Jump to content
The Wifcon Forums and Blogs

Recommended Posts

What does the subcontract say on this point? Also, does the contract say what body of law will be used to resolve disputes between the parties? Because we are talking about a subcontract, the precise subcontract language is what will be used to determine the parties rights and obligations.

Link to comment
Share on other sites

It reads: "The SUBCONTRACTOR shall perform procurement actions (procure materials, supplies....etc.) as requested by the CONTRACTOR. Procurement actions greater than $5,000.00 shall be supported by at least 2 competitive procurement proposals/quotes. Payment shall be in accordance with Exhibit C"

Link to comment
Share on other sites

To answer your question, you will have to look at the law of the jurisdiciton identified in the subcontract to determine how this language would be interpreted by courts in that jurisdiction. Unless specifically incorporated in the subcontract, FAR and the decisions of the appeals boards, COFC and CAFC will not be binding on those courts, but may be considered instructive.

Link to comment
Share on other sites

Guest Vern Edwards

A T&M subcontract requires that the subcontractor obtain competition for amounts over $5,000 but the subcontractor failed to provide proof of competition, what effect does it have on allowability?

Assuming that the prime contractor has incorporated the government's terms into the subcontract (i.e., payment clause and cost principles), then failure to get competition would make the cost unallowable (due to violation of the terms of the contract), and failure to provide proof of competition might justify a conclusion that the contractor did not, in fact, get competition. At least, you could argue that, and you would probably win unless the court decided for some reason not to enforce those terms.

Link to comment
Share on other sites

One factor that could bear on the determination of cost allowability was the duration between the time the subcontractor acquired the goods/services and the time it was asked to provide proof of competition. I've seen several recent DCAA audit reports that questioned similar costs literally a decade after incurrence. In my view, it is not reasonable to expect a commercial entity to retain detailed purchasing records for that length of time.

Of course, the contract language controls. But I believe that other factors may also be relevant.

Hope this helps.

Link to comment
Share on other sites

I don’t know what side of this situation your client is on – prime or sub; but for a sub that did not perform an actual competition, perhaps they could still support their purchasing decision by comparing the price against prices based on adequate price competition. The comparison prices based on adequate price competition do not need to have been obtained through an actual solicitation/competition performed by the sub. The sub could rely on past solicitations/competitions either performed by themselves or others.

Link to comment
Share on other sites

Also, what exactly is unallowable, the direct and indirect expenses associated with procuring and delivering the item or the cost of the actual item itself? I would assume if the item is accepted and being used by the prime or customer then it might be allowable.

Link to comment
Share on other sites

Guest Vern Edwards

What is allowable or unallowable is the amount for which reimbursement is sought, whatever that includes. Acceptance of the item would not make the cost allowable if the cost was not incurred in accordance with the terms of allowability.

Link to comment
Share on other sites

If I was the subcontractor I would argue that while I failed to obtain competition the intented purpose of the competition requirement over 5K is to ensure amount paid was reasonable. With that said, then it would be up to the Government to determine what amount was reasonable and reimburse it as such.

Link to comment
Share on other sites

Whether the subcontractor obtained two proposals quotes for a procurement action may not be the determinative factor as to whether the costs are allowable. There could be several other facts that could come into play such as sole source items, prime or government directed sources, etc. Further, even if they may be unallowable under the terms of the contract, the sub may have an equitable claim to payment. Therefore, I would not automatically assume that the costs at issue are unallowable if the sub did not comply in all respects with the terms of the subcontract.

Link to comment
Share on other sites

Guest Vern Edwards

Further, even if they may be unallowable under the terms of the contract, the sub may have an equitable claim to payment.

I don't know what you mean by "an equitable claim to payment." Is it a claim arising under or a claim relating to a contract? If arising under, what clause would be the basis for such a claim? If relating to, on what basis might it so relate? Can you give an example of an equitable claim to payment in the case at hand in this thread?

I'm not challenging you. I just want to know what you're talking about.

Blitz, this is a subcontractor v. contractor issue, not a subcontractor v. government issue. The contractor would have to decide that the subcontractor's cost is allowable before it could seek reimbursement of its payment to the sub from the government. It would have to prove to the government that the cost was allowable under the subcontract in order to get reimbursed for any payment to the sub.

Link to comment
Share on other sites

Guest Vern Edwards

What? Quantum meruit is for payment to the extent that the government has benefitted under an implied-in-fact contract, which is not the case here. The contract is not implied-in-fact. As for impossibility, I don't understand what you're talking about. I can't see any impossibility issue in this matter that would entitle the subcontractor to reimbursement in the face of its failure to comply with the contract terms.

Look -- if the one of the tests of cost allowability under the subcontract is compliance with the terms of the contract, and if the subcontractor did not comply with the terms of the subcontract in incurring the cost, then the cost is unallowable. That doesn't mean that the subcontractor should not get anything. The prime should pay what it considers to be a reasonable amount -- the amount the sub would have incurred if it had gotten competition as required. It would be up to the sub to prove that the amount it incurred is the amount it would have incurred after competition.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...