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When are Prime contractors required to obtain Certified Cost or

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How is your scenario substantively different from mine? In both cases a subcontract is awarded after the negotiation and award of the prime contract. In my scenario, the subcontract is awarded because the prime changed its mind about doing the work in house. In yours, the subcontract is awarded because the prime was dissatisfied with the first subcontractor. What does the reason for the subcontract award have to do with anything? What's the connection? Why is the new sub's data not cost or pricing data in your scenario, but might be cost or pricing data in mine?

In your scenario, the prime subbed the work when it said in its proposal that it was going to self perform it.

In this case, the prime did exactly what it said it would do in its proposal. However, the sub failed to perform (according to the information provided) and had to be replaced.

In your scenario, the change in strategy may have affected the price that the government should have paid. The government audit might be able to show that the contractor had possession of or had solicited a proposal from the sub before or during negotiations nut failed to disclose it. If such a proposal showed that it should have been less expensive to subcontract the work, but the prime priced it as though it were going to self perform at a higher cost, there might be defective pricing.

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The remedy might be termination for default. See, e.g., FAR 52.249-8(a)(1)(iii) or 52.249-9(a)(1)(iii). In lieu of termination for default the government might accept some other consideration.

Vern, I'm not seeing it, unless the Government has suffered some substantive harm in the scenario I posted.

"A default termination is a drastic sanction, which should be imposed and sustained only on ?good grounds and on solid evidence.? E.g., Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). Government contract provisions authorizing termination of a contract for default are a species of ?forfeiture? and are to be strictly construed. Forfeitures are not favored, and one who asserts that there has been a forfeiture is held to the letter of its authority."

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You don't see it? Really? I think that an argument could be made that refusal to comply with a contract clause that implements a statutorily mandated obligation might be considered sufficiently serious to warrant T for D. Prove I'm wrong. See Inter-Continental Equipment, Inc., ASBCA No. 37422, 96-1 BCA 28048, in which the board upheld a termination for default because the contractor failed to comply with FAR 52.247-64, “Preference for Privately Owned U.S.-Flag Commercial Vessels, Alternate I (APR 1984).” According to the board:

[W]e conclude that [the Navy] has established that the default termination rested on “‘good grounds and solid evidence.”’ Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987) quoting J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969). Under paragraph (a)(1)(iii) of the Default clause (see finding 2), respondent may terminate for default if the contractor fails to “[p]erform any of the other provisions of [the] contract” following an unsatisfactory response to a cure notice. See FAR 52.249-8. On this record, there is no doubt that appellant failed to comply with the requirement in paragraph ?(1) of the Cargo Preference clause that it “submit one legible copy of a rated on-board ocean bill of lading for each shipment to both (i) the Contracting Officer and (ii) the . . . Maritime Administration.” See FAR 52.247-64.

Hope this helps you see it.

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Joel:

In your scenario, the change in strategy may have affected the price that the government should have paid. The government audit might be able to show that the contractor had possession of or had solicited a proposal from the sub before or during negotiations nut failed to disclose it. If such a proposal showed that it should have been less expensive to subcontract the work, but the prime priced it as though it were going to self perform at a higher cost, there might be defective pricing.

You're avoiding an answer by changing my scenario. Please answer the questions I asked based on the scenario I presented. Are you able to do that? Are you willing?

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Joel:

You're avoiding an answer by changing my scenario. Please answer the questions I asked based on the scenario I presented. Are you able to do that? Are you willing?

OOPS. I did misread your scenario. I will answer but not tonight. I just got home from TDY and leave again first thing in the morning. I want to see my wife. I will need to read up on it. I'll be home Friday night and will look after that.

There is a difference though. In the original scenario, the contractor did what it proposed to do. In the second situation, it didn't do what it proposed to do. However, I need to read Nash and Cibinic and the files I have collected.

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You don't see it? Really? I think that an argument could be made that refusal to comply with a contract clause that implements a statutorily mandated obligation might be considered sufficiently serious to warrant T for D. Prove I'm wrong. See Inter-Continental Equipment, Inc., ASBCA No. 37422, 96-1 BCA 28048, in which the board upheld a termination for default because the contractor failed to comply with FAR 52.247-64, ?Preference for Privately Owned U.S.-Flag Commercial Vessels, Alternate I (APR 1984).? According to the board:

Hope this helps you see it.

