contract (see the Uniform Contract Format, Part I, Section B ) should include a contract line item (or subline item, see FAR Subpart 4.10) for labor and a contract line item (or subline item) for materials. The statement of work should describe the work to be done and identify the kinds of labor and the kinds of materials that the contractor is required to use. The contractor can invoice for both labor and materials.

The Schedule of a L-H contract should include a contract line item for labor, but not for materials. The payment clause defines ODCs as materials. The statement of work should be clear that the parties agree that the contractor is not required to provide materials. Since there is no line item for materials in an L-H contract, the contractor cannot invoice or voucher for materials.

So the answer to your question is No. ODCs, which are materials, cannot be charged to a L-H contract. See ji20874's reference to FAR 16.602. If the contract requires the contractor to provide materials and includes a line item (or subline item) for materials, then it is not a L-H contract.

Paula C said:

So what you are saying is that if materials are acquired via means other than purchasing them outright, i.e., subcontracting, travel, indirect costs, etc., then "materials" can be billed on a labor hour contract?

That is not what I said.  

Please see FAR 16.602.  There are no materials on a labor-hour contract.