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Neil Roberts

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Posts posted by Neil Roberts


  1. Aside from flowing down the right requirements on the subcontractor side of the business, if you are also the company's negotiator with customers on the contracts side of the business, you need to be aware that there are terms and conditions (FAR/DFARS/Uniform Commercial Code, etc.) that your company should think about negotiating for inclusion into the customer contract, which are not being proposed by your customer. These are not as obvious as the process for handling the subcontractor side of the business. Perhaps others in this forum could recommend learning tools for you. Examples include data rights and liability.       


  2. StePa,

    Suggest you obtain a free email subscription to the Federal Register to keep abreast of new contract clauses and provisions. Check daily under Department of Defense and GSA (GSA handles FAR) for final final FAR/DFARS regulations. If you want to be a real student, read all the proposed ones as well and get involved with commenting on them. Happy adventure!


  3. Not sure whether your assignment is as a contracts person trying to determine how to review and negotiate terms and conditions of your company's contracts with a prime contractor or whether your assignment is with respect to flowdowns to subcontractors derived from your company's prime contract terms and conditions. Or, is your assignment with respect to both the above? Makes a difference as to learning focus. You may already be aware that FAR/DFARS terms and conditions generally guide Government and do not obligate contractors or subcontractors except where specifically mentioned and incorporated in the contract between the Government and the contractor And, when so incorporated, some such terms and conditions are expressed as mandatory flowdowns to subcontractors, which may require that the 1st level subcontractor flow it to its subcontractors. Other terms flowed to subcontractors by contractors may be business flowdowns which may or may not need to be further flowed by the 1st level subcontractor. Sufficiently confused? Very normal, and you may find different positions regarding a term and condition taken by people which may or may not be in line with your most knowledgeable current position. Try to learn the bases for their position and make up your own mind.     


  4. Hi, Vern. I only chimed in with a post because it seemed that some of the other posts may have been leaning in the direction that all contractors are at all times members of the Acquisition Team due to FAR 1.102 (c) , and that therefore everything in FAR is binding on them as a result. Surprisingly, I have met many contractor supplier management employees and managers that actually believe every FAR regulation is applicable to Contractors. They had "good intentions" and beliefs that if FAR guides Agencies and Contracting Officers, Contractors are to be guided by the same. Thanks for your clarification.         


  5. FAR 1.102(c) does state that contractors are members of the Acquisition Team. I am not sure how or when that occurs in general. However, the law department  for many Contractors, in my experience, would not agree that Contractors are obligated by any FAR regulation that specifies requirements solely for Agencies or Contracting Officers.   


  6. You should be able to Google standard contracts for the sale/purchase of international goods and download them free and/or buy them. However, you may wish to consult your company's attorney with respect to what I said above, decisions to make regarding application (or opting out) of the 1980 UN Convention on Contracts for the International Sale of Goods, application of the Uniform Commercial Code, and application of the standard terms of purchase currently in use by your company. Bottom line, just blindly adopting some existing form would probably turn out to be the right thing to do for your company only by accident. I have known such accidents to happen when neither party reads the contract, both parties comply with laws such as export and import as a matter of practice, and both parties expectations are met regardless of what the contract says.


  7. A subcontract may vary depending on the country where subcontract work is performed, the country where the subcontractor "resides," the country where your company resides and the relationship between the Dubai office and your company. Is the Dubai office considered to be a company under Dubai law or recognized under Dubai law as  a company under the laws where your company resides.   


  8. Unless someone can identify a mandatory regulatory requirement or law that the prime must provide pbp, they may agree to do so when and if they want under whatever terms they wish. In my experience, prime contractors do not make interim payments without adequate safeguards. It is bad business to do so and requires costly financial oversight. What those safeguards are, can vary and may be negotiable. My comments are based on my experience and expertise and are just offered as business guidance for whatever it is worth to anyone, since the majority view seems to be there are no regulatory requirements, the prime's business judgement is all that remains. I think I have now moved on and I thank all those involved for these discussions.


