Limitations on Pass-Through Charges

[Researching]

52.215-22 LIMITATIONS ON PASS-THROUGH CHARGES -- IDENTIFICATION OF SUBCONTRACT OCT/2009 EFFORT prohibits excessive pass-through charges. Does anyone have experience with what percentage of profit/fee the government considers appropriate for a situation where the contractor adds value and for a situation where the contractor adds no or neglibible value?

[here_2_help]

52.215-22 LIMITATIONS ON PASS-THROUGH CHARGES -- IDENTIFICATION OF SUBCONTRACT OCT/2009 EFFORT prohibits excessive pass-through charges. Does anyone have experience with what percentage of profit/fee the government considers appropriate for a situation where the contractor adds value and for a situation where the contractor adds no or neglibible value?

The solicitation provision you cite needs to be read in conjunction with the 52.215-23 contract clause. As I see it, it's an all-or-nothing proposition. If the contractor DOES add value, then the provision and clause are not applicable and profit/fee negotiations commence as they normally would. If, however, the contractor is found not to add value, then all indirect costs (except for subK management costs) and associated profit/fee become unallowable.

Look at the definition of "excessive pass-through charge" found in the -23 clause.

?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). ... The Government will not pay excessive pass-through charges. ...

(1) For other than fixed-price contracts, the excessive pass-through charges are unallowable in accordance with the provisions in FAR subpart 31.2; and

(2) For applicable DoD fixed-price contracts, as identified in 15.408(n)(2)(i)(, the Government shall be entitled to a price reduction for the amount of excessive pass-through charges included in the contract price.

Hope this helps.