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"Welcome to Act Notes Tutorials, my name is Matt, a contracting officer. I will explain the time and materials contract type, commonly used in construction and product development. This contract pays for time and materials used, suitable when project size or changes cannot be estimated. Unlike fixed price contracts, it follows detailed rules in Federal Acquisition Regulation Subpart 16.6, based on direct labor hours and fixed hourly rates. Use this contract when project details are uncertain."