Common use of Direct Labor Clause in Contracts

Direct Labor. Amounts of direct labor charged to a Party shall be based on actual direct labor, reflecting the effects of overtime and nonproductive time. For most employees, direct labor shall be charged to a Party pursuant to the following methodology: an employee shall report each month the number of hours incurred in performing activities for such Party. Based on the time reported each month, the regular, predetermined account distribution for the employee shall be adjusted to reflect the distribution of direct labor charges to the appropriate affiliate function. Some individuals, departments or organizations may provide a recurring, predictable level of services to a Party or Parties. For these individuals, departments or organizations, at a minimum annual reviews shall be performed to determine a normal distribution of time to such Party or Parties. The distribution percentages derived from such reviews shall then be used to allocate time with respect to each month. Significant deviations of actual activity from these predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate accounts. Overtime shall be reflected in the direct labor rates charged to a Party. For bargaining unit employees, direct labor shall be charged based on the base and overtime pay amounts under a Party's collective bargaining agreements. Likewise, for non-bargaining employees who are compensated for overtime, direct labor shall be charged based on the base pay amounts incurred for such employees, including overtime. For management employees not compensated for overtime, direct labor charged to affiliates shall be adjusted, on a departmental or organizational basis, to reflect estimated overtime incurred based on an overtime review performed annually. All direct labor charges shall be increased by a factor to reflect nonproductive time. The nonproductive time factor shall be developed based on a review of actual nonproductive time incurred for the previous year. The nonproductive time factor reflects time incurred for vacations, holidays, disability, jury duty and other paid absences.

Direct Labor. Amounts of direct labor charged to a Party shall be based on an employee's actual direct laborlabor rate, reflecting the effects of overtime and nonproductive time. For most employees, direct labor shall be charged to a Party pursuant to the following methodology: under a positive time reporting methodology under which an employee shall report each month pay period the number of hours incurred in performing activities for such Party. Based on the time reported each monthpay period, the regular, predetermined account distribution for the employee shall be adjusted to reflect the distribution of direct labor charges to the appropriate affiliate functionaccount. Some individuals, departments or organizations may are expected to provide a recurring, predictable level of services to a Party or Parties. For these individuals, departments or organizations, at a minimum annual reviews shall be performed to determine a normal distribution of time to such Party or Parties. The distribution percentages derived from such reviews shall then be used to allocate time with respect to each monthpay period. For these departments or organizations, direct labor shall be charged to a Party or Parties under an exception time reporting methodology. That is, significant deviations of actual activity from these predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate accounts. Officers of each Party shall also utilize an exception time reporting methodology. Distribution percentages derived from an annual review for each Officer shall be used to allocate time with respect to each pay period. Significant deviations of actual activity from these the predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate accounts. Overtime shall be reflected in the direct labor rates charged to a Party. For bargaining unit employees, direct labor shall be charged based on the base and overtime pay amounts actually incurred under a Party's collective bargaining agreements. Likewise, for non-bargaining management employees who are compensated for overtime, direct labor shall be charged based on the base actual pay amounts incurred for such employees, including overtime. For management employees not compensated for overtime, direct labor charged to affiliates shall be adjusted, on a departmental or organizational basis, to reflect estimated overtime incurred based on an overtime review performed annually. All direct labor charges shall be increased by a factor to reflect nonproductive time. The nonproductive time factor shall be developed annually based on a review of actual nonproductive time incurred for the previous year. The nonproductive time factor reflects time incurred for such items as vacations, holidays, disability, jury duty and other paid absences.

Direct Labor. Amounts of direct labor charged to a Party shall be based on an employee's actual direct laborlabor rate, reflecting the effects of overtime and nonproductive non-productive time. For most employees, direct labor shall be charged to a Party pursuant to the following methodology: under a positive time reporting methodology under which an employee shall report each month pay period the number of hours incurred in performing activities for such Party. Based on the time reported each monthpay period, the regular, predetermined account distribution for the employee shall be adjusted to reflect the distribution of direct labor charges to the appropriate affiliate function. Some individuals, departments or organizations may are expected to provide a recurring, predictable level of services to a Party or Parties. For these individuals, departments or organizations, at a minimum annual reviews shall be performed to determine a normal distribution of time to such Party or Parties. The distribution percentages derived from such reviews shall then be used to allocate time with respect to each monthpay period. Significant For these departments or organizations, direct labor shall be charged to a Party or Parties under an exception time reporting methodology. That is, significant deviations of actual activity from these predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate accountsfunctions. Officers of each Party shall also utilize an exception time reporting methodology. Distribution percentages derived from an annual review for each Officer shall be used to allocate time with respect to each pay period. Significant deviations of actual activity from the predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate functions. Overtime shall be reflected in the direct labor rates charged to a Party. For bargaining unit employees, direct labor shall be charged based on the base and overtime pay amounts actually incurred under a Party's collective bargaining agreements. Likewise, for non-bargaining management employees who are compensated for overtime, direct labor shall be charged based on the base actual pay amounts incurred for such employees, including overtime. For management employees not compensated for overtime, direct labor charged charges to affiliates shall be adjusted, on a departmental or organizational basis, to reflect estimated overtime incurred based on an overtime review performed annually. All direct labor charges shall be increased by a factor to reflect nonproductive time. The nonproductive time factor shall be developed annually based on a review of actual nonproductive time incurred for the previous year. The nonproductive time factor reflects time incurred for training, vacations, holidays, disability, jury duty and other paid absences.

Direct Labor. Amounts of direct labor charged to a Party shall be based on an employee's actual direct laborlabor rate, reflecting the effects of overtime and nonproductive non-productive time. For most employees, direct labor shall be charged to a Party pursuant to the following methodology: under a positive time reporting methodology under which an employee shall report each month pay period the number of hours incurred in performing activities for such Party. Based on the time reported each monthpay period, the regular, predetermined account distribution for the employee shall be adjusted to reflect the distribution of direct labor charges to the appropriate affiliate function. - 10 - -------------------------------------------------------------------------------- Page 60 Some individuals, departments or organizations may are expected to provide a recurring, predictable level of services to a Party or Parties. For these individuals, departments or organizations, at a minimum annual reviews shall be performed to determine a normal distribution of time to such Party or Parties. The distribution percentages derived from such reviews shall then be used to allocate time with respect to each monthpay period. Significant For these departments or organizations, direct labor shall be charged to a Party or Parties under an exception time reporting methodology. That is, significant deviations of actual activity from these predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate accountsfunctions. Officers of each Party shall also utilize an exception time reporting methodology. Distribution percentages derived from an annual review for each Officer shall be used to allocate time with respect to each pay period. Significant deviations of actual activity from the predetermined percentages shall be reported and shall result in adjustments to the predetermined distribution of direct labor charges to the affiliate functions. Overtime shall be reflected in the direct labor rates charged to a Party. For bargaining unit employees, direct labor shall be charged based on the base and overtime pay amounts actually incurred under a Party's collective bargaining agreements. Likewise, for non-bargaining management employees who are compensated for overtime, direct labor shall be charged based on the base actual pay amounts incurred for such employees, including overtime. For management employees not compensated for overtime, direct labor charged charges to affiliates shall be adjusted, on a departmental or organizational basis, to reflect estimated overtime incurred based on an overtime review performed annually. All direct labor charges shall be increased by a factor to reflect nonproductive time. The nonproductive time factor shall be developed annually based on a review of actual nonproductive time incurred for the previous year. The nonproductive time factor reflects time incurred for training, vacations, holidays, disability, jury duty and other paid absences.