Neil Roberts

@EGovCon, based on what looks like an "official" GSA blog site, the plan would only be effective on new orders. You can follow up by contacting as indicated to ensure it applies to your situation .https://buy.gsa.gov/interact/community/6/activity-feed/post/8ab1cd64-028c-444c-a14d-b43cf288771c/Updated_Model_Subcontracting_Plans?utm_medium=email&utm_source=govDelivery

@FrankJon, also see United States Code (USC), 10 USC 2326 entitled, Undefinitized Contractual Action; restrictions at https://www.govinfo.gov/content/pkg/USCODE-2010-title10/html/USCODE-2010-title10-subtitleA-partIV-chap137-sec2326.htm (this was the law as of 2010. It was repealed in 2021 and relocated to different USC section and may have been amended in some way thereafter. Still working on it. It is somewhat complex to run it down in its final language of today, if it was subsequently changed. Still working on it but I hope you get the picture about the top level requirement related to undefinitized contractual actions is federal law approved by Congress and the President, which then is "interpreted" and approved for FAR as a regulation.)

@FrankJon, does this shed any light for you? https://www.federalregister.gov/documents/2023/05/25/2023-11139/defense-federal-acquisition-regulation-supplement-undefinitized-contract-actions-dfars-case

You may certainly argue that. I argue that GSA MAS contracts (not the task order) may be negotiated contracts regardless of whether or not cost or pricing data is called for or submitted. I wonder if government files in the vast majority of GSA MAS contracts mentions "negotiation." My reading of articles about how GSA works is that it negotiates the prices.

@CuriousContractor_22, it would have been better if your post included the total value of the task order, information about relevant contract terms and conditions of the parent company contract/task order (including if there was a small business subcontract plan) , whether or not the parent or the subsidiary have government approved accounting systems and whether there are policies at the parent or subsidiary regarding transfer pricing of commercial items under government contracts. Assuming the subsidiary is the subcontractor, it appears to me that the subcontractor may be guided by the parent as to aspects you posted about.

@CuriousContractor_22 For a pro forma teaming agreement example, see https://www.princegeorgescountymd.gov/sites/default/files/media-document/dcv4443_teaming-agreement-template-prime-role-pdf.pdf

@CuriousContractor_22, 1. I am not entirely sure whether or what factors/forces are in play (i.e.,taxes, cost accounting standards, etc) with respect to earned profit that may drive a specific result relating to the subsidiary status as an independent company. Someone else would have to answer that. 2. I would expect the parent or subsidiary that holds the task order would issue a purchase contract to the other party. A teaming agreement in my world of government contracts is something that is executed at the proposal stage and specifically states it is in contemplation of a contract between the parties when one of the parties is awarded a contract. This purchase contract should specify all the particulars about the work that the "subcontractor" is required to perform, pricing, terms and conditions, schedule, quality requirements and any other relevant requirements.

@CuriousContractor_22, My argument in response is as follows: Task Order named awardee should request an arms length proposal from the subcontracted party and negotiate the fair and reasonable rate to be paid for its work by Task Order awardee. Any applicable GSA MAS existing rate for the subcontracted party should be considered in coming to such agreement with the understanding subject GSA MAS rate probably has profit in it and the subcontracted entity proposal and the agreed to rate is to be at cost unless otherwise permitted per FAR 31.205-26. A teaming agreement is irrelevant unless it was the task order awarded party.

In my experience, that above is unlikely to fly well with major prime contractors for various reasons including: 1. don't have time to deal with addressing this as there may be schedule impact to the prime for doing so (delay in placing the purchase contract with you due to company required lengthy preparation to negotiate with you over the status of perhaps a hundred or more clauses). 2. "Business" clauses are not prohibited by a prime contract for inclusion in purchase contracts but are not included in the prime contract. Think of it as the business boilerplate often found in non-government contracts. 3. The above position runs the risk of simply going to the next bidder who may have a higher purchase price. Factoring in the time it would take to deal with you in what is seen as a normal business practice by the prime (with dubious results probable), you may no longer be best value. Some exceptions are acceptable provided adequate rationale accompanies it. For your first government contract review, it seems to me your company should engage an experienced subcontract person to review it alongside you. If you wish to proceed with the above suggested approach, please be sure you have your top management's approval so that they are not surprised (and you are not embarrassed or at risk) by any phone call from a prime contract executive or program manager regarding the above suggested approach and your company's viability as a supplier.

I would ensure the disclosure was in writing and states that the most current data is that there now revised rates agreed to by DCAA and Contractor. Most medium to large size contractors that I have worked for or dealt with over the years have a written procedure (which may be required for an approved procurement system) and/or practices to do a final sweep of current cost or pricing data and whether you want to call it courtesy or required, will provide a revised proposal even if only limited in elements or even just the bottom line delta dollars and more, if asked to do so. This can also provide a company with more confidence against any later allegation of defective pricing. Some such contractors even go the length of including a laundry list of the data items disclosed and a reference to the document description and date that did so, and reference the laundry list in the Certificate that is signed.

@Needforspeed, since this has always worked, keep doing it is one option. I would disclose that a new provisional rate agreement is in work and if the award is made before that takes place, I would sign the current cost or pricing certificate without any related changes to the proposal.

