Can Time and Material Contract Type be used for obtaining 100% Subcontracting services?
and
Is there any restrictions on placing a contract or a contract line item for 100% subcontracting?

By Vern Edwards on Monday, September 25, 2000 - 08:58 am:

I'm not sure that I understand your question. Are you asking if it's okay to award a T&M contract to a firm that plans to subcontract 100 percent of the work?

By Anonymous on Tuesday, September 26, 2000 - 01:48 pm:

The question: Is T&M contract type appropriate for contract effort when the only element is 100% Material $s (no labor hours and no profit on Material $s)?

Another question: Is there any restriction on issuing contract line items for effort that is 100% Subcontracting (no prime contractor effort included in the contract line item)?

By Vern Edwards on Tuesday, September 26, 2000 - 02:09 pm:

The answer to your first question is, No. T&M is a type of contract for use in the procurement of services. It provides for payment on an hourly labor rate basis. It allows the contractor to purchase materials--e.g., equipment parts or components--that are incidental to the performance of the services. If all you want to buy is materials, i.e., supplies as defined in FAR 2.101, then use a fixed-price or cost-reimbursement contract, as appropriate.

The only restriction on the percentage of subcontracting that immediately comes to mind is the one associated with small business set-asides. See FAR 19.508(e). However, any contracting officer who awards a contract (or a line item) to one firm for complete performance by another should have his or her head examined, unless the line item is for a very minor part of performance of a larger contract.

By John Ford on Monday, October 02, 2000 - 11:01 am:

Vern, in regard to your second answer, let me pass on a type of contracting abuse I am seeing now. That involves GSA schedules. I am seeing agencies issue orders under these schedules not to obtain the services of the schedule holder, but of an entity with which the schedule holder has some business relationship. The reason for this is that it is faster to issue an order under the schedule than to do an open market solicitation where the agency may not get the company it wants. Eventually, I think this practice will cause a backlash against the wave of acquisition streamlining we have seen in the last few years and cause some restrictions (probably too draconian) on using schedules to be instituted.

By Vern Edwards on Monday, October 02, 2000 - 11:16 am:

John:

I'm not surprised by your information. The entire story of the 1990s acquisition reform era has been about reducing the transaction costs of contract formation. This has especially meant finding ways to get around CICA and FAR Part 6.

I'm not fond of CICA. I do not think that it is a suitable policy to apply to many of today's most significant government requirements. Nevertheless, it's the law, and flagrant abuses of that law in the name of "innovation" and "streamlining" are likely to prompt the kind of Congressional reaction that you anticipate.

I have little hope of an intelligent policy response. The acquisition community just doesn't seem to produce that kind of leadership in Washington.

By Ramon Jackson on Tuesday, October 03, 2000 - 10:03 am:

The circumstance John describes doesn't strike me as having anything to do with reform. I'm also a bit surprised at the comment that reform "especially meant finding ways to get around CICA and FAR Part 6." Reform dealt with much more and appeared to me to touch on these areas as an attempt to relieve over focus on mechanics, form over substance, in honoring CICA and FAR Part 6.

It is a shame that even intelligent reform is abused by irresponsible or ego driven individuals. It is also a shame the only answer seems to put chains on everyone. I share Vern's rather hopeless view, but perhaps for different reasons.

Fear of and the work involved in taking effective action against individual and agency abusers seems to drive the global and very expensive solution. It is something like building lane barriers on the Beltway to prevent those hazardous high speed, weaving sweeps across all lanes some reckless drivers make. Instead of enforcement and effective deterrent (vehicle seizure for the felony of reckless endangerment perhaps) against these "good" citizens the regulatory answer in our context would seem to be erect barriers and penalize everyone.

I would smile if those agency heads and contracting authorities abusing the system by the sham John describes saw their agency's contracting authority removed and their government careers ended upon a second agency offense. I'm reasonably sure no such thing will happen, habitual abusers will remain as a form of rot, and a "general" solution will be found in the draconian form of chains for all. Worse, the public purse will be saddled with a needless high drag system.

I'm not so far in clouds that I think the abuse problem will ever be solved, but I know it will not begin to be solved without targeting abusers rather than encrusting the system itself with barnacle like regulations rarely or never bearing consequences for individual abusers.