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Can a prime contractor receive profit on a non-profit subcontractor's portion?

Portion of what? Do you expect anyone to know what this is in reference to?

If the subcontract cost is for an equitable adjustment on a contract that otherwise provides for profit, why would you think no prime profit is allowed? If pricing a contract for some work that is subcontracted and the contract would otherwise allow profit, why would you think that no prime profit on the subcontract is allowed?

I assume that the prime contractor is responsible for the successful performance of the work that the subcontractor is performing, is that correct? The prime is at risk for performance and must expend cost and resources to administer the subcontract, so why would it not be entitled to profit, unless there is some special circumstance or contract arrangement?

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I don't understand the question either.

But I did want to add that even a not-for-profit entity is entitled to receive a profit based on contract type and negotiated price. The "non-profit" status of a business is based on IRS rules, not the FAR. It should not affect whether the government (or prime) actually pays a profit on the subcontractor's costs.

To be clear: generally speaking, "not-for-profit" status refers to the tax status of the entity as a whole, and not to the profit or fee associated with an individual contract.

Hope this helps.

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In response, "portion" is referring to the subcontractor's portion of the overall effort, which in this case is approximately 85%. This effort is below the SAT, so based on FAR 15.408(n)(ii) it is at the CO's discretion to include the Limitation on Pass-Through Charges?Identification of Subcontract Effort clause 52.215-22. The contract type is CPFF and the risk to the prime is minimal. Thank you for your responses and I apologize for the vague original post. It was posted in haste and I will make sure I refrain from doing that again.

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In response, "portion" is referring to the subcontractor's portion of the overall effort, which in this case is approximately 85%. This effort is below the SAT, so based on FAR 15.408(n)(ii) it is at the CO's discretion to include the Limitation on Pass-Through Charges?Identification of Subcontract Effort clause 52.215-22. The contract type is CPFF and the risk to the prime is minimal. Thank you for your responses and I apologize for the vague original post. It was posted in haste and I will make sure I refrain from doing that again.

So, are you saying that the clauses 52.215-22 and 23 do apply to this negotiated CPFF contract or order?

If yes, then is the prime contractor providing any value to the subcontract, contract or order, per the definition of "excessive pass-through charge" in clause 52.215-23?

"'Excessive pass-through charge', with respect to a Contractor or subcontractor that adds no or negligible value to a contract or subcontract, means a charge to the Government by the Contractor or subcontractor that is for indirect costs or profit/fee on work performed by a subcontractor (other than charges for the costs of managing subcontracts and any applicable indirect costs and associated profit/fee based on such costs).

?No or negligible value? means the Contractor or subcontractor cannot demonstrate to the Contracting Officer that its effort added value to the contract or subcontract in accomplishing the work performed under the contract (including task or delivery orders)."

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FAR 52.215-22, in my opinion, should apply to this effort; however, given the sole source relationship we have with the contractor this below SAT effort won?t make it on the list of priorities concerning contractor and program issues. And perhaps rightfully so, since one could make a reasonable argument that the prime contractor is adding value (the speed by which the effort is administered vs if the Government were to go directly to the subcontractor (yes this point can be argued) and the knowledgeable oversight the prime will provide). Furthermore, the cost benefit analysis on this CPFF effort would more than likely show that it is more costly to the Government to challenge the prime and delay the overall objective(1) than to just agree to pay profit on this minor effort. The one aspect I can control is the weighted guidelines developed for this effort.

1. Overall ?theoretical? objective ? create a solution to global warming before it gets uncontrolable.

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Just to clarify, 52.215-22 is the solicitation provision that requires certain information with a proposal related to pass-through charges and puts offerors on notice of the rules; -23 is the corresponding contract clause dealing with the same subject and lays out the rules that apply during performance.

Provisions and clauses are not identical, although the distinction is not always clear or understood.

The commercial world sometimes calls provisions "instructions to bidders" and "information for bidders."

Others may have better definitions or examples, but I believe this covers the basics.

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