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Competition in Subcontracting

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FAR 52.244-5 generally identifies the requirements for subcontract competition in negotiated procurements. I view this as a pretty vague regulation with little substance. Can anyone direct me to additional authority that provides more substance regarding a prime contractor's obligation, if any, to recompete subcontracts for long term programs?

Consider this hypothetical. Contractor wins a negotiated DOD procurement to develop a piece of hardware with the expectation that the government will purchase the item over an extended period of time, 10 years or more. To win the contract, the prime enters into requirements based subcontract relationships with certain suppliers for key materials. The prime wins the procurement and over time is awarded a series of cost-reimbursable contracts to furnish the item and such contracts are not competitively procured. The prime keeps the same subs for 10-20 years. Will there ever come a time when the prime is expected to recompete the subcontracts that furnished key materials for the series of cost-reimbursable contracts the prime may win over a 10-20 year period?

I suspect the answer may lie in 52.244-5's language referring to "the objectives and requirements of the [prime] contract." Perhaps the Government and the contractor have negotiated the subcontract competition issue in the prime contract or some MOU. Perhaps also the prime is expected to conduct cost reasonableness analyses periodically (annually, bi-annually,?) to ensure the Government is getting the right price for the key materials over time, before extending the sub's purchase order. But if anyone is aware of literature to shed light on this, I would appreciate hearing from you. Thanks.

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For the prime to win a series of cost-reimbursable contracts to furnish the item, the prime would need an Approved Purchasing System.

The extent of the prime's cost or price analysis requirements in subcontracting would be spelled out in its Approved Purchasing System.

The purchasing system (and indeed in general all the costs incurred on the reimbursable prime contract) would be subject to audit.

If the Government really wanted to exert more control over the subcontracting aspects of this situation, the Government could exercise (after adding or modifying, as may be needed) FAR 52.244-2, Subcontracts, with particular attention to paragraph ( d ) and possibly also ( j ).

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For the prime to win a series of cost-reimbursable contracts to furnish the item, the prime would need an Approved Purchasing System.

The extent of the prime's cost or price analysis requirements in subcontracting would be spelled out in its Approved Purchasing System.

The purchasing system (and indeed in general all the costs incurred on the reimbursable prime contract) would be subject to audit.

If the Government really wanted to exert more control over the subcontracting aspects of this situation, the Government could exercise (after adding or modifying, as may be needed) FAR 52.244-2, Subcontracts, with particular attention to paragraph ( d ) and possibly also ( j ).

Cajun, why do you say the contractor would need an approved purchasing system for it to win a series of cost reimbursement contracts? Also, exactly what did you mean when you said "in general all the costs incurred on the reimbursable prime contract) would be subject to audit"?

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Cajun, why do you say the contractor would need an approved purchasing system for it to win a series of cost reimbursement contracts? Also, exactly what did you mean when you said "in general all the costs incurred on the reimbursable prime contract) would be subject to audit"?

On a practical basis, without an approved purchasing system, a contractor's chances of a cost reimbursable award are slim to none - and Slim left town last week.

The other was a poorly phrased contrast between an Purchasing System Review and a Cost Incurred Audit.

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On a practical basis, without an approved purchasing system, a contractor's chances of a cost reimbursable award are slim to none - and Slim left town last week.

The other was a poorly phrased contrast between an Purchasing System Review and a Cost Incurred Audit.

I have to disagree with your observation regarding a contractor's chances of receiving a cost reimbursement contract without having an approved purchasing system. I know of several contractors without approved purchasing systems that receive cost reimbursement contracts.

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I have to disagree with your observation regarding a contractor's chances of receiving a cost reimbursement contract without having an approved purchasing system. I know of several contractors without approved purchasing systems that receive cost reimbursement contracts.

Examples? Without getting too specific about contractor name, could you let us know the monetary ranges of such contracts and the awarding agency(ies)? Always willing to learn.

Stepping back from these specifics, I believe Joe's question has been answered.

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Cajun's assertion about the need for an approved purchasing system is too general and wrong for that reason. Much would depend on the dollar values of the contracts and the agency(s) making the awards.

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Examples? Without getting too specific about contractor name, could you let us know the monetary ranges of such contracts and the awarding agency(ies)? Always willing to learn.

Stepping back from these specifics, I believe Joe's question has been answered.

Most of the contracts to which I was referring were awarded to small businesses for whom no CPSR had been conducted. Note that the general threshhold for the conduct of a CPSR is anticipated $25M in awards, excluding competitively awarded firm-fixed-price and competitively awarded fixed-price with economic price adjustment contracts and sales of commercial items pursuant to Part 12, in the next year. Many small business concerns fall well below that threshhold.

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Examples? Without getting too specific about contractor name, could you let us know the monetary ranges of such contracts and the awarding agency(ies)? Always willing to learn.

Stepping back from these specifics, I believe Joe's question has been answered.

I agree - many thanks.

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DCAA Audit Guidence Memo, dated 11/15/10, titled "Audit Guidence on Audit Procedures Related to Long Term Agreements (LTA)" might be helpful.

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