If the provisional billing rates are valid only for the current FY(subject to adjustment at year end), how does this work for proposed work that extends into another FY or two? Even if the work is to be performed only during the current FY, how would this work if the proposed increased your base enormously? Would you not think there should be some adjusted rates in the proposal response if current cost or pricing data applied? Maybe you could clarify the details of the Provisional Billing Rate Agreement.

@Salus, ownership information of a JV may be available quickly through products of one or more companies such as Dun & Bradstreet (from the prime contract side, I can tell you we used such reports extensively in evaluating suppliers). If you have not already done so, I suggest you review SBA final rule dated April 27, 2023. It is 54 pages including clarifying JV certification requirements, JV limitations and many other changes. Proposed JV changes to FAR are in process. See https://www.federalregister.gov/documents/2023/04/27/2023-07855/ownership-and-control-and-contractual-assistance-requirements-for-the-8a-business-development

@Salus, Perhaps I do not understand the situation you are describing. I don't know why an awardee under multiple awards can not submit a protest within 5 days asking for formal determination of the small business status of another awardee based on "information and belief." You seem to have relevant information about the status. But, as a practical matter, if the determination is made that the other awardee was not qualified for the status, the Agency would just award to the next qualified status bidder in line. So, why would you protest no matter what information you have, and what SBA process is there to fix???

@LOLM, does this discussion shed any led on your question?

Other questions include, (a)what government department or agency, if any, issued the contract and/or RFP ITQ?(b) did someone apply for government approval of these costs if this is a government contract? (c) is this a commercial contract between two companies with no government involvement? (d) what is PWS? (e) is this a fixed price contract type, flexible contract type, or?? (f) did the RFP or quote state anything about this (g) is this transaction competitive? (h) what is the estimated dollar value of the questioned cost compared to the task order amount?

this DCAA Audit may shed some light on the general conceptual view of contractor hardship post and R&R costs https://www.dcaa.mil/Portals/88/Documents/Guidance/MRDs/m04ppd023.pdf?ver=2019-03-06-135454-660

Agreed. Specifically we don't know if the subcontractors' proposed/disclosed an hourly rate and indirect costs or an hourly selling price only. We don't know the details surrounding the prime contractor's justification/review of the subcontractors' proposed and we don't know if the government poster bench marked either or both. My take on FAR Part 31 is that it is associated with cost analysis. I don't agree the government needs to do a cost analysis of hourly rates, but I agree with what I think is your bottom line, that whatever the government comes up with should be defensible as reasonable.

@FLContracts, Additionally, from the prime contractor you should request a copy of the memorandum supporting the subcontractor proposed rates and a copy of the SOW and RFP/ITQ sent by the prime to each subcontractor. Should you wind up not finding the proposed rates supported enough, you may wish to consider proposing adding special surveillance contract requirements to the prime contract for each of the subcontracts that have questionable rates . The surveillance should include but may not be limited to advance notification and prior consent for each such subcontract/change.

Thanks, Don. You beat me to the punch. @Retreadfed, still unclear to me what you are trying to tell the poster. Are you saying that the poster gathered comparable labor rates are not valid with respect to a prime contractor's subcontracted labor rates unless: "Factors that may be relevant include, but are not limited to, conformity with compensation practices of other firms- (i) Of the same size; (ii) In the same industry; (iii) In the same geographic area; and (iv) Engaged in similar non-Government work under comparable circumstances."??? In any event, the issue is the prime contractor's review, evaluation and substantiation of its subcontractor proposed rates.

@Retreadfed, could you elaborate about the point in your post reference to FAR 31.205-6(b), which concerns personal services? The FAR definition of personal services is: "Personal services contract means a contract that, by its express terms or as administered, makes the contractor personnel appear to be, in effect, Government employees (see 37.104)."

You should ask the prime to make a presentation to you with in depth details regarding the justification for salary.com being the only source for comparable prices, and a complete review of each and every detail input into salary.com by the prime that led to the results proposed. Also they should provide the job description of each position from each sub. In addition, you should tell them how many subcontract dollars your analysis yields vs the total for each proposed subcontract.

Just a point of information regarding reducing proposed rates and quantifying proposed cost savings. Proposed contractor rates are included in overall estimated costs, which is used as a basis for establishing fixed fee, which in a cost plus fixed fee contract can not exceed 10% or 15% of estimated costs per FAR 15.404-4, depending. The contractor is reimbursed actual costs, not estimated costs. So, if you "save" $100,000 in proposed (estimated) costs through negotiation, the actual "savings" may be no more than $10,000 or $15,000 in fixed fee not $100,000, and the contractor's actual cost reimbursement may eat up $10,000 or $15,000 or maybe $100,000 anyhow.

@Sarita, Alaskan Native Corporation (ANC)/joint venture/8(a) awards are a relatively small specialty area. Generally speaking, one would like to know the terms and conditions included in the ANC contract, such as FAR/DOD clauses and Small Business Administration regulations that may be applicable. Sometimes, details that you seem to be looking for are clarified during the "legislative history" process that established the clause or regulation. There is no way to research that either without knowing the applicable clause/regulation number. If you any any such information, please share it.

It may be a good practice to provide for a review and favorable termination terms when when the total cumulative dollar amount ordered exceeds the estimate by a certain amount or % because that could be an indication that perhaps it needs to be re-evaluated as to whether it should be re-competed.