Vern, my point was that I would see a TforD as being unwarranted in a situation where the government suffered no harm. I acknowledge it is a possible course of action, but one I would find unlikely, given the circumstances. In the case you cited from, the government could allege actual harm.

As a counter example, I have been part of multiple CPSR reviews, where several failures to comply with clauses that implemented statutorily mandated obligations were encountered. (E.g., failure to obtain EEO clearance when required, failure to flow down CAS admin. clause when required, etc.) In NONE of those instances did the DCMA reviewers ever recommend, consider, discuss, or even mutter under their breath, a TforD as the government's remedy. I would be surprised if the hypothetical situation I posited would be treated differently.

Again, it is a possible course of action, but why? Just as a negotiating tactic to bludgeon the contractor into giving some form of consideration?

I reiterate: I don't see it [happening] -- but I acknowledge that it could happen.

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Your "no harm" thinking is unsound. The harm lies in not having certified cost or pricing data from a subcontractor which might be useful in making equitable adjustments and settling claims in the future. Another harm is not obtaining compliance with a federal statute. What would Congress and the public say if it found out that the government isn't enforcing its contracts? Would (further) loss of public confidence in the integrity of the procurement system constitute harm?

In any case, must the government suffer actual damage in order to T for D? Is actual injury a prerequisite to T for D? You seem to suggest that it is, but is that true?

As for your experience with CPSRs, I don't see what bearing that has on this matter. The function of a CPSR team is to evaluate a contractor's purchasing system, not to recommend how to administer particular contracts. As a member of a CPSR I would not recommend that a particular subcontract be terminated for default, but I might recommend denial or withdrawal of purchasing system approval if I found that the contractor was not enforcing its contracts so as to ensure that the government's third party rights are protected.

I probably would not terminate a contract for default because a contractor failed on one occasion to obtain subcontractor cost or pricing data through ignorance or neglect. However, if a contractor refused to obtain it on grounds of a half-baked theory like Joel's, you can bet that I would issue a cure notice and give T for D serious consideration.

In any case, I don't see why you're bringing this up in the present discussion. Does your question have something to do with Joel's theory? If not, why not start a new thread about T for D as a response to contractor failure to comply with contract clauses? That's an interesting topic. What should the government do if a prime fails to flow down the clause at FAR 52.215-2, Audits and Records--Negotiation (JUN 1999)?

I await your new thread with interest and anticipation.

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I probably would not terminate a contract for default because a contractor failed on one occasion to obtain subcontractor cost or pricing data through ignorance or neglect. However, if a contractor refused to obtain it on grounds of a half-baked theory like Joel's, you can bet that I would issue a cure notice and give T for D serious consideration.

*****

I await your new thread with interest and anticipation.

Vern,

The point I was trying to make was that, if the government did not have a monetary remedy available under TINA, perhaps it would not be treated as TINA matter. We've discussed that point.

There's no need for another thread.

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FAR 52.215-12 requires the contractor to obtain the submission of cost or pricing data before awarding "any" subcontract that exceeds the TINA threshold when no exception applies. As a contract clause, that FAR subsection clearly applies after award of the prime contract. See also FAR 15.403-4(a)(1)(ii) and 15.404-3©. The clause requires the prime to require the sub to flow its terms down to its own subs. There is no case law of which I am aware holding that the clause means anything other than what it says.

I do not buy the argument that subcontractor data cannot be cost or pricing data if it could not affect the original pricing of the prime contract. Such an interpretation of the definition of cost or pricing data would render FAR 52.215-12 meaningless, thus violating a well-known general rule of contract interpretation. See, e.g., Westfed Holdings, Inc. v. U.S., 407 F.3d 1352 (2005):

It is of course firmly established as a general rule of contract interpretation that the “interpretation that gives a reasonable meaning to all parts of the contract will be preferred to one that leaves portions of the contract meaningless.” United States v. Johnson Controls, Inc., 713 F.2d 1541, 1555 (Fed.Cir.1983).

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