dmuir

Using my GSA rates for subcontractor

11 posts in this topic

We have a GSA Schedule. A company we wish to subcontract with does not. The qualifications of the individuals we would like to use would allow us to place them in our labor categories. Can we bill them at our rates? Do we need any approval from our CO?

I was trying to locate specific regulatory justification for this practice but could not find it. I did find that some rules were proposed with SARA (the Services Acquisition Reform Act of 2004) that would have clarified things but I don't know how to find the final rules or the final clarification. There supposedly was GSA information before SARA that said it was fine (and no rate approvals or disclosure of actual rates paid to subs were necessary), but DCAA believed that FAR 52.232-7 Payments gave them audit rights to review any difference between sub rates and the Schedule rates.

Any suggestions on where to look would be appreciated. I only found info on Contractor Teaming Arrangements on the GSA Schedule webpage.

best regards, D

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We have a GSA Schedule. A company we wish to subcontract with does not. The qualifications of the individuals we would like to use would allow us to place them in our labor categories. Can we bill them at our rates? Do we need any approval from our CO?

I was trying to locate specific regulatory justification for this practice but could not find it. I did find that some rules were proposed with SARA (the Services Acquisition Reform Act of 2004) that would have clarified things but I don't know how to find the final rules or the final clarification. There supposedly was GSA information before SARA that said it was fine (and no rate approvals or disclosure of actual rates paid to subs were necessary), but DCAA believed that FAR 52.232-7 Payments gave them audit rights to review any difference between sub rates and the Schedule rates.

Any suggestions on where to look would be appreciated. I only found info on Contractor Teaming Arrangements on the GSA Schedule webpage.

best regards, D

You are correct. So long as you can fit the subs' employees into your labor categories, you can use your Schedule and labor categories.

See http://www.gsa.gov/portal/content/202257#3

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I'm not a GSA Schedule expert, not by a long shot. But I followed the helpful link that jlbdca posted, and I read about prime/subK relationships vs. CTAs.

Did I read and interpret correctly that, when there is a prime/subK relationship, the prime is responsible for compliance with the Price Reductions Clause--even if the discount is offered by the subK and not the Prime? I guess that would make sense on one level, because the subK is billing at the Prime's GSA Schedule rates ... but from a practical, compliance standpoint, I would be very uncomfortable with that risk. If I were the Prime, I would be losing sleep because I would be terrified that my subK was going to offer a discount to one of my comparison companies and I wouldn't know about it.

Again, not an expert. Am I off-base with this concern? Happy to be set straight.

H2H

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Can we bill them at our rates? Do we need any approval from our CO?

Be careful. Are you performing under a time-and-materials or labor hour order? If so, you'd better read the applicable payment clause in the contract. See, generally, FAR 16.601( c)(2). You may need separate rates for the subcontractor. You might want to check with the GSA contracting officer and the contracting officer who issued the order.

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I'm not a GSA Schedule expert, not by a long shot. But I followed the helpful link that jlbdca posted, and I read about prime/subK relationships vs. CTAs.

Did I read and interpret correctly that, when there is a prime/subK relationship, the prime is responsible for compliance with the Price Reductions Clause--even if the discount is offered by the subK and not the Prime?

Primes must comply with the Price Reduction Clause (PRC) in their contract; that is, they must ensure that they preserve the discount ratio negotiated based on their basis-of-award customer or customer category. I believe what here_2_help is referring to from the linked page is this:

The ordering activity is invoiced in accordance with the prime contractor's GSA Schedule contract, including any applicable price reductions.

This means only that if the prime has triggered a price reduction, it must honor those reduced rates on all labor, including subcontractor.

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Can we bill them at our rates? Do we need any approval from our CO?

I was trying to locate specific regulatory justification for this practice but could not find it.

If T&M/L/H order see FAR 52.212-4 (e)(1)(ii)

...(ii) Hourly rate means the rate(s) prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are—


  • (A) Performed by the contractor;
    (B) Performed by the subcontractors; or....

Emphasis on bold underlined.

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Sorry, Meant to say FAR 52.212-4 ALT I (e)(1)(ii). And I don't know how the smiley face got in there. Guess I need to post more.

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If the prime's and subcontractor's statement of work only defines hours tied to the subcontractors internal labor categories and does not make mention of the specific GSA labor category agreed upon by the Prime and the End Customer, who is liable to the end customer if in fact, unqualified personnel work on the contract?

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The prime has to bill the government either for

1 hours of labor, which may only be at the prime's approved GSA rates or the subcontractors' approved GSA rates, if the parties are in a CTA, 52.232-7a(2)

or

2 the subcontract at cost 52.232-7b91)(ii)(B)

If the latter, the items should be marked open market by the CO and in your invoices.

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Yet what if the end customer rejects the primes invoice for labor as it deemed that the labor was not performed in accordance with the designated GSA labor categories. Who would then be liable for such non-compliance, the prime or the subcontractor?

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The prime would be liable to the government, of course, but the prime might've passed that liability down to the sub by subcontract, most prudent primes do!

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