Megan G

ji20874: FAR 52.232-7 was carefully constructed where references to "Contractor" mean "Seller" and the terms "Government Contracting Officer", "Government" or "Contracting Officer" mean "Buyer".  The structure recommended by here_2_help seems to best align with the requirements of the clause, unless in conjunction with your most recent company we cannot have different billable rates for identical labor categories. 

Each subcontractor will be providing the same technical labor (engineering support and analysis) but specific to their components.  The rates we've received from subcontractors for labor hours vary with the smaller subcontractors having a significant delta in the hourly rate (- $60/hr) and the larger subs providing rates in excess of our standard (+$20/hr). The rate spread is generating mild audit concerns.

Thank you ji20874 for the response, it helped answer an underlying question. As the subcontractor, I was concerned I had started down a rabbit hole in applying FAR principles to this relationship - I had. I moved beyond the RFP flowdowns and into generic T&M FAR research. 

The RFP however includes 52.232-7. As the subcontractor, am I required to separate our rates and the rates of our subcontractors (52.232-7(a)(1)) or may we provide a blended labor rate? If the rates are separate, would it be permissible to add a fixed fee onto our subcontractors' rates? I've made note that if we have a labor rate for PM and CM efforts and if those positions manage the subcontractors it is unnecessary to mark-up subcontractor rates - we'd capture that with PM/CM hours.  Our team has limited experience with T&M proposals so this has been a bit of a challenge for us to quote.   Thanks again for the feedback and redirection.

We are a subcontractor for a multi-year FFP DoD contract. Our Prime was awarded an Order under Basic Ordering Agreement (BOA).  The award to the Prime was non-competitive, as the Order supports a pre-existing Contract for which the Prime, ourselves and our subcontractors are the only sources with the requisite knowledge, experience, and technical expertise to provide the required supplies and services under the Order.  The Prime has asked for the T&M proposal for our participation. We have historically avoided T&M efforts but the proposal scope is too broad for us and our suppliers to provide a traditional FFP for the effort. Our participation alone and the participation of several subcontractors will exceed $150,000. I have many questions but I’ll limit it two; I suspect the response may help answer the others. 

1) Based 16.601(c)(2)(ii), do I understand correctly that we need to provide the hourly rates for ourselves and the hourly labor rates for each of our subcontractors separately? My understanding is the lack of competition restricts us from submitting blended labor category rates.

2) If I’ve understood the first, how do I capture the overhead costs related to subcontractor management? We don’t have a standalone role/position of subcontract manager, that task is shared between PM and CM.  Can I add a fixed fee (e.g. 10%) to all subcontractor hourly rates? We’re still waiting on rates from our subs, in the interim can we bookmark the proposal by stating “xxxx will invoice at the subcontractor rates plus 10%.”?  I’m hesitant with this approach and uncertain whether it would create a prohibited CPPC.

A few notes: (1) we and the majority of our subcontractors are not supply COTS or Commercial Items; (2) no Materials will be provided – a technical labor effort; 52.216-30 was not included in the flowdowns.  As always, appreciate the feedback and support from this forum.

17 hours ago, Don Mansfield said:

That looks like a portion of the preface. Is there more preceding it? Specifically, how "Contractor" should be construed?

Correct, the rest of this section is (what I consider) standard Prime - Subcontractor flowdown: The clauses set forth below, and in effect on the date of the Order, are incorporated herein by this reference and made a part of the Order. In all such clauses, the term "Contractor" shall mean "Seller," the term "Contract" shall mean the "Order," and the term "Government Contracting Officer" (or equivalent phrases), shall mean "Buyer" as applicable; except that in those clauses conferring patent and data rights to the Government, the term "Government" or "Contracting Officer" retains its literal meaning and is not to be construed as "Buyer."  The relevant data flowdowns are 252.227-7013; 252.227-7030; 252.227-7037; and 252.246-7001.

@Neil Roberts Yes, we are working within a FFP contract and the anticipated losses are significant.  The sheer number of updates needed is one thing, but it's the current change order process which takes an hour/drawing update.  We will explore an exemption to this process (unlikely) or, as you suggest, setting a price which we will pay for the Government to complete the updates.

22 hours ago, Jacques said:

It seems unlikely that, for as many deliverables are you seem to be talking about here, the Government would be prepared to put in place what it needed to in order to systematically but properly "ignore" the markings on these specific affected deliverables.  DFARS 227.7103-12(b), discussing unjustified markings, includes no discussion about how, exactly, the Government would go about "ignoring" the unjustified markings.

Admittedly, I am not familiar with the Government's document/deliverable control practices. The Final Determination granted Unlimited Rights to each component which rights had been asserted; simply put, all restrictive markings on all deliverables provided could/should be ignored. Without formal procedure, I would think an attestation which identifies all affected Deliverables and directs the Government to ignore the Restrictive Marking pursuant to 252.227-7013 and 252.227-7037 could suffice -- I acknowledge this is a rather simple (and hopeful) fix.

