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In service-oriented contracts, a common type used is time and materials (TM), focusing on acquiring supplies and services. Clients often engage service providers instead of purchasing products. The concept of loaded labor rates is introduced, where the basic wage (e.g., $10/hour) is increased to account for indirect costs, resulting in a higher rate to recoup these expenses. In TM agreements, materials are reimbursed at cost, with possibilities for negotiating general and administrative (G&A) fees added to material costs. While TM rates for materials are fixed, the labor hours can vary.
