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jeff4757

Subcontractor costs to Government

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Is their a FAR Clause that allows the PRIME to pass increased subcontractor costs beyond the PRIME's control on to the Governement?

Any feedback is appreciated.

Thank you!

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It depends on the terms of the prime contract and the reasons for the cost increase.

1. is the prime contract fixed-price, cost-reimbursement, time-and-materials, or something else?

2. Why were the sub's costs increased?

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Well, if the prime contract is cost-reimburseable, then, pursuant to the allowable cost and payment clause, FAR 52.216-7, the prime should be able to recover the additional subcontract costs from the government if:

1. the additional subcontract costs are allowable pursuant to FAR Subpart 31.2, and

2. the prime's total costs incurred, including any allowable subcontractor costs, are within the limitation of cost or limitation of funds stated in the prime contract.

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Adding to what Vern said, even if the prime's costs exceed the LOC/LOF amount, the government generally has discretion regarding funding the overrun. Thus, under these clauses, the prime may be able to recover overrun costs, but no fee.

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