Jump to content
The Wifcon Forums and Blogs

Sign in to follow this  
ohnoudidnt14

FAR 52.215-23 Limitations on Pass-Through for FFP

Recommended Posts

Vern (#20) - I like it...to the point. I guess my second question is: How the hell, using only appropriate regulatory references, can I convince the KO to get this out of the solicitation?

Don - I'll admit I was a bit hung up on "and", but based on your (and wvanpup's) interpretation, the exclusions of FAR 15.408(n)(2)(i)( B )(2) might as well not be there because you are giving the KO full discretion regardless of anticipated contract value or contract type.

Retread - I know your question was directed at Don, but I figure 15/208(n)(ii) incorporates the "additional exceptions" mentioned in ( B ).

Joel – I’m still attempting to get the clause removed completely and am struggling with the disclosure requirements as this is a low-bid / IFB.

Thank you to everybody...this is what makes WIFCON so valuable. (Vern, I look forward to being a student in one of your classes someday).

Share this post


Link to post
Share on other sites

Wait, Don, you've edited your post so that both remaining options start with "When the total estimated contract or order value is below the thresholds identified in FAR 15.408(n)(2)(i)"...does this mean that you are agreeing with my AND hang-up and the KO DOESN'T have the discretion when the estimated contract or order value is ABOVE the stated threshold?

Share this post


Link to post
Share on other sites

Vern (#20) - I like it...to the point. I guess my second question is: How the hell, using only appropriate regulatory references, can I convince the KO to get this out of the solicitation?

In Post #10, you said that the solicitation is an Invitation for Bids, I thus presume that the procurement is being conducted pursuant to FAR Part 14. That being the case, I would say this to the CO:

1. The provision at FAR 52.215-22 and the clause at FAR 52.215-23 are prescribed by FAR 15.408. FAR 15.408 applies to solicitations and contracts in acquisitions being conducted by negotiation, not to acquisitions being conducted by sealed bidding. See FAR 15.000.

2. FAR Part 14 makes no mention of FAR 15.408, the provision at FAR 52.215-22, or the clause at FAR 52.215-23. Thus, inclusion of the provision and the clause in an IFB is a FAR deviation as defined at FAR 1.401(a). If the deviation is unapproved, the clause will be unenforceable.

3. Nothing in FAR Parts 14 or 15 provides for application of the pass-through policy to contracts awarded by sealed bidding or to modifications of such contracts. Compare the implementation of the pass-through policy with the implementation of the Truth in Negotiations Act. See FAR 14.201-7. Thus, again, the use of the provision and the clause in an IFB or contract awarded pursuant to sealed bidding is a deviation.

If the solicitation closing date has not already passed, I would file an agency-level protest with the CO or one of his or her superiors, or a protest with the GAO.

Share this post


Link to post
Share on other sites

Wait, Don, you've edited your post so that both remaining options start with "When the total estimated contract or order value is below the thresholds identified in FAR 15.408(n)(2)(i)"...does this mean that you are agreeing with my AND hang-up and the KO DOESN'T have the discretion when the estimated contract or order value is ABOVE the stated threshold?

Yes, I agree that the CO does not have the discretion to include the clause in contracts above the thresholds for the types of contracts listed at FAR 15.408(n)(2)(i)( B )(2).

Share this post


Link to post
Share on other sites

Don, you wrote:

You're hung up on the "and" at FAR 15.408(n)(2)(ii). You think that two conditions must be met in order for the CO to exercise their discretion to include the clause. That's not what it says. The CO may include the clause, at their discretion,--

1. When the total estimated contract or order value is below the thresholds identified in FAR 15.408(n)(2)(i) and the contract type is one that is not listed FAR 15.408(n)(2)(i)( B )(2), or

2. When the total estimated contract or order value is below the thresholds identified in FAR 15.408(n)(2)(i) and the contract type is one that is listed FAR 15.408(n)(2)(i)( B )(2).

Based on this, you concluded:

Yes, I agree that the CO does not have the discretion to include the clause in contracts above the thresholds for the types of contracts listed at FAR 15.408(n)(2)(i)( B )(2).

As expressed in an earlier post, I came to a very different conclusion.

