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Seeking to subcontract with Uiniv of Arizona, they submitted a CPAF proposal for R&D effort we were requesting. I had thought that since they are a "non profit" organization they weren't able to bid fee?? Researching the FAR they refer to OMB -21 which discusses what costs are allowable however no where is fee discussed. AS i cannot find any direct proscription against fee for educational institutions, I assume they are entitled to it. Would appreciate someone with experience in contracting with Universites, educate me. Thank you in advance . ED

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Guest carl r culham

Reading between the lines it appears you are a prime with a Federal contract intending to subcontract with the University. There are many questions I am sure that others that respond on this forum would want to ask you to help answer your question such as what is your prime contract - fixed priced or cost reimbursement, the value of the contract etc. that will kick in application of such things as cost or price analysis issues, CAS coverage etc. I am somewhat familiar with the matter of profit/fee for educational institutions strictly from the Federal side. You are correct OMB Circular A-21 does not address profit/fee (Paragraph 1. - Purpose) and FAR coverage contained in 15.404-4 regarding profit does not address the matter specifically but agencies sometimes do. For instance in NASA their FAR supplement states that profit/fee is not to be paid to educational institutions (NFS 1815.404-471-6(a)) and the DFARs address the matter through the weighted guidelines process.

Overall if I have concluded correctly that you are a prime contractor it might be better to ask your question of the Contracting Officer for your contract as he/she would know all the related facts to your particular situation and what your contract type and any terms and conditions in it may or may not require.

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Reading between the lines it appears you are a prime with a Federal contract intending to subcontract with the University. There are many questions I am sure that others that respond on this forum would want to ask you to help answer your question such as what is your prime contract - fixed priced or cost reimbursement, the value of the contract etc. that will kick in application of such things as cost or price analysis issues, CAS coverage etc. I am somewhat familiar with the matter of profit/fee for educational institutions strictly from the Federal side. You are correct OMB Circular A-21 does not address profit/fee (Paragraph 1. - Purpose) and FAR coverage contained in 15.404-4 regarding profit does not address the matter specifically but agencies sometimes do. For instance in NASA their FAR supplement states that profit/fee is not to be paid to educational institutions (NFS 1815.404-471-6(a)) and the DFARs address the matter through the weighted guidelines process.

Overall if I have concluded correctly that you are a prime contractor it might be better to ask your question of the Contracting Officer for your contract as he/she would know all the related facts to your particular situation and what your contract type and any terms and conditions in it may or may not require.

Thanks for your insight........ED

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Reading between the lines it appears you are a prime with a Federal contract intending to subcontract with the University. There are many questions I am sure that others that respond on this forum would want to ask you to help answer your question such as what is your prime contract - fixed priced or cost reimbursement, the value of the contract etc. that will kick in application of such things as cost or price analysis issues, CAS coverage etc. I am somewhat familiar with the matter of profit/fee for educational institutions strictly from the Federal side. You are correct OMB Circular A-21 does not address profit/fee (Paragraph 1. - Purpose) and FAR coverage contained in 15.404-4 regarding profit does not address the matter specifically but agencies sometimes do. For instance in NASA their FAR supplement states that profit/fee is not to be paid to educational institutions (NFS 1815.404-471-6(a)) and the DFARs address the matter through the weighted guidelines process.

Overall if I have concluded correctly that you are a prime contractor it might be better to ask your question of the Contracting Officer for your contract as he/she would know all the related facts to your particular situation and what your contract type and any terms and conditions in it may or may not require.

I do however want to state that I am a Gov't Prime with a CPAF contract seking to retain U 0f A as a sub..I will be contacting the contracting officer tomorrow. I looked at FAR and DFAR as well as A-21 and struck out. Thanks again, ED

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Guest Vern Edwards

FAR does not prohibit the use of cost-reimbursement contracts with fees (CPFF, CPAF, CPIF) when contracting with nonprofits, not-for-profits, or educational institutions. However, some agencies, such as Department of Energy and NASA do not pay profit or fee to educational institutions as a matter of agency policy. See their FAR supplements. I know of no governmentwide policy against paying profit or fee to nonprofits, not-for-profits, or educational institutions.

If you are confused by the fact that nonprofits and not-for-profits can earn profit or fee under a government contract, you need to do some reading about the nature of nonprofit and not-for-profit organizations.

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FAR does not prohibit the use of cost-reimbursement contracts with fees (CPFF, CPAF, CPIF) when contracting with nonprofits, not-for-profits, or educational institutions. However, some agencies, such as Department of Energy and NASA do not pay profit or fee to educational institutions as a matter of agency policy. See their FAR supplements. I know of no other governmentwide policy against paying profit or fee to nonprofits, not-for-profits, or educational institutions.

If you are confused by the fact that nonprofits and not-for-profits can earn profit or fee under a government contract, you need to do some reading about the nature of nonprofit and not-for-profit organizations.

Thanks Vern for your insight,not so much confused, I abide by the regs and I also could not find anything to the contrary regarding fee on educational institutions. I will check with my customer who is an agency I cannot discuss. Having some experience with them I believe that fee is allowable under this circumstanec. I really appreciate the quick repsonses I received from all members. Thanks ED

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Thanks Vern for your insight,not so much confused, I abide by the regs and I also could not find anything to the contrary regarding fee on educational institutions. I will check with my customer who is an agency I cannot discuss. Having some experience with them I believe that fee is allowable under this circumstanec. I really appreciate the quick repsonses I received from all members. Thanks ED

Remember, the FAR and agency supplements generally address policies covering contractng between the government and prime contractor. Very little in these regulations provides guidance on how a prime is to subcontract. As for fee on subcontracts, that is a cost to the prime and the entire amount a prime can recover for what it pays its subs under a cost reimbursement contract is subject to the cost principles. Fee or profit to a subcontractor is not treated separately by the cost principles.

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