Level-of-Effort Term Contract Law and Legal Definition

Level of effort term contract is a type of cost reimbursement contract. It requires:

1. a contractor to provide a specified level of effort over a stated period of time, on work that can be stated only in general terms; and

2.the government to pay a contractor a fixed dollar amount.

Level-of-effort term contract is suitable for investigation or study in a specific research and development area. Its purpose is usually to report results achieved through application of the required level of effort. However, payment is based on the effort expended rather than on the results achieved.

According to 48 CFR 16.207-3, level of effort term contract may be used only when:

1.The work required cannot otherwise be clearly defined;

2.The required level of effort is identified and agreed upon in advance;

3.There is reasonable assurance that the intended result cannot be achieved by expending less than the stipulated effort; and

4.The contract price is $ 100,000 or less, unless approved by the chief of the contracting office.