Cajuncharlie

Let's not forget the definition of "United States" in FAR 2.101, to connect the last dot to the $1M SAT.

Looks like Steve won the luggage!

Not aware of any such prohibition, and such an arrangement would likely be preferred by the government rather than prohibited.

Subcontracting is generally not subject to FAR but to the prime's policies, procedures, and practices ("contractor purchasing system"), which may or may not have Government approval, and to applicable clauses in the prime contract.

Although not strictly subject to the entire FAR, most primes use FAR principles, including those governing (sub)contract type. A clearly defined scope and set of deliverables would point towards a fixed price subcontract, regardless of prime contract type.

The simplified acquisition threshold doesn't mean much in subcontracting unless the prime's purchasing system parallels the FAR in this area, although the monetary amount might make a difference, depending on how one of the blanks is completed in the "Subcontracts" contract clause in the prime contract.

The prime would not be asking for "approval from the government under FAR 44.201-2," first, because that is not a clause and would not be in the prime contract, and second, "approval" is such an inaccurate word in this context that it often provokes a negative reaction from government folks. Only the government is bound by 44.201. The prime and the government both would be bound by a contract clause that implements 44.201. Rather than "approval" the prime would more likely be asking for "consent to subcontract" under the contract clause at FAR 52.244-2, depending on how the blanks in the clause are filled in (among other assumptions).

In my 37 years' experience, the government not only allows but prefers its cost reimbursement primes to subcontract on a fixed price basis when practical, as this reduces risk to the program for the portion of performance subcontracted on a fixed price basis.

Others may give a more academically researched answer and may disagree, but based on my experience which is mainly in the trenches, this is my $0.02 worth.

Exercise FAR 52.244-2 and see how well it works.

The result may be only a bit of creative writing down in the lower tiers, but it seems a likely tool, coupled with audit and/or requirements for detailed supporting documents with invoices.

The real issue, however, is not a contracting or subcontracting problem; it's a program problem.

Edited to add: This is based on experience in Iraq with a contractor providing security services and construction camp support to government and contractor customers.

Vern's post on the clause is spot on.

In the absence of a clause, in addition to common sense, does your company have written policies and procedures on the subject? If so, those would be what you are audited to.

I have to disagree with your observation regarding a contractor's chances of receiving a cost reimbursement contract without having an approved purchasing system. I know of several contractors without approved purchasing systems that receive cost reimbursement contracts.

Examples? Without getting too specific about contractor name, could you let us know the monetary ranges of such contracts and the awarding agency(ies)? Always willing to learn.

Stepping back from these specifics, I believe Joe's question has been answered.

GSA is also non-profit.

GSA rates have already been determined F&R. Offering a discount off GSA rates to another non-profit would not be necessary to get to F&R pricing, and while it may not be a violation of GSA contract terms, would likely make life more difficult in the next price negotiation with GSA.

Cajun, why do you say the contractor would need an approved purchasing system for it to win a series of cost reimbursement contracts? Also, exactly what did you mean when you said "in general all the costs incurred on the reimbursable prime contract) would be subject to audit"?

On a practical basis, without an approved purchasing system, a contractor's chances of a cost reimbursable award are slim to none - and Slim left town last week.

The other was a poorly phrased contrast between an Purchasing System Review and a Cost Incurred Audit.

For the prime to win a series of cost-reimbursable contracts to furnish the item, the prime would need an Approved Purchasing System.

The extent of the prime's cost or price analysis requirements in subcontracting would be spelled out in its Approved Purchasing System.

The purchasing system (and indeed in general all the costs incurred on the reimbursable prime contract) would be subject to audit.

If the Government really wanted to exert more control over the subcontracting aspects of this situation, the Government could exercise (after adding or modifying, as may be needed) FAR 52.244-2, Subcontracts, with particular attention to paragraph ( d ) and possibly also ( j ).

It was something of a surprise that the GAO went beyond the instant case, in which all that was needed was to say the protest was timely filed under the old rule, and provided a deeper analysis with broader applicability, very useful guidance which should be applauded.

