B2B.Consultancy

On 7/18/2019 at 10:51 PM, Retreadfed said:

I think the validity of 1a has been established.  Based on the language of the statute and the DoD promulgation comments rejecting suggestions to apply the exception at the subcontract level, the exception only applies to prime contractors.  As for 1b., we don't know what the subcontract is for, thus, no one can say.

1a: I appreciate your point of view. But we also had here at least one point of view on the rule that may intend the exception to be applied at subcontractors level.

paragraph (e) of the DFARs 252.215-7010 contains the flowdown requirement which requires to flowdown the exceptions to further levels of subcontracts, this is difficult to discard:

"(e) Subcontracts. The Offeror shall insert the substance of this provision, including this paragraph (e), in subcontracts exceeding the simplified acquisition threshold defined in FAR part 2."

In the promulgation comments (following your suggestion), that I found at the following link, i tried to find the comment/response you were using as reference

"https://www.federalregister.gov/documents/2018/01/31/2018-01781/defense-federal-acquisition-regulation-supplement-procurement-of-commercial-items-dfars-case

I have found only the following:

"Additionally, two respondents recommended clarifying that “subcontractors” be added to the definition of nontraditional defense contractors so that items provided by a subcontractor that meet the definition of a “nontraditional defense contractor” may be treated as commercial items.
Response: Section 857 amended 10 U.S.C 2380a to provide DoD with the permissive authority to treat items and services provided by nontraditional defense contractors as commercial items. This authority was neither mandatory nor was it extended to prime contractor commercial item determinations for subcontracted items and services."

As I read it, it is just saying that the Prime Contractor cannot substitute the DOD CO in commercial item determinations for subcontracted items and services. I think, but I may be wrong, that it refers to 252.215-7013. I think this because the respondents end the recommendation with "may be treated as commercial items" which is the text of the DFARS 252.215-7013, while the 252.215-7010(b)(1)(ii)(E) "only" adds an exception from submitting certified cost and pricing data, which is different.

then if you read comment in section 35 of the same page, titled "35. Subcontract cost or pricing data flowdown requirements."(https://www.federalregister.gov/d/2018-01781/p-169)

the respondant was suggesting many possible problems (from his point of view) in flowing down to all tiers of subcontractors. 

Here the comment, instead of saying that it is not applying to any subcontractor, states the opposite:

"Response: Section 831 of the NDAA for FY 2013 does not relieve prime contractors from their responsibility for exercising the same due diligence as DoD contracting officers in making subcontractor commercial item determinations and evaluating their subcontractors' price reasonableness."

In case I overlooked the comment that you have read, please help me locating it.

I thank you all because with your comments I have found a lot of supporting information.

I hope that this awesome community continue to discuss this adding pro and cons or actual business cases in which this aspect has been discussed (and with enough LUCK maybe we can find a final determination on the matter)

Thank you

I think that point 2 of my original post has been discussed having all on the same opinion, for this specific point 2 I think my take-away is that the definition of NTDC do applies to a supplier that is exempt from CAS or subject to modified CAS, even if it had in the last 12 months a subcontract from a Prime, where the Prime Contract was Full CAS covered, because his subcontract cannot be considered full CAS covered, and so the definition of NTDC still applies.

I don't see yet a final position (maybe I did not catch it) to support or discuss prime's rejection reasons on points 1a and 1b.

I'll appreciate any further help on this.

I'm sorry for the delay in the reply, I was on a long travel.

Retreadfed,

On 7/17/2019 at 6:58 PM, Retreadfed said:

An exception under what clause/provision?

Always the same DFARS, I did not change focus.

I followed what you posted and, considering it a good idea, I went to read the public comments and responses to the Proposed Rule on Federal Register and I found  the two responses that I posted above.

On 7/17/2019 at 6:21 PM, B2B.Consultancy said:

Response: The standards for what information is necessary to make commercial item determinations and determinations of price reasonableness should not be relaxed for subcontractors. Prime contractors are responsible for exercising the same due diligence as DoD contracting officers in making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness.

Response: This rule does not alter prime contractors’ responsibility for making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness, regardless of whether the end item has or has not been determined to be a commercial item.

From that reading I was gaining the perception that there were more comments in favor of the applicability to subcontracts than contrary to that. I also understand that responses to public comments can just give an help reading the rule, but the text of the rule is what it is.

Neil Roberts:

I confirm that my interest is still on the applicability of the exception conteined in DFARs 252.215-7010(b)(1)(ii)(E). In any case, to your question: yes, I verified that also FAR 25.215-12 is included in their flowdown, which should not be applicable if the above exception would be applicable (as no certified cost and pricing data will be required).

Thank you and sorry again for the delayed reply

Neil,

Thank you for your position, that I find very clear and helps me in further understanding the situation.

