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About subs

  • Birthday 03/20/1978

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    Johnstown, PA
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    Government contracts, subcontracts, and software development.

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  1. @here_2_help I agree with everything in your second post. Thanks for that. @ji20874 My position has always been that consent for the 15K mod in the original post would not be required. The term "subcontract" as used in the clause includes modifications, and because the 15K mod (subcontract) does not exceed the SAT, no consent is required. I asked about here_2_help's response because it appeared not to consider the mod as a subcontract, but since that has been amended or clarified, we are all on the same page. If it appeared that I thought consent was required, that is probably because a debate about this scenario flares up from time to time around the office and I wanted to be fair in presenting the opposing view point when posting the question. Your last sentence also brings up a good point, and is part of the reason for my question. Many times the resolution is, "we don't know, so let's ask." I was hoping to make it so that we do know and therefore don't ask. Thanks again everyone for your time!
  2. here_2_help, Thank you for your response. I am curious about your last sentence, "... regardless of the dollar value of the modification." Where the mod was not part of the originally proposed subcontract, and if the mod itself were to exceed the SAT, would consent not be required for that mod? The basis for my question is my understanding that the term "subcontract" as used in the clause includes modifications. Thanks again.
  3. Greetings: I am seeking guidance from the community on this issue. Any assistance you can provide would be appreciated. Background: The prime contract includes FAR 52.244-2 with para (d) modified as follows: (d) If the Contractor has an approved purchasing system, the Contractor nevertheless shall obtain the Contracting Officer’s written consent before placing the following subcontracts: Notwithstanding the language contained in paragraph ©, written consent from the Contracting Officer is required prior to entering any subcontract over the simplified acquisition threshold that was not originally proposed. The prime has an approved purchasing system. A subcontract was included in the contract proposal at a value under the Simplified Acquisition Threshold ($140K). The resulting contract states in Section B that Subcontractor ABC is authorized to work under the contract. During execution of the contract, the need arises to modify the subcontract to add value in the amount of $15K resulting in a cumulative subcontract value of $155K. Question: Does the prime need to obtain the Contracting Officer’s consent for the $15K mod? Some argue, “Yes, because the cumulative subcontract value would exceed the SAT,” and some argue, “No, because at no time would a particular subcontract, or modification to a subcontract for which consent is required, exceed the SAT.” Which interpretation, if either, is correct? Thank you for your time.
  4. Reading the prescription as a whole, it lists the circumstances under which the CO should insert the clause, then lists exceptions based on dollar value and contract type, then provides the CO the flexibility to include it if s/he determines it to be appropriate. I do not agree that the COs authority to insert the clause if they determine it to be appropriate for one of the excepted contract types is limited only to those circumstances where the total estimated value is below the thresholds identified in 15.408(n)(2)(i). Why would that make sense? Just because of the grammar ("and" instead of "or")? Setting that aside, if the CO believes it is appropriate and the clause is included, you are going to have to deal with it as instructed above.
  5. The application of the CD to a subcontract is a travesty! This will have lasting and terrible consequences: "The hospitals have not provided any cogent reason why the government may impose terms on government contracts by operation of law but not on government subcontracts. They offer no persuasive explanation of why the same constructive knowledge of federal procurement regulations should not also be imputed to subcontractors who undertake to provide services that support a government contract."
  6. You are in complete control of your subs. If you allow your subs to take direction from the Government, you are asking for the kind of trouble you are now experiencing. It is a false dilemma to believe that if the Government technical customer is not in direct control of your subs he will be unsatisfied. Subcontractor management is part of your overall technical and management solution (hopefully). You need to clearly articulate to both the customer and the sub your (value-added) role as the prime contractor. What kind of mod? A change order? A bilateral mod? You issued two subcontract mods at risk for ~$1M? Who told you the prime contract mod was on its way? Did you provide a proposal for the increase? The question of scope is definitely relevant. The short time between PO mods to the subcontractor is not. Certified cost or pricing data may be required depending on the circumstances. See FAR 15.403-4 and 15.404-3 for more information.
  7. Assuming there are no violations of 52.203-7 or other criminal actions involved, there are still some potential disincentives for the prime contractor: Each subcontractor adds profit and other costs that result in less performance per dollar for the prime’s customer. Each subcontractor, especially moving from large (prime), to small, and back to large, could add considerable performance risk to the prime. The prime may be required to obtain consent to subcontract, in which case the Government could request detailed support for the subcontractor costs. The Government could withhold consent to subcontract if they do not approve of the arrangement. The Government could withhold or withdraw approval for the prime’s purchasing system under FAR 44.305-3. Indirect costs and profit billed by the small business subcontractor on the lower-tier large business subcontractor costs could be considered excessive pass-through under 52.215-23.
  8. @joel hoffman. I am most definitely asking that question. Just so you understand my involvement in this, I am the subcontract administrator for the prime. I asked the question about the clause, and continue to question our guys, to ensure I am properly protecting the company.
  9. Yes, the examples are listed there. I was thinking that almost any prime contractor, service contractor in particular, that has two or more subs could assert that they do all of those things. I was wondering if there were any general standards by which those assertions are measured. Or, if anyone has had direct experience with a situation where this clause was a factor, or had to defend their added value.
  10. @InNeedofWisdom. Thanks for your reply. I suppose another question is: Are there any generally accepted standards to use in determining whether the contractor, or subcontractor in this case, provides "added value"? Everyone thinks that what they do adds value, right?
  11. Greetings, First, I'm new to the forum and will start out by saying thank you to all those that contribute. These forums are extremely helpful! Questions: Assume an existing DoD contract that meets the prescription in FAR 15.408(n) for inclusion of the clause 52.215-23 Limitation on Pass-Through Charges. The clause is not included in the Contract. Would this clause be read into the contract by operation of the Christian Doctrine? 52.215-22 is also not included in the contract, in case you are wondering. Assume the answer to 1. is "yes", and the prime contractor later intends to award a subcontract that was not included in the contractor's original proposal. The subcontractor's proposal to the prime includes lower-tier subcontractor costs that exceed 70% of the total estimated cost of the subcontract. In this situation, could the indirect costs or fee on work performed by the lower-tier subcontractor be considered excessive pass-through? It is debatable whether the subcontractor adds no or negligible value to the lower-tier subcontract. Would you submit the notification pursuant to 52.215-23© considering your answer to 1. above?
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