  9. Retread, we seem to have different views about FAR. To me, It has a huge impact on the relationship between a prime and its subs. Many FAR clauses, because they are obligations the prime owes to the Government, wind up being business flowdowns in the subcontract in order for the prime to comply with its obligations and/or are adopted as the model for subcontract language even when it is not required to comply with a prime contract obligation to the Government. It is understandable that a company under a firm fixed price contract does not want to disclose actuals. However, the prime is still responsible for ensuring itself that the subcontractor is financially sound before making an interim payment not supported by what it contracted for, a deliverable product. Many commercial financial institutions take liens and so forth on inventory/accounts receivable to protect its loan. Perhaps financial stability assurances could be provided by a financial statement signed off by a 3rd party accounting firm. What I don't hear from siwilliams' company are any counteroffers. Also disappointing, is the apparent lack of reasonable explanation by the prime contractor, other than "it's required," as to why it needs to have actuals. Perhaps the prime needs to select a different supplier and/or the supplier needs a diffferent prime.          


  10. The DFARS clause above requires that the prime submit total costs incurred to date. It would be nice if some of the finance types here weigh in on this. it seems to me that if payment to your company was based only on deliverable items, and there was no performance based payment, the prime financial records would reflect that payment for a deliverable item as its cost. However, since payment to your company is not based on that, perhaps the thinking is that the mere negotiated value of the performance payment is not sufficient for the prime to meet its obligation to the Government to disclose total costs incurred to date, and that the subcontractors costs are to be included, because interim negotiated performance payment is not a cost. If such disclosure is your only objection, I suggest you get finance types together to understand the rationale for the prime's request and whether the prime rationale is reasonable and necessary. Failing that, as I previously indicated, your company may need to give up the performance payments and resubmit a proposal with higher fee to reflect added risk.      


  11. In my prime contract experience, 52.232-32, suitably modified, is a mandatory prime contract business flow to subcontractors. If not that clause, something so substantially similar, that it would be best to just flow the clause in order to administer the bases for payment. If siwilliams' company has a different proposed term and conditions for performance based payments, it should offer them to the prime. Arguing about whether it is mandatory in its language or "mandatory" from the point of view of the prime, is not fruitful to me. Ditto for DFARS 252.232-7012. 


  12. A few thoughts...not sure you are a subcontractor in the normal sense of the word that I am accustomed to. Your principal might want to issue a different type contract to you, other than a traditional subcontract, one that perhaps focuses on ensuring you abide by all ethics and work rules required of employees and the prime. If the principal insists on issuing a standard type subcontract to you with flowdowns from the prime contract, you may be able to accept many of them because they would be inoperative/inapplicable to the work you are to perform (and you are not providing any goods). I can not envision what "selling the prime's product and services to the customer" means. Usually, the sale is memorialized in a prime contract. There isn't anything more to sell after that.    .


  13. Shot in the dark. Perhaps the concept you are searching for was derived from FAR 2.101 which states as follows:

    “Micro-purchase” means an acquisition of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold (emphasis added).

    “Micro-purchase threshold” means $3,500..."

    I do not read the above as requiring a price analysis for a $4,000 purchase when you already did one for a $3,000 purchase and there is only a $1,000 change notice value. I only point this definition out because it includes the $3500 threshold you were taught and "aggregate amount" may be where your taught "cumulative value" came from. In my mind, the above definition only serves to state that in your example you may have had a micro-purchase, and now you don't.


  14. Appendix 19 of the DCMA CPSR Guidebook dated May 9, 2017, does not appear to clearly instruct the DCMA review team whether or not flowdowns the team is evaluating for inclusion in subcontracts are limited by whether or not the subcontract is for a commercial item. The Appendix is a "job aid." Appendix 19 Practice section, for example, reads as follows:

    "The CPSR analyst is required to utilize the Contract Flow Down tab of the DATA workbook for reference while reviewing each file. Compare the mandatory flow downs for the prime contract the procurement is being purchased for to the actual file being reviewed. Record the results of the file being reviewed in the DATA workbook for the mandatory FAR and DFARS flow downs and whether or not they were adequately flowed down to the subcontractor."

