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Welcome to ACT Notes tutorials! My name is Matt, a contracting officer, here to explain the time and materials contract type. This contract is common in construction and product development, where payment is based on time and materials used. It is suitable when project size or changes are unpredictable, unlike fixed-price contracts. As per federal regulations, it involves hourly rates covering labor, overhead, expenses, profit, and material costs. Use this contract type when project scope is uncertain.