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Thanks Retread. Sounds reasonable. I'll think on it.

Ed

Retredfed. Yes, they both contain 52.222-41

Vern. Please explain "take effect under the law" as used in your post.

Related issue. Adjusting FP, T&M, LH Subcontracts under Cost-Reimbursement Prime Contract

Situation:

Long-term cost-reimbursement prime contract for major Government program is subject to SCA. Several long-term FP, TM, or LH subcontracts, also subject to SCA, are awarded by the prime contract.

Neither the prime nor the subcontracts contain FAR 52,222-43 or any other instructions for adjusting the subcontracts.

The prime contractor is left to determine procedures for adjusting the subcontracts.

Prime decides to require subs to make new Wage Determinations effective on the date of issuance of the WD, rather than on the anniversary date of the multiple year contract, or at the beginning of a renewal, as contemplated by 52.222-43. Because the rates in the WD are applied over a longer period, prime contractor's costs are increased.

.

Comments?

The accounting system for a T&M commercial contract must be adeqate to comply with the terms and conditions of the T&M commercial contract.

Your inclination seems right. But, apparently you are requesting some sort of cost/price info from prospective suppliers.Why? If the "BOA" you're issuing is a BOA as described in FAR 16.7, the cost/price is not set till an order is issued - you will have no firm cost/price info to analyze until an order is issued.

But prime contractors sometimes issue subcontract documents called BOAs that are not the same as BOAs described in FAR. So look at your situation. Is there any reason to set cost/price in the the BOA itself? Will the BOA become a contract at the time it is issued?

See what NASA does at NASA FAR Supplement 852.270 and 1852.242-70. Also NASA Form 1632

Atlas Shrugged by Ayn Rand

One can find subcontract terms and conditions used by various government prime contractors on their web sites - including how they handle FAR flowdowns.

OOPs, here's a better site.

http://www.governmentcontractslawblog.com/...o-subcontracts/

Back in the mid eighties, we procured a memorial monument (you would all know of it). We basically followed the A&E selection process. We requested proposed designs and had a selection board, etc. It was funded with non-apropriated funds, so we didn't have to contend with FAR.

Interesting. I tend to agree with H2H . But, but, but?. The CAS regulations don?t provide for the prime to choose not to claim exemption, nor do they give the CO a choice in the matter. The CO is required to insert the proper clause (for full or modified CAS ) unless the contract is exempt (FAR 30.201-4 et seq). In this case the contract apparently was exempt. Did the prime fully and truthfully complete the CAS certifications (52.230-1)? Is the CAS clause really in the prime contract, or is it there by mistake?

If your contract is truly firm-fixed price, the Government doesn't care what it costs you to perform the contact. All the cost risk is yours - including your cost of subcontracts.

The Government has no right to audit or review you books under a true FFP contract.

Further, there is no requirement for contracting officer consent to subcontracts, because the Subcontracts clause FAR 52.244-2 is not required in a firm-fixed price contract [see 44.204(a)(1)]. And the Competition in Contracting clause may not be required. [see 44.204©].

Be careful! "Bimonthly" is ambiguous. It can mean every two months or twice per month.

Thanks H2H, Your response must be correct - no WoV - yet

While we?re on the subject, I?ll take this opportunity to ask about filling out the Cost Accounting Standards Notices and Certification, FAR 52.230-1. When an offeror is eligible for Modified CAS, is it wrong to check block I( c )(3) ?Certificate of Monetary Exemption? AND the ?Eligibility for Modified CAS Coverage? block in part II ? We received such a cert. Some here think it is invalid and a new cert should be obtained. Others believe that I( c )(3) does not contradict II and a new cert is not necessary. What say y?all?

Gatrth,

For the past twelve years I have worked for a prime contractor. We have a major subcontracting program. We award subcontracts of all types and dollar values. Our purchasing system is Government approved. We do not follow FAR 15-3, because our prime contracts do not require same. We do; however, have company acquisition procedures that follow generally the principles of FAR 15-3. They allow for prudent business judgment and are less strict than FAR 15-3. We have survived many CPSRs and audits. We have never been directed by a Government representative to follow FAR as you describe. Maybe your DCMA/DCAA people really want you to do something like we are doing. Do you have internal procedures that govern your source selection process?

Ed

If the subcontract includes the usual cost-reimbursement "best efforts" language, such as in FAR 52.232-20, Limitation of Cost, I suggest you also include language in the mod to require the subcontractor to complete the job

Capping indirect costs in a cost-reimbursement contract is not new. I personally know of an agency that has used such caps with long-term, on-site, support-service contracts since back in the early sixties.

Belated thanks to Don and H2H. Common sense prevails.

Ed

A contractor has recently been awarded a long-term prime contract with responsibility for operating a major Government program. The contractor has a Government-approved purchasing system, and is responsible for issuing as-yet-unidentified subcontracts as required to support the program. Subcontracts of various types and dollar values will be required.

This contractor is faced with implementing the CAS exemption of T&M and Labor Hour SUBCONTRACTS for commercial items.

The exemption in CFR 9903.201-1( (6) is shown, in pertinent part, as follows.

"... time-and-materials, and labor-hour ... subcontracts for the acquisition of commercial items."

Note that the CFR exemption doesn't mention competition. Competition; however, is an unstated condition of the exemption, at least as the exemption applies to contracts placed in accordance with FAR. FAR 12.207 ( provides that a T&M/LH type contract can be used for commercial items when the contract is awarded using competitive procedures. This was discussed and understood in the CAS Board's deliberations preceding issuance of the exemption.

But what about subcontracts? This contractor's subcontracting program is not subject to the competition requirements of FAR 12.207. It is; however, subject to FAR 52.244-5(a).

So, should this contractor:

1. follow the CFR language literally and exempt all T&M/LH subcontracts for commercial items, or

2. exempt only those T&M/LH subcontracts that were processed using the competitive procedures envisioned by FAR 52.244-5 (a), or

3. do something else, and if so what?

Where's Les Fettig when we need him?

The clauses 52.222-43 and 52.222-44 are for adjusting fixed price contracts. [see FAR 22.1006©]. As Navy indicated, cost-reimbursement contracts are "self adjusting" under the Allowable Cost and Payment clause.

Can somebody please explain to me how a contract can exist before key elements (e.g., price and terms and conditions) have been negotiated? I have always thought an "agreement to agree" is unenforceable. Am I wrong?

Buyerboy,

We often get that from potential subcontractors. Our responses:

1. we are required by our prime contracts to get these certs.

2. the sub is certifying to my company, not to the Government.

3. some of the certs may duplicate the certs to the Government, but they are not all the same.

This usually satisfies them.

Ed