Common Mistake

Awarding a time and materials contract without a ceiling price that the contractor exceeds at its own risk and without documenting why no other contract type is suitable.

Avoidance Strategy

FEMA advises against the use of time and materials contracts and only reimburses costs incurred under these contracts in limited circumstances. Without a ceiling price in the contract, there is very little incentive for the contractor to control costs of the contract.

To receive reimbursement, Applicants using time and materials contracts must document why no other contract was suitable, include a ceiling price that the contractor exceeds at its own risk, and provide a high degree of oversight to ensure contractor uses efficient methods and effective cost controls.