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My CO became aware that my company was utilizing a staffing agency for the filling of vacant positions on a temporary basis until our company could hire a permanent employee. My CO objected to this approach and stated that the use of a staffing agency "was not within the scope" and he intended to disallow any costs associated with the staffing agency because we did not obtain his consent when adding them to the contract.

I don't agree the CO's determination that this is unallowable. However, I need some help here in pleading my case. The costs of the "temp-to-perm" is not very high (~$75K) so I was going to cite (in my response) that it's below the simplified acquisition threshold and therefore we do not need the CO's written consent to subcontract to this staffing agency.

Does this sound like a good approach to take with my CO?

Thanks!

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"Consent," short for "consent to subcontract" in FAR 2.101, usually refers to the process described in the Subcontracts clause at FAR 52.244-2. Is that clause in your contract? If not, your problem is not a compliance problem but a client relations problem, and you may want to ask the CO to help you understand which part of the contract applies. If the clause is in the contract, be sure you read, understand, and comply. The clause has blanks to be filled in, so pay attention to those paragraphs. If your temp agency subcontract does not require consent, back to client relations.

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The interesting question here is whether your contract with the staffing agency qualifies as a "subcontract" for purposes of advance consent as well as for purposes of flowing-down prime contract clauses. If it does qualify as a "subcontract" for those two purposes, then you may indeed have a problem. But if not, why not?

My view is that if you entered into the staffing agency contract for the sole purpose of staffing this contract, then it is likely a subcontract. But if you entered into a staffing agency contract for the benefit of the entire company, then it is not a subcontract for purposes of consent and flow-down. But by no means is there a bright-line answer, and by no means is my view bullet-proof.

Vern has a nice summary of this muddy swamp of an issue in April's N&C report. It's worth finding.

Hope this helps.

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As an answer to your question, the staffing agency is for the sole purpose of the contract we have with the Gov't. So in that case, they are a "subcontractor". In addition to FAR 52.244-2, my contract stipulates that subcontracts within the simplified acquisition threshold do not require prior written consent from the CO.

How can the CO object to the addition of a subcontractor of such a small value?

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There is another recent thread floating around here about whether labor subcontracts under a T&M prime are ODCs or just labor, and the answer was based on which version of the payment clause is in the T&M prime. Look around for that and see which payment clause is in your contract. It may be that the CO is reacting based on the old clause rather than the new clause. Or the CO may just be bullying.

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Guest Vern Edwards

Let's assume that the contract with the staffing agency is a subcontract as defined in FAR 44.101. The question is whether it is subject to the consent requirements of FAR 44.201-1. A review of the FAR should provide the answer.

If we assume that the subcontract with the staffing agency does require the CO's assent, then the issue is whether the CO has legitimate grounds for denying consent. The notion that temporary staffing is "not within the scope" of the contract does not make much sense to me. Does the contract expressly prohibit the use of temporary staffing? If not, is temporary staffing otherwise inconsistent with some express term of the contract? If not, then the CO's determination that the staffing cost is unallowable is insupportable, even if the contract does require consent which has not been sought and obtained.

Decide whether you need the CO's consent. If you do, then seek it. If it's denied, then demand a written statement of rationale. When you get it, then decide what to do next.

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