    The above may be the source of the DCMA position initiated in this thread. 


  15. The following just posted LinkedIn CPSR Forum group. I do not know if this is coming from a different firm than ThomCons posted here on this thread:

    DCMA's Latest Changes to Commercial Item Flow Down Clauses

    Just want to give everyone a heads up in preparations for your next CPSR. We went through an audit in Dec 2016, and were cited a finding for not flowing down all required clauses for commercial items. Apparently, DCMA has taken the position that if your prime contract is issued under FAR Part 15, not only is 52.244-6 required to be flowed down for commercial items, but also all other mandatory flow downs from the prime contract. We are in disagreement with this, but are proceeding accordingly. It is causing great difficulty getting our commercial vendors to accept all the additional terms and conditions. Please let me know if others are having the same findings and issues.


  16. Good comments by contributors above which can serve you well in your defense. It is all about risk to me. I would rather reduce or eliminate: (a) customer allegations that a prime contract clause requirement was breached and harmed the customer (is anyone aware of any federal case, statute or FAR regulation holding a prime contractor insulated from all prime contract liability caused by furnishing the customer with a commercial item which was not compliant with a prime contract clause?) (b) risk to an approved procurement system due to DCMA allegations of flowdown deficiency or (c) receiving mid-course allegations by a customer that the subcontractor goods or services are not commercial. My experience is that when the customer perceives that a prime contractor caused a serious or possibly embarrassing problem, people just run to the contract and look at the plain words in the four corners of the document. During negotiations with a commercial item subcontractor, it's objection to clauses can be examined by the prime contractor for risk and deleted if the prime contract risk is acceptable. Also, the subcontractor can view many flowed clauses as little risk due to it being inapplicable. They should have no objection to its inclusion.All clauses that help satisfy the prime contractor's contractual obligation to the customer should be flowed.        


  17. 7 hours ago, Retreadfed said:

    Neil, my reading of 252.244-7000(a) is that the other DFARS clause in the prime contract must specify that it is to be included in subcontracts for commercial items in order for it to be inserted in such subcontracts.  It is narrower than a requirement to include all DFARS flowdown clauses from the prime contract into subcontracts for commercial items.

    Retreadfed, I respect your reading of 252.244-7000(a), but I think the clause is ambiguous and I feel it to be too risky to adopt your view at this time. My reading is that the Contractor is not required "to flow...unless so specified." My reading of "so specified" is that any mandatory flowdown is required to be flowed because it is specified. It doesn't have to specify that it be flowed in commercial items. Would be receptive to your reading if there was some definitive guidance other than our opinions. I have not had time to research this further. In my experience, those that I would flow can be challenged by the subcontractor and deleted during negotiations if warranted as inoperative/inapplicable.  


  18. 2 hours ago, Don Mansfield said:

    So what? Any contracting officer requiring a prime to include clauses other than those identified in FAR 52.244-6 in subcontracts for commercial items or commercial components would be deviating from FAR 44.402(b).

     

    The contracting officer does not know whether or if a prime will be procuring commercial items. The prime contract in my experience, necessarily includes the clauses needed or required per the prescription for each clause corresponding to the contract work, contract type, etc. Those clauses in the prime are not necessarily limited to only the clauses in FAR 52.244-6. Including those clauses is not a deviation from FAR 44.402(b). Some of those required clauses may include mandatory flowdowns.      


  19. 15 minutes ago, Don Mansfield said:

    Neil,

    See FAR 44.402( b ):The clause at 52.244-6, Subcontracts for Commercial Items, implements the policy in paragraph (a) of this section. Notwithstanding any other clause in the prime contract, only those clauses identified in the clause at 52.244-6 are required to be in subcontracts for commercial items or commercial components.

     

    Don, This language is not included in the contract. Also, how do you see the flowdown situation when DFARS 252.244-7000 is also included in the prime?  

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