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4.70.20.10. Fixed time rate

  1. This basis of payment provides for the payment to the contractor for the actual amount of time spent in performance of the work. The actual amount of time spent in performance of the work may be subject to government audit. The amount paid for these hours is calculated based on a predetermined fixed time rate. The fixed time rate usually includes direct labour rates, overhead rate and profit. Refer to the SACC Manual clauses C0212C and C0214C.
  2. Use this basis of payment when:
    1. it is not possible to estimate in advance the extent or duration of the work, but it is possible to determine within reasonable limits the applicable direct labour and overhead rates during the contract period; and
    2. there is provision for adequate controls to ensure that the contractor is not using inefficient or wasteful methods.
  3. For a contract or part of a contract with a fixed time rate basis of payment, which include a ceiling price, the contractor must complete the prescribed work without additional payment, whether or not the actual costs exceed the ceiling price. When a ceiling price is used, there must be full agreement between the parties as to what constitutes the prescribed work. SACC Manual clause C6000C must be used in a ceiling price contract where it is necessary to ensure against the contractor making changes or carrying out additional work without the prior approval of the contracting officer.
  4. When a contract or part of a contract with a fixed time rate basis of payment does not include a ceiling price, SACC Manual clause C6001C - Limitation of expenditure must be included in the contract. A limitation of expenditure is the maximum amount the contractor may be paid for the prescribed work. The limitation of expenditure is normally used when the level of effort cannot be accurately estimated at the outset. At the client’s request, the contracting authority will amend the contract to provide additional funds, or request the contractor to complete the work to the extent that the original funding permits.
  5. Following the negotiation of fixed time rates, the contractor must resubmit the price bid based on the agreement reached and include a rate certification.
  6. Time verifications, rate certifications and discretionary audits must be provided for in contracts.