The European Union Institutions (EUI) directly influence the creation of national public tenders through frameworks for public procurement, such as the Public Procurement Directives (Directive 2014/23/EU, Directive 2014/24/EU, and Directive 2014/25/EU).
Additionally, the tenders that EUI publish are often used as examples by national public administrations.
Therefore, it is valuable for a service manager to understand how the EUI contractually manages professional services contracts.
This post focus on the Time and Means type of contract.

In any kind of tender of the European Commission involving IT Technologies, the Annex III. GENERAL TERMS AND CONDITIONS FOR INFORMATION TECHNOLOGIES CONTRACTS (from now on just indicated as Annex III) provides a common framework for understanding the rights and obligations of all parties involved and helps to ensure a fair and transparent procurement process. By consequence, it is also a crucial reference for all Framework Contracts managed by the EC (normally through DIGIT) in which other European Union Institutions (EUI) participate (for example the European Parliament, The European Council, Court of Auditors, etc) despite his venerable age (it was created in 2006).
The paragraf 7 deals with “SPECIFIC PROVISIONS RELATING TO ALL INFORMATICS
SERVICES” and it can be considered the “bible” of the service managers working with EUI.

This document mentions the three basic type of contracts for professional services that are implemented through specific contracts with EUI: time and means, quoted time-and-means and fixed-price.

Time and means (T&M) Contract.
Annex III specifies that ” Informatics Services shall be provided on a time-and-means basis when
the Parties agree in the Specific Contract that a specified daily sum is to be paid for a given number of days in return for the provision of the means to perform the Informatics Services”.
Normally, for this type of contract, the contractor has an obligation to provide resources but not to reach a specific result. However, It is also mentioned in Annex III that “In all cases, the Specific
Contract shall state the purpose of the provision of the Services; this may involve an obligation for the Contractor to achieve a specific result”.
As Time and means always implies an obligation of resources, it is necessary that the contractor quantifies the provided resources and the EUI validates the report through a document called time sheet.
Normally the template of the time sheet it is specified in the contract (here a typical template).

The key elements of a T&M contract are:
– Identification of the human resources roles (ex. Senior Consultant, Project Manager, etc).
In the EUI contracts, it is important to specify if the role is on site (intra muros) or remote (extra muros) as the price must include all related costs;
– The daily (or hour) prices of each identified role;
– The amount of days (or hours) of each identified role;
– The duration of the contract.

T&M Contracts: A Fit for Agile and Expert Services.
For professional services where the value lies in the expertise of individual professionals, T&M contracts offer a flexible and transparent approach.
These contracts are particularly well-suited also for Agile projects due to their adaptability to changing requirements and priorities. T&M contracts provide clear visibility into the work done and associated costs, fostering trust and collaboration between clients and development teams. Additionally, they can mitigate the risk of project failure by avoiding fixed-price commitments for uncertain outcomes. This aligns with Agile values of collaboration, adaptability, and delivering value incrementally.

Agile projects rely on cross-functional teams. However, T&M contracts can introduce some rigidity when specific roles are clear defined (even more when for the same role it is necessary to distinguish between intra and extra muros). In T&M it is necessary to create a contractual split of the contract value at the role level, making it difficult to adjust the allocation of days or hours between roles without a formal amendment.
For example, if a contract allocates 10 days for a Project Manager and 115 days for Consultants, it may not be possible to use more than 10 Project Manager days, even if Consultant work is consumed only for 90 days.
To address this potential limitation, consider using flat rate roles. This approach can provide more flexibility by defining a fixed rate for a role, regardless of the actual hours worked. For instance, the contract could specify a “flat rate consultant for 125 days at 800 euros.” This can help ensure flexibility and align with Lean Budget principles.

EUI requests for quotations might include T&M contracts with specified deliverables. This can sometimes be a client’s attempt to obtain the competitive pricing of T&M while also seeking a guaranteed outcome. Generally, contracts with only resource responsibility are at least 30% cheaper than those with outcome responsibility.
In practice, contractors must provide validated time sheets to justify resource usage and validated certificates of conformity to justify deliverables.
At this point, much better to proper use the quoted time-and-means contract.
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To know more:
Understanding FIX PRICE Contracts in EUI Tenders.
Understanding QUOTED TIME AND MEANS Contracts in EUI Tenders.