16 hours ago, Neil Roberts said:

In paragraph (e), DoD wrote it such that the DoD contractor shall incorporate the substance of this provision in subcontracts, which to me means the entire DoD provision. On the other hand, it goes on to say that the subcontractor shall comply with paragraphs (c) and (d), but no mention of subcontractor compliance with paragraph (b), the commercial item exception

I was confident that paragraph (b) was part of the flow down due to the first sentence of paragraph (c), which states that the requirements apply only IF none of the exceptions apply (the exceptions in paragraph (b)):

252.215-7010(c)Requirements for certified cost or pricing data. If the Offeror is not granted an exception from the requirement to submit certified cost or pricing data,

Further, following the suggestion of here_2_help, I went through the comments and responses of the Proposed rule and I found these clarifications:

Response: The standards for what information is necessary to make commercial item determinations and determinations of price reasonableness should not be relaxed for subcontractors. Prime contractors are responsible for exercising the same due diligence as DoD contracting officers in making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness.

Response: This rule does not alter prime contractors’ responsibility for making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness, regardless of whether the end item has or has not been determined to be a commercial item.

I'm reading more information supporting that the subcontractor may be right in the request for exception , than evidences to reject it.

Please help me with this feeling "killing" or "feeding" it to a supported decision.

Thank you and all again for your opinions.

54 minutes ago, Neil Roberts said:

BTW, you seem to use "exemption" and "exception" interchangeably. They are not.

You are right, "exception" is the right one in this case, it would be an exception from submitting certified cost and pricing data. Thank you for the clarification.

3 hours ago, B2B.Consultancy said:

If this statement would be true, I think that we would have a bigger problem, because also the exceptions (b)(1)(ii)(A), (B), (C) and (D) would not apply to a sub-contractor...

You are right, my question was on DFARs 252.215-7010. With the statement above I was referring the other 4 exceptions that are listed in DFARs 252.215-7010(b)(1)(ii), before the (E), I thought that all of them (or none of them if I got your position) should be applicable to the sub-contractor. 

Hopefully I clarified my understanding.

4 hours ago, Neil Roberts said:

did the RFP include language that substituted parties in general throughout the RFP, or specifically with respect to this DoD provision, such as "Offeror means subcontractor" and "Contracting Officer means Contractor?"

Yes it does, specifically after 252.215-7010 "Contracting Officer means the Buyer", where the Buyer is defined as the Prime. 

4 hours ago, Neil Roberts said:

Offeror to DoD

is there a definition of sub-offeror? why the clause itself require the flowdown, if it cannot be used from a sub-contractor while sub-Offering?

4 hours ago, Neil Roberts said:

(b)(1)(ii) clearly means the Offeror to DoD when such provision is included in a DoD solicitation. It does not change meanings when it is flowed down to subcontractors. Therefore, it has nothing to do with subcontractors. (b)(1)(ii)(E) is a subsection of (b)(1)(ii).

If this statement would be true, I think that we would have a bigger problem, because also the exceptions (b)(1)(ii)(A), (B), (C) and (D) would not apply to a sub-contractor... while it results to me are commonly used to require the exception for those categories of products.

I do appreciate your point of view. Thank you.

1 hour ago, here_2_help said:

As I understand things, the DFARS permits a government contracting officer to use commercial item procedures to acquire goods and services from a NTDC, without making a commercial item determination

I agree on this, it is the rule in DFARs 252.215-7013. This applies the Part 12 to the procurement which is a far more relaxed requirement than "just" the exemption from certified cost and pricing data, which is what the 7010(b)(1)(ii)(E) seems to allow. It contains the requirement to what is necessary to ask for the exemption, that for the NTDCs is just the written statement... This change was planned because many (all?) NTDC do not have in place systems to certify the data, even if quality and price of products/services may satisfy the Customer, this gap in system/processes was exposing them to potential following problems... which has been a fear preventing many to offer in this arena. The original intent was to enlarge the supplier base as far as I understood.

Thank you for the time you have spent on this.

I appreciate your reply,

13 hours ago, Retreadfed said:

However, the above statement does not make any sense.  Can you try to restate more clearly what the facts are?

It is connected with the definition of NTDC, as far as I understand prime's position is that if you performed as subcontractor of a prime on a contract that for the prime is full CAS covered, you cannot claim the exemption because you do not fall anymore in the definition below.

"Nontraditional defense contractor means an entity that is not currently performing and has not performed any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement"

13 hours ago, Retreadfed said:

The prime contractor seems to be correct in regard to 1

Could you please help me understanding where is written that this esemption is not applicable to subcontractors? The flowdown seems to me to be mandatory.

Thank you 

Hi,

the environment of this request is a DOD production project, a subcontractor submitting a proposal following a FFP RFP, requested by a US prime contractor on Part 15, on an alternative source subcontractor, for parts produced on Prime's design.

The request is on the applicability of the DFARs 252.215-7010(b)(1)(ii)(E): exemption from submitting certified cost or pricing data for Nontraditional Defence Contractors (NTDC). (rule modified in Jan 2018)

1. the prime contractor is stating that the supplier (subcontractor) cannot request this exemption from submitting certified cost or pricing data, because:                  a. this exemption is allowed only at prime contract level.

                b. the contract is not for commercial items.

2. the prime is also stating that if the subcontractor is running a subcontract where a prime contract is full CAS covered, the subcontractor (that qualifies for modified coverage, e.g small business or foreign concern) cannot claim to be a Nontraditional Defence Contractor, because it has at least one prime contract which is full CAS covered.

I do not have enough experience to state if it is an overkill to request certified cost or pricing data or it is a just right application of the rules.

I would appreciate some references that can eliminate the doubt and allow to take a supported position.

Thank you.