For DoD, the clause is not required for one of two reasons. The first reason is because the contract is below the TINA threshold. The second reason is because the contract, while above the TINA threshold, is of a certain type. I am saying that the provision gives the contracting officer the discretion to include the clause regardless of the reason it is not required. I am saying that "and of any contract type" applies independently of "below the threshold." The reason I am saying this is threefold.

  • There is no "contract type" associated with the below the threshold provision for not including the clause. Therefore, adding the contract type language would be unnecessary.
  • If the contract type language is to be tied to the below the threshold language, the proper word would be regardless (i.e., the contract type does not matter).
  • It makes absolutely no sense to say that the contracting officer can use his discretion to include the clause in a contract below $700,000, but cannot use his discretion to include the clause in a contract of $150,000,000 (pick any large contract value). If I were drafting a regulation and wanted to impose a limitation on the contracting officer's discretion, it would be to prohibit the clause in the small contract where the amount in question is minimal, and authorize the clause in large contracts where the amount in question is significant.

I am curious; what is the flaw in my logic?

Share this post


Link to post
Share on other sites

In post number 29, Vern said in part:

In Post #10, you said that the solicitation is an Invitation for Bids, I thus presume that the procurement is being conducted pursuant to FAR Part 14. That being the case, I would say this to the CO:

1. The provision at FAR 52.215-22 and the clause at FAR 52.215-23 are prescribed by FAR 15.408. FAR 15.408 applies to solicitations and contracts in acquisitions being conducted by negotiation, not to acquisitions being conducted by sealed bidding. See FAR 15.000.

While this is correct concerning the initial acquisition conducted by sealed bidding under Part 14, Part 15.4 does apply, where applicable, to modifications of contracts that were awarded by sealed bidding under Part 14 (italics added):

15.400 -- Scope of Subpart.

This subpart prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts) and contract modifications, including modifications to contracts awarded by sealed bidding.

As I mentioned earlier, I don't think that the provision at 52.215-22 is applicable to an IFB. The prescription at 15.408 (n) (1) states

(n) Limitations on Pass-Through Charges.

(1) The contracting officer shall insert the provision at 52.215-22, Limitation on Pass-Through Charges—Identification of Subcontract Effort, in solicitations containing the clause at 52.215-23.

However, the provision refers to requirements and restrictions concerning the contract proposal, which don't appear to be applicable to a sealed bid under Part 14. In addition, solicitation provisions generally are intended to address pre-award matters - thus here, Part 15 solicition processes. Subpart 15.4 is not applicable to IFB acquisition process itself - only to modifications after award.

So why would a Part 15 solicitation provision that is inapplicable to an IFB have to be included even if the clause at 52.215-23 could be used in an IFB? And Vern said that there is no reference in the Part 14 solicitation provisions to this provision (that is numbered 52.215-22). I'd think that if it were intended to apply to the original contract award, or to restrictions on the original contract price, there would be a corresponding provision in 14.206-6, Solicitation Provisions.

I don't really want to argue as to whether or not the prescription at 15.408 (n) (ii) for the clause at 52.215-23 could be applicable to a sealed bid FFP construction contract modifications, if 15.408 (n) were applicable. I doubt it.

(ii) The clause may be used when the total estimated contract or order value is below the thresholds identified in 15.408(n)(2)(i) and for any contract type, when the contracting officer determines that inclusion of the clause is appropriate.

1. Regardless, I think that its use is inappropriate for the several reasons that I explained in earlier posts. It seems to be totally inconsistent with the way that U.S. construction contracts are traditionally formulated, subcontracted and managed not only in federal contracting but under normal commercial practice.

2. As I stated earlier, recovery of excessive pass through charges for the original contract price under paragraph ( d ) of the clause is specifically inapplicable to firm-fixed-price contracts awarded on the basis of adequate price competition. Thus, this major part of the clause is meaningless here.

3. if the clause were applicable to IFB's, that leaves only some type of possible restriction on excessive pass-through charges under negotiated construction contract modifications, In my reading of the clause, it seems to indicate that the contractor could only include costs and fee on the actual costs to manage subcontracts but not on the subcontract costs, themselves. This - again, is NOT appropriate for construction contracting, where the contractor must bond the entire contract cost and bears the risk for quality, safety and schedule as well as integration and performance impacts of its subs. I don't know of any construction contractor that doesnt normally mark up subcontracts. Why be in the business and assume such risks if one can't spread your costs over subcontracts or earn profit on them???