8 minutes ago, Retreadfed said:

You said you were with a subcontractor.  As such, the government is not in privity of contract with you.  Your contract is with the prime.  What do(es) your subcontract(s) say about what data rights you are conveying and to whom?

2 minutes ago, Jacques said:

Perhaps the parties are relying on paragraph (k) of the "Validation of Restrictive Markings on Technical Data" clause at DFARS 252.227-7037.  It provides:

 

Both are correct, however @Retreadfed brings the task at hand back into focus.  Our Data Assertions were provided in accordance with 252.227-7017 and included as an Exhibit in our subcontract(s). The communication of Final Determination was from the Prime, and the Prime made the request that we update the deliverables to remove the restrictive legends.

The contracts further provide that all data which we asserted to be proprietary and that is necessary for the performance shall be protected in accordance with 252.227-7013.  The relative flowdown clauses are prefaced with the language: except that in those clauses conferring patent and data rights to the Government, the term "Government" or "Contracting Officer" retains its literal meaning and is not to be construed as "Buyer". 

13 minutes ago, Jacques said:

I'm curious about the phrase, "Notwithstanding any provision of this contract concerning inspection and acceptance" in paragraph (h)(1) or the "Rights in Technical Data--Noncommercial Items" clause at DFARS 252.227-7013.  Does this function as an exception to the finality of acceptance?  If the validation is resolved in a way that favors the Government, does that mean the Government can revisit its acceptance of those data deliverables as it relates to the unjustified marking?  Does this language have the effect of reviving the direction to contracting officers at DFARS 227.7103-14(b)(3)?  It provides:

 

First, thank you for the reference to DFARS 227.7103-12(b)(2)(ii).  With respect to 252.227-7013(h)(1), I had thought to mention earlier the deliverables with the restrictive markings had been accepted by the Prime, and presumably the Government. As I read the language above, this would permit the Government to revisit acceptance, but, at least in my situation, it wouldn't direct the CO to DFARS 227.7103-14(b)(3).  If the marks were nonconforming 227.7103-14(b)(3) may apply. Although the final determination notice didn't specify, it's my assumption that in a Government Challenge, if the Government is successful in its challenge the restrictive legends are an Unjustified Markings rather than Nonconforming.  

I'm also struggling with the timeline of related events. First assertion 2012 - Notice of Challenge 2015 - Final Determination 2019. During this seven year period hundreds of drawings containing the markings were provided and accepted. If this Challenge had resolved in 2015 there may be only a few hundred of updates needed instead of the 1000+ we're currently looking at.  I'm unfortunately any related background knowledge left the company a couple years ago without leaving a document trail on this matter.  

@here_2_help thanks for your review and feedback. The question is less about the impact the Unlimited Rights determination has on the  asserted data rights, and more on our obligation as a subcontractor to provide drawing updates.  Based on the date the notice of final determination was provided, we are outside the window (90 days) to provide notice of an intent to appeal.  

With respect to the drawing updates, @Jacques I am looking at the language at paragraph (h)(1) of the "Rights in Technical Data--Noncommercial Items" clause at DFARS 252.227-7013. With the current drawing approval process, updates to the drawing will take us close to a year to complete and hundreds of resource hours.  My reading of 252.227-7013(h)(1) is that the Government can either ignore, or at our expense they (the Government) may correct or strike the restrictive markings.   A request that the Contractor modify the drawings as a result of the Challenge is not explicitly provided as a remedy. Might a request that the Contractor modify the deliverables entitle the Contractor to equitable adjustments?

We are a subcontractor for several DoD contracts related to a specific program.  For each subcontract over the past eight years, we have asserted the same data rights to certain technical data.  Our first assertion was made and provided to the Prime in July 2012.  In August 2015, we received notification of a Government Challenge pursuant to 252.227-7037.  In November 2019, we received notification of Final Determination in which the Government took the position of Unlimited Rights. In accordance with 252.227-7013, there are no authorized marking legends for Unlimited Rights.

Without going too far into the weeds, has anyone successfully petitioned the Government to ignore the prior legends as permitted in 252.227-7013 and 252.227-7037? My understanding of these DFARS is the Government may ignore or, at the Contractor's expense, correct or strike a marking (7013) or may cancel or ignore the restrictive markings (7037). There is a choice how to handle the unjustified markings.  There are 1000+ drawings which included restrictive legends consistent with the data rights we asserted. The burden of removing the legends is labor intensive and an expensive endeavor; I also don't see the contractor updating the drawings to remove the legend as a remedy provided under the DFARS.   

Personal disclaimer, I have been with this company >1 year. The history related to the Challenge and the decision not to appeal the determination had been lost with personnel changeover. I appreciate any feedback.