At the risk of oversimplifying, all the changes to CICA from FASA and the 2008 NDAA restrictions rode off into the sunset, leaving CICA still in place, along with GAO jurisdiction, so "the plain meaning of 41 U.S.C. sect. 253j(e)(3) eliminates any bar to our jurisdiction to hear and issue decisions concerning bid protests arising from task or delivery orders of any value."

Why should a holder of a MATOC IDIQ contract not have the right to protest an award the same way as a full and open award?

FAR 15.405( b ) as noted in Post #7 above. Can the "new players" who want to throw out proposals based on line item pricing without looking at the bottom line reconcile their proposed approach to the requirements of FAR 15.405( b )? If their argument is the solicitation does not talk about overall price evaluation, only line item price evaluation, therefore they can't do overall price evaluation, they are out of compliance with this portion of the FAR, which applies to all solicitations, regardless of whether expressly stated in the solicitation. Offerors are presumed to know the basic ground rules, as are the Government folks.

Cajuncharlie,

Unbalanced bidding is all about .

Suppose an offeror think they know more about the governments requirement for specific CLINs than the government does. Or suppose they want to gamble. That offeror might really bid a very high rate for the CLIN they think will be used more than the estimate and bid another CLIN very low for one that won't be used much. Their bottom line evaluated price might be competitive but if they got the award and their hunch turned out right, they get a windfall. So the OP is stuggling with how to best guard against this in the evaluation and it's all about what the government will actually pay.

It was not necessary, imho, to again raise the specter of unbalanced pricing, which had already been mentioned.

I was good to see that your post ended with the same point I was making.

As the Moody Blues said, it's A Question of Balance.

My take is that the crux of the question is the different new approach of putting more emphasis on line item price evaluation versus more emphasis on the bottom line.

I see a danger in getting so far down in the weeds as to lose sight of the main objective.

The main objective, FAR 15.405( b ) tells us, is, "The contracting officer's primary concern is the overall price the Government will actually pay."

That paragraph ends with, "...the contracting officer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiation to achieve a total result -- a price that is fair and reasonable to both the Government and the contractor."

This sounds like it's all about people who can't see the forest for the trees.

My experience is old, never having worked for the Government while employed by an agency, and having left the Government in 1978, but I worked mainly in the Middle East in contracting from 1980-2005.

My employment was with contractors.

Interesting question. My old answer would have been the parts of the FAR that are within the funky four corners of the contract we signed. Now, those four corners have roped in not only the whole FAR but also the DFARS.

Contractor purchasing systems used to have to follow FAR principles with wide latitude to use commercial best practices. Now they must "comply" with the FAR and DFARS, a much higher standard.

May as well throw out all the old policies, procedures, and practices (except for a few such as Disputes, Prompt Payment, etc that cannot flow down as is, and must be adapted) and just use the FAR and DFARS for everything else.

No longer can a contractor limit a bidders list to enough proven performers to maximize the likelihood of adequate price competition. Now it appears that a contractor must comply with those portions of the FAR and DFARS that implement CICA. Our company's procedures require a justification for non-competitive procurement. Now it looks like we will need a justification for anything other than full and open. Does FAR/DFARS compliance include posting subcontract requirements on FedBizOpps? Or some similar contractor web page?

How far does this compliance requirement go? Every last detail? Literal compliance with every piece of FAR and DFARS will be a practical impossibility for contractors.

It's times like this when I'm glad I work the prime contract side of the contractor house, and not the subcontract and procurement side.

Charlie, in regard to your being a "four corners of the contract kind of person," what would your position be if an 8(a) set aside contract contained a CAS clause, or a contract for commercial items contained the clause at FAR 52.215-2?

I would have asked the question during the solicitation phase. I've done it before for clauses that should not be in an RFP, and succeeded and fishing out an amendment that deletes the offending clause.

One simple answer is, as you have done, RTFC (read the f-f-full contract). If a clause is in the contract, the parties have agreed to be bound by it, regardless of whether it might not have been prescribed, in my experience. Others may have different or better experience, but I am a four corners of the contract kind of person.

A practical answer might be to simply check the VETS-100 website and print a page for the file, but last I looked, their website was down for maintenance, and the only way to check was call or email, if memory serves. That is contrary to, and goes back to, a very old and basic principle: If there is an administrative burden around, flow it down to your contractor (or sub, as applicable). But sometimes you do what you have to do to fill all the squares so you have a complete and pretty file.

