Labor Hour

Definition

Labor Hour (LH) is similar to T&M but without materials — payment is based on fixed hourly rates only.

Where this matters in federal contracting

Labor Hour describes a specific contract structure that the federal government uses. The contract type controls risk allocation, payment timing, reporting cadence, and how performance is measured — all of which affect whether the work is profitable and whether it fits a contractor's capability profile. Knowing whether a solicitation is structured as a Labor Hour versus another vehicle is one of the first signals of how the government expects the work to be executed and what kind of contractor they're trying to attract. Misreading the contract type can mean either over-pricing risk you don't actually carry or under-pricing risk you do. The related terms above name the adjacent vehicles Labor Hour most commonly competes with or rolls up under.

More contract type terms