4. The KO can always question unnecessary subcontracting, levels of subcontracting or tiering of subcontracts during mod negotiations anyway. Thus, there is really no need for this clause, here. Again, I question the propriety of the clause under a FFP construction contract.

So, regardless of whether or not the government could successfully defend a protest concerning the theoretical applicability of the prescription for including the clause at 52.215-23 under 15.408 (n )(ii), if the intent is to disallow prime contractor markups on anything other than the actual direct or indirect costs to manage the subcontracts, it is not appropriate for use on modifications to construction contracts, .

I'm not in a position to advise that you submit a pre-bid protest but it sure seems like it should be tested as to its propriety. I seriously wonder whether the drafters of the legislation and rulemaking for the provision and the clause clearly thought through the appropriateness for applicability to 1) IFB's and 2) construction contracts.

Vern said in post 24 above:

In what way is the clause unclear in its intent? It seems perfectly clear to me.

It may be perfectly clear to Vern but it's not perfectly clear to me as to its intent on a firm-fixed-price construction contract awarded on the basis of adequate price competition using an IFB. A major portion of the clause (recovery) is specifically inapplicable to such awards. The rest of it is inappropriate or unnecessary.

Share this post


Link to post
Share on other sites

wvanpup,

The problem with how we were interpreting FAR 15.408(n)(2)(ii) was that it was not consistent with the statute. As Retreadfed pointed out, the statute (section 852 of P.L. 109-364) states:

Not later than May 1, 2007, the Secretary of Defense shall prescribe regulations to ensure that pass-through charges on contracts or subcontracts (or task or delivery orders) that are entered into for or on behalf of the Department of Defense are not excessive in relation to the cost of work performed by the relevant contractor or subcontractor.
(2) Scope of regulations.--The regulations prescribed under this subsection--
(A) shall not apply to any firm, fixed-price contract or subcontract (or task or delivery order) that is--
(i) awarded on the basis of adequate price competition; or
(ii) for the acquisition of a commercial item, as defined in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)); and
( B ) may include such additional exceptions as the Secretary determines to be necessary in the interest of the national defense.

DoD chose to implement the requirements of the statute in contracts exceeding the cost or pricing data threshold. The final FAR rule (75 FR 77741) contains the following exchange:

Issue 8: One respondent recommended that the rule should use the threshold in FAR 15.403-4 to ensure a consistent minimum threshold among all executive agencies in lieu of multiple thresholds currently in the rule. The respondent believed that if the Councils utilize the threshold in FAR 15.404-4, the rule “will exclude a significant number of subcontracts from this burdensome requirement but still cover the vast majority of the total value of subcontracts.”

Response: The Councils do not concur with the respondent's recommendation. By statute, civilian agencies are required to establish the threshold at the simplified acquisition threshold, while DoD established its threshold at the threshold for obtaining cost or pricing data in FAR 15.403-4.

FAR 15.408(n)(2)(ii) provides guidance on the use of FAR 52.215-23 below the cost or pricing data threshold--it is not implementing the requirements of the statute. The use of "and for any contract type" has the same meaning as "regardless of contract type." This interpretation harmonizes the regulation with the statute.

If we interpret FAR 15.408(n)(2)(ii) as permitting a CO to include FAR 52.215-23 in, for example, a fixed-price contract awarded on the basis of adequate price competition that exceeds the cost or pricing data threshold, we would be in direct conflict with the prohibition in the statute.

Share this post


Link to post
Share on other sites

It may be perfectly clear to Vern but it's not perfectly clear to me as to its intent on a firm-fixed-price construction contract awarded on the basis of adequate price competition using an IFB. A major portion of the clause (recovery) is specifically inapplicable to such awards. The rest of it is inappropriate or unnecessary.

What's perfectly clear, as I pointed out above, is that neither the provision nor the clause is applicable to an acquisition conducted by sealed bidding. The use of the provision or clause in an IFB or a contract awarded by sealed bidding is not just a FAR devision, but a violation of the statute, as well. If everyone had focused on the original question asked the thread would have died shortly after Post #10.