Suggest turning this around and using the carrot instead of the stick, by putting a small incentive on each milestone. A milestone should be a complete and usable segment of work, inspected for compliance, quality, and timeliness, each of which carries brownie points.

My hazy recollection dredged up "Accounting Classification Reference Number" from the same rusty bin as "Paying and Disbursing Station Number" but drew a blank on CASE.

Well, , , , and, , , ,

One "big" thing about the clause is the "5% incentive payment. Getting stares here. So, if I award a sub to one of our "regular" sellers with this clause flowed down, and they then issue a sub to an "Indian organization", where is the "5%" for my sub going to come from? Not from me! And, certainly not from the Prime, and who want's to convince the KO that he should cough up the "5% for a third tier sub?

In DOD the 5% comes from the Office of Small Business Programs, not from the budget used for the contract.

Again: Is the contract you asked about a DOD contract? Does it contain the DFARS clause?

First, the clause is not a "flow down" clause. You can always tell if a clause is to be flowed down, because it will includes language such as this: "(d) The Contractor shall include the substance of this clause in all subcontracts under this contract that meet the applicability requirement of FAR 15.408(g)." The clause at FAR 52.226-1 does not contain such language.

Second, I don't know why Cajuncharlies said the clause "cannot be flowed down." I can see no reason why the prime cannot decide to flow the clause down on its own initiative. I don't know why a prime would do so, but it could if it wanted to.

The botom line is that the prime in this case is not contractually obligated to flow the clause down. Your position is correct.

The main reason I said the clause "cannot be flowed down" is that's what was on one of our company's internal PowerPoint training slide decks. It would have been more precise to say that a prime cannot flow down the prime's eligibility for the 5% incentive payment under the FAR clause.

FAR 52.226-1 cannot be flowed down; however, DFARS 252.226-7001 must be flowed down to subcontracts over $500K at any tier, and subs are eligible. Is it a DOD prime contract? Does your subcontract have the DFARS clause?

The "T" in T&M is not considered fixed-price.

If the labor rates in a T&M contract are fair and reasonable, it would not seem to matter much whether the labor is self-performed or subcontracted out, but the pass-through limitations cannot be ignored.

One approach would be an Advance Agreement that specifically addresses the value added by the prime's performance of the management functions listed in the clause. If you are the prime, make your case and provide support. If you are the Government, use some healthy skepticism but keep an open mind.

On cursory reading it appears there is no conflict.

Alternate I adds a paragraph (11) that reads, "Complete if the offeror has represented itself as disadvantaged in paragraph ( c )(4) or ( c )(9) of this provision.) [The offeror shall check the category in which its ownership falls]:" This is followed by categories of ownership qualifying as disadvantaged, each with a blank that can be checked when applicable.

If you did not represent your firm as disadvantaged, no action required.

If you did, check the applicable category.

The DFARS clauses seem to talk about data that had been identified all along, with a conscious decision in the RFP and contract to identify which data are subject to deferred delivery. They seem to offer a bit more precision in how to handle such things, but seem to be based on the premise that there is a scope (or spec or SOW or PWS) that is clear, well-defined, and biddable (perhaps more than usual).

A contractor might worry that the Government would use the FAR clause as an open-ended and unfunded blanket requirement to furnish anything the agency should have thought of at RFP time, but didn't, so the contractor didn't price it.

The Government might worry that a contractor should know full well what a complete documentation package comprises, but would hide behind the agency's lesser knowledge of the contractor's specialty, and seek an equitable adjustment for providing anything that was not explicitly called for in the contract.

Are these the two extremes that must be balanced by good faith, or is there more to it than that?

In the middle of the last century, the conventional wisdom was that engineers make the best managers because they are trained in problem-solving.

This was followed by a trend to hire liberal arts majors because they have broader education in how to think. The traditional liberal arts included grammar, logic, rhetoric, arithmetic, astronomy, music, and geometry. The contemporary liberal arts are literature, languages, philosophy, history, mathematics, and science. These provide a pretty solid basis for developing important life skills.

The sources cited in the article are clear that undergraduate business degree curricula, standards, students, and degrees do not measure up very well to others.

The answer seems to be a resounding "yes."