Retreadfed

LeighHar, I would be guided by what your subcontract says about the prime's ability to unilaterally change the fee structure. If the subcontract does not permit the prime to do so, whether you agree to such a change and on what terms is generally up to you.

SBA has issued such a statement in regard to the change in the number of years used to determine a concern's size using a revenue based size standard. While congress has said that 5 years will be used to make that determination, SBA has said the 5 year period does not apply until it amends its regulations to reflect the change.

Neil, I hope these primes are not doing something that would be inconsistent with the terms of their prime contracts.

The Small Business Act gives the SBA Administrator the responsibility for issuing regulations that implement the Act. Individual government employees are given no authority to implement the Act. Thus, contracting officers have no individual authority to implement the Act on a contract by contract basis. 644(q) applies to multiple contracts above the agency's substantial bundling threshold, not just to bundled procurements.

Thank you. Note that this is from 15 U.S.C. 644(q)(1)(B). This section of the statute has not been implemented by SBA. Accordingly, the FAR has not been amended to reflect this requirement. However, note 644(q)(1)(c) which deals with evaluating past performance of JVs. The SBA has implemented this requirement in various sections of its rules, such as 13 CFR 125.8(e). This was done in July 2016. However, the FAR again has not been amended to account for this change in rules. Thus, your concerns seem to be premature.

What U.S. Code section is this from?

Brock, is FAR 52.242-14 in your subcontract? If it is, I suggest that you read it.

Brock, do you know if the government is objecting to your plan and the "buyer" (prime) is merely acting as a middleman passing on the government's objections?

What does this mean? Are you saying that the "buyer" is a prime contractor and you are a subcontractor? If not, exactly what does this mean?

Not necessarily. It depends on when the contractor does the recertification of its size. In addition to the SBA regulation references above, look at FAR 52.219-28.

That is not necessarily a true statement. I know of some contracts where the license is submitted with the proposal, appropriate modifications made to it pre-award and then the modified license is incorporated as part of the contract at award. I'm afraid the reason agencies do what you have described is because they have always done it that way.

Joel, aren't you conflating the question of whether an item is a commercial item with the issue of what procedures should be used to acquire that item?

I still don't get it. Are you asking if a determination by one agency that an item is a commercial item can be used to convince another agency that the item is a commercial item?

I'm still not clear as to what is happening. Will the rates you are proposing be fixed rates so that no matter what your actual rates are, those are the rates at which you can bill and will be reimbursed on the final voucher, or are the rates you propose rate caps so that the final rates may be lower, but not higher? If the former, how is this not a cost plus percentage of cost contract?

Tender, are you looking for the entire DFARS or only a particular section or clause?

Adding to what H2H said, because of the Limitation of Cost clause, contractors are expected to monitor their indirect cost rates. If doing so indicates that the rates will be higher than anticipated and result in an overrun, the contractor is required to give the government notice of the overrun before it occurs. If the contractor does not, any overrun costs are at the contractor's risk. The exception to this is that the contractor did not know of an overrun and had no way of knowing of an overrun before it occurred. Thus, if the contractor did not monitor its indirect costs, but such monitoring would have disclosed the overrun, the contractor should have known of the overrun in this case.

What do you mean by this? I am confused as to what you are trying to ask? Sales to the Federal government are not sales to the general public.

El, if you have an idea as to what the cap on indirect cost rates will be, have you done an analysis to determine if you will perform the contract at a loss after you have figured in all your anticipated allowable cost that will be allocated to the contract as well as all of your unallowable costs that also must be allocated to the contract but not reimbursable?

El, I'm confused about what you are saying. You said you have been told you are in the competitive range for the procurement. This indicates that this is a competitive procurement. Yet, you say you are "covered by the requirement for current, accurate, and complete cost or pricing data? This indicates that there is not adequate price competition. Reconcile these statements. If the latter requirement is correct, have you looked at the instructions for submission of certified cost or pricing data in Table 15-2 found in FAR 15.408? Next, you are referring to incurred indirect cost rates. This indicates final rates for the years to me. What you would use going forward are either forward pricing rates or billing rates. Do you have billing rates for 2018-2019?

What does the rate agreement letter say about when the new rates are applicable? Generally, such an agreement contains a disclaimer that the rates established in the agreement do not change any contract cost limitations. Thus, the estimated cost contained in the contract would still the estimated cost of the contract for Limitation of Cost purposes.

A word of caution. One on the inconsistencies between FAR 32.503-6 and 52.232-16 is that 32.503-6 makes suspension or reduction of progress payments mandatory through the use of the word "shall." However, FAR 52.232-16 says the contracting officer "may" reduce or suspend progress payments. This indicates that such action is discretionary on the part of the contracting officer. Because 52.232-16 is a contract term, that is what the contracting officer must follow. Therefore, if a reduction or suspension is to occur, the rationale for doing so must be clearly documented to avoid such action being determined to be an abuse of discretion. Remember, if a reduction or suspension occurs and the contractor contests it under the Disputes clause, the reduction or suspension is a government claim for which the government bears the burden of proof. Finally, 52.232-16 goes into fixed price contracts while 52.249-14 goes into cost reimbursement contracts. They both should not be n the same contract for the same work.

If the government is not clear in what it wants it can lead to situations similar to one like this that I experienced. Prior to contract award, there was government concern that the contractor did not fully understand the government's requirements for a firm fixed price contract. The government's solution was to clarify what it wanted after award.

More importantly, read FAR 52.232-16 if it is in the contract. That explains the contractual rights and obligations of the parties. FAR 32.5 is not a part of the contract and there is an inconsistency between what it says about reduction of progress payments and what 52.232-16 says.

Guestsmith, you did not state what the cause of the so-called delinguency was. You need to make sure that the contractor did not experience an excusable delay in performance before you take any action to reduce or suspend progress payments due to a failure to make progress.

Hope he didn't miss a buck while doing so.