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GSA SCHEDULES, PASS THROUGHS TO SUB

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Can a GSA schedule holder allow a subcontrator that doesn't have a GSA schedule to use its GSA schedule and only charge the subcontact a "pass through" charge. Is this allowable ? The prime has little or no involvement in the proposed work. Are schedule holders around the beltway doing this more often than they should, and not realizing that it is bascially unacceptable and frowned upon?

In a nutshell, we allowed a subcontractor who we know well and teamed with many times (and is the incumbent doing the work at an agency) an opportunity to use our GSA schedule for a specifc procurement designated for XYZ GSA schedule holders only. We simply marked up a nominal amount and in our proposal we were clear that the sub was doing the majority of the work and we the prime ?schedule holder considered it a pass-through. The CO's response is that a pass through erodes the integrity of the procurement process and is deemed unacceptable in that in circumvents the rules. I have worked at other companies that also allowed companies to use their schedule in a pass-through situaiton.

Is this pass through practice deemed appropriate or not? and can companies be reported to the GAO for engaging in this practice? Please advise.

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It appears these clauses apply to cost reimbursement type contracts. The procurement is off GSA Schedule and T&M is contemplated. T&M is technically a cost reimbursement type contract so the pass through limitations would still apply. Too bad that more thought did not go into the proposal process instead of knee jerk effort to assist a company that didn't have a GSA schedule.Lesson learned.

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I am not going to make a statement one way or the other about the allowance of the pass through. I do want to make an observation regarding comments so far. Be careful as the references and comments made offer a FAR clause in support of the positions reflected and I question such an approach. The clauses would ONLY be applicable if they are contained in the FSS contract. In most cases FSS contracts are solicited and awarded under FAR Part 12. While they might incorporate FAR Part 15 procedures and clauses a quick look at a couple of FSS contracts and their clauses I note the absence of either FAR 52.215-22 and/or 23. Likewise I looked at a solicitation on FBO for a current FSS and the clauses were not contained in it. As such these references would only be applicable if the procuring agency added the clauses to the specific task order.

Further the definition of a “cost reimbursement contract” as found in FAR 16.3 DOESNOT include a T&M contract therefore by my read FAR 52.215-23 and 22 are not required in civilian agency T&M contracts. A different rule applies if it is a DoD contract.

Think before you leap!!!!! Read the specific FSS solicitation, FSS awarded contract and the specific FSS task order or better yet…………………………….

Refer your question is to the GSA CO for your particular schedule contract and ask them what is appropriate regarding pass through.

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Okay. Understood. I did check and didn't see the limitations on pass through clauses in the FSS or the solicitation so the next move would be to ask the schedule ACO. Thank you again for the food for thought.

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We deal with schedule contract holders that use subs all the time. However, they are limited in what they can charge, as they can only charge what the negotiated rate is in the Schedule contract. That discourages many "prime" contractors from doing this as they cannot charge a "pass-through" or "up-charge" for subcontract management.

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The schedule rates are discounted for the particular sub in question, as the sub's rate structure is below the schedule rates.

Note-This is not the first time I see this particular situation around the beltway. Small business goes to large business/schedule holder stating we really would like to pursue this GSA schedule opportunity but don't have an xyz Schedule, can we use your schedule (prime) as a pass through. It doesn't really seem appropriate but it is done. In this present case, we didn't hide the fact that it was a pass through.

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