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CAS Covered Subcontract Notifications


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We are specifically trying to clearly determine that if a 1st tier subcontractor issues a CAS covered award to a 2nd tier subcontractor, should the first tier subcontractor issue the CAS notification letter to the prime contractor's CFAO or the 1st tiers CFAO, or the 2nd tiers CFAO.

Excerpt from 52.230-6:

(l) For all subcontracts subject to the clauses at FAR 52.230-2, 52.230-3, 52.230-4, or 52.230-5?

(1) So state in the body of the subcontract, in the letter of award, or in both (do not use self-deleting clauses);

(2) Include the substance of this clause in all negotiated subcontracts; and

(3) Within 30 days after award of the subcontract, submit the following information to the Contractor?s CFAO:

(i) Subcontractor?s name and subcontract number.

(ii) Dollar amount and date of award.

(iii) Name of Contractor making the award.

(m) Notify the CFAO in writing of any adjustments required to subcontracts under this contract and agree to an adjustment to this contract price or estimated cost and fee. The Contractor shall?

(1) Provide this notice within 30 days after the Contractor receives the proposed subcontract adjustments; and

(2) Include a proposal for adjusting the higher-tier subcontract or the contract appropriately.

(n) For subcontracts containing the clause or substance of the clause at FAR 52.230-2, FAR 52.230-3, FAR 52.230-4, or FAR 52.230-5, require the subcontractor to comply with all Standards in effect on the date of award or of final agreement on price, as shown on the subcontractor?s signed Certificate of Current Cost or Pricing Data, whichever is earlier.

Thanks so much for your help with this interpretation.

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We are specifically trying to clearly determine that if a 1st tier subcontractor issues a CAS covered award to a 2nd tier subcontractor, should the first tier subcontractor issue the CAS notification letter to the prime contractor's CFAO or the 1st tiers CFAO, or the 2nd tiers CFAO.

Which would you like to do?

I ask this question in all seriousness.

I suppose it is possible to deduce an answer. For example, because of privity of contract, CAS-related adjustments related to subcontracts (at any tier) can only be taken at the prime level and thus one might argue that the notification letter needs to go to the prime's CFAO. Alternately, one could argue that, even though the CAS enforcement is government to prime, and prime to subK, and thence downward in the suply chain, the fact is that the next higher tier is responsible for administering CAS on its subcontractors ... meaning that any notification needs to flow upwards in the supply chain, one tier at a time.

But my point is that it's ambiguous. The regulation is unclear. To my knowledge it's never been litigated, so we have no Court interpretation to assist us.

So pick the answer that you like and go with it.

Hope this helps.

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  • 1 month later...

Here 2 Help,

Based on your knowledge and research provided, would you agree that there is not a subcontractual requirement to issue CAS Notification Letters for 2nd tier and under subcontractors? If the CAS Notifications were not issued, since FAR is unclear on where to issue them, could a CPSR team legitimately state this as a finding in an audit?

Please advise,

ThomCons

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  • 1 month later...

But, , , , in this particular instance I'm being quizzed on why I did not notify in regard to the issuance of a Letter Subcontract. I'm not aware of ever notifing in the case of Letter Subs, or any other non-difinitized matter. The LSC is for "long lead material" in the amount of a couple million dollars, while the definitized Purchase Order will be over $20 million.

Thoughts?

This whole CAS Administration thingee is a difficult area, with little in the way of regulatory guidance. So I'm going largely on experience and gut feel here, which Vern would tell you is a terrible way to go and should not be trusted. That caveat aside ....

You have a CAS covered subcontract award at the time you award a priced contract action. To me, a Letter Subcontract (or UCA if you prefer) is still a contract. In my experience, the definitization is via modification to the contract. If so, then the modification does not change the CAS "flavor" of the contract; it stays with the same CAS coverage it had at the time of award. (That's a fairly settled position.) So I'm tending to think you need to report the Letter Subcontract award, especially since, at "a couple million dollars," it exceeds the CAS threshold of $700,000.

The CAS Admin clause (52.230-6) is a mandatory flow-down clause ("required when applicable"). In addition, the body of the clause, at (l), provides explicit directions. So I think the reporting requirement flows down with the clause into the suply chain until it reaches a subcontract this is exempt from CAS, at which point it becomes "not applicable".

Hope this helps.

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