52.232-7 — Payments under Time-and-Materials and Labor-Hour Contracts
Researched by the BidStride Research Team
What This Clause Requires
Establishes the payment mechanism for T&M and labor-hour contracts including hourly rate ceilings, material allowances, and invoice requirements.
Official Regulation Text
See 48 CFR 52.232-7 for the full regulatory text. This clause establishes the billing and payment procedures for time-and-materials and labor-hour contracts. Contractors are paid at prescribed fixed hourly rates for labor and at cost plus a percentage for materials, subject to contract ceilings.
Compliance Checklist
- Invoice at the prescribed hourly rates for labor categories
- Support material costs with receipts if over $150
- Do not exceed the contract ceiling without modification
Flow-Down to Subcontractors
No flow-down required
This clause applies only to the prime contract and does not need to be flowed down to subcontractors.
Frequently Asked Questions
You must notify the contracting officer when you have spent 85% of the ceiling price. If the ceiling will be reached before the work is complete, request a contract modification immediately. Continuing work beyond the ceiling without authorization can result in non-payment for overruns.
Material costs are typically reimbursed at cost, which may include a handling charge if specified in the contract. Receipts or invoices are required for material purchases over $150. Purchased items must be directly related to contract performance.
Only with contracting officer approval. Substituting a lower-qualified person at a higher labor rate is not allowed. If you need to substitute personnel, notify the CO in advance. Unauthorized substitutions can trigger disallowed costs.
Typically monthly unless the contract specifies otherwise. Invoices must be submitted through the agency's payment system (WAWF/IPP) with supporting timesheets by labor category. Prompt invoicing helps maintain cash flow — delays in submission delay payment.
This summary is for informational purposes only and reflects the BidStride Research Team's plain-English interpretation of the regulation. It is not legal advice and does not constitute an attorney-client relationship. Always consult the official Federal Acquisition Regulation (FAR) or Defense Federal Acquisition Regulation Supplement (DFARS) text and qualified legal counsel for compliance decisions.