We're not in pre-award environment, we're in post-award and I'm administering a multi-option contract. The prime uses an approved forward pricing rate agreement but the subs are competed and selected when an option is exercised. There are no contractually stipulated rates for the subs.
The reason I had the title as "buying-in" is because we noticed (through previous exercised options) that some subs' final price if calculated, does not equate to the rate proposed in the basic multiplied by the labor hours being proposed to accomplish the growth work. That's when it was revealed that the delta comes from the Profit and G&A being added in growth work, it isn't just the straight calculation of labor hours x rate anymore as quoted during competition. The Prime insists that it's the risk the subs take as FFP contractors since growth work, is not always guaranteed. However, as mentioned above, the subs rates were not contractually stipulated in the basic contract or when the option was exercised. And since work had already started (ie open & inspect then report the issue, then repair), it became more costly to leave an equipment unrepaired to argue a point. It was more prudent to settle the matter and allow the contractors to complete the work.
So, I understand your reasoning, however, with the additional information provided, do you still think the government should quit asking the prime to verify the sub's rate?