Level of Effort(LOE)
A contract task or deliverable defined by a specified amount of labor (e.g., hours or staff-months) rather than discrete outputs or outcomes.
Overview
Level of Effort (LOE) describes contract work where the government pays for a predetermined quantity of labor — such as 12 staff-months or 2,000 hours — regardless of the specific deliverables produced. The contractor commits to providing the labor; exact outputs may not be defined in advance.
Why It Matters in GovCon
LOE is common for advisory support, studies, program management, and tasks where scope is difficult to define upfront. It provides flexibility but can lead to disputes if the government expects specific deliverables while the contractor interprets the task as labor-only. Clear contract language is critical.
Key Details
- Staff-Months or Hours: LOE is typically expressed as labor units (e.g., 24 FTE-months).
- No Deliverable Guarantee: Payment is tied to effort expended, not outcomes achieved.
- Ceiling: Contracts usually cap the total LOE; exceeding it requires a modification.
- Documentation: Timesheets and labor distribution reports support LOE billing.
Related Terms
- Labor Hour (LH)
- Time and Materials (T&M)
- Indefinite Delivery/Indefinite Quantity (IDIQ)
- Task Order
More Contracts Terms
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