Share this post


Link to post
Share on other sites

Vern, I'm glad this thread didn't die too quickly, there is a lot of valuable information here. I've learned a lot and I'm glad it will be here for future researching Wifcon-ers (Wifconeers? Wifconians? Wifconettes? Whatever). I will try to come back here with the outcome. Thank you to all who contributed.

Share this post


Link to post
Share on other sites

What's perfectly clear, as I pointed out above, is that neither the provision nor the clause is applicable to an acquisition conducted by sealed bidding. The use of the provision or clause in an IFB or a contract awarded by sealed bidding is not just a FAR devision, but a violation of the statute, as well. If everyone had focused on the original question asked the thread would have died shortly after Post #10.

Roger, 10-4. I thought you were saying that you knew the KO's intentions for using the clause on this FFP construction contract awarded on the basis of adequate price competition using an IFB. I now Copy.

Share this post


Link to post
Share on other sites

I, too, am curious about the CO's intentions about the clause. It may be that he/she wants to apply the pass-through limitation to mods of a sealed bid contract, on grounds that FAR 15.400 says: "This subpart prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts) and contract modifications, including modifications to contracts awarded by sealed bidding." If that's what the CO is thinking, then he/she is not reading the regulation as a whole. FAR 15.400 does not bring everything in FAR Subpart 15.4 into play.

With respect to sealed bidding, the policy in 15.4 that applies is in 15.403, which concerns the submission of certified cost or pricing data for mods. See FAR 14.103-1 "The policy for pricing modifications of sealed bid contract appears in 15.403-4(a)(1)(iii)" That brings in certain ancillary parts of 15.4. See, e.g., FAR 15.403-5, 15.404-1(a)(3), 15.404-3( c), and 15.404-4(a). It also brings in 15.406-2, 15.407-1, and 15.408(l) and (m).

However, FAR 15.408(n)(2)(i) is clear that the pass-through clause does not go into a firm-fixed-price contract awarded after adequate price competition, which description fits a sealed bid contract. Since the clause does not go into such a contract, it would not apply to within-scope mods. However, since an out-of-scope mod ("cardinal change") would be a "new procurement" and awarded without adequate price competition, such a mod should require application of the pass-through clause to that mod, if other applicability criteria apply, but not to the entire contract.

What I've done is make sense of a regulation that ought to be clearer, but isn't and never will be. I'm using standard regulatory interpretation methods. My conclusion is consistent with what the regulators did with TINA. In FAR Part 14 they prescribe a clause that applies TINA to mods of sealed bid contracts, which they did not do for the policy about pass-through. My argument is that they would have developed a similar clause if they had wanted to apply the pass-through policy to mods of sealed bid contracts.

Share this post


Link to post
Share on other sites

Don, I understand your interpretation. However, isn't yours just as inconsistent with the statute as you say mine is? The statute (PL 109-364, sec 852) says the implementing regulations shall not apply to an FFP contract awarded on the basis of adequate price competition. It makes no distinction based on the value of the contract (actually, I did not see anything in the statute that sets TINA as the threshold). If it violates the statute to give discretion to include the clause in FFP contracts based on adequate competition which are above the TINA threshold, why doesn't it violate the statute to include the clause in the same contracts which are below the TINA threshold?

I don't think either of us will convince the other. One of the best features of this discussion is the ability to disagree without being disagreeable.

Share this post


Link to post
Share on other sites

wvanpup,

You're correct that the statute does not contain a dollar threshold. However, in implementing the statute, DoD decided to set a threshold (at the cost or pricing data threshold) above which the requirements of the statute would apply. DoD can do that. Below the threshold, the requirements of the statute do not apply. So, a contracting officer could include the clause in a FFP contract awarded on the basis of adequate price competition below the threshold and not be in violation of the statute.

FAR 15.408(n)(2)(ii) merely provides guidance on the use of FAR 52.215-23 below the cost or pricing data threshold--it is not implementing the requirements of the statute.

Share this post


Link to post
Share on other sites

wvanpup,

Below the threshold, the requirements of the statute do not apply. So, a contracting officer could include the clause in a FFP contract awarded on the basis of adequate price competition below the threshold and not be in violation of the statute.

I disagree, Don. The statute clearly prohibits application of the policy to firm-fixed-price contracts awarded after adequate price competition.

The regulations prescribed under this subsection--(A) shall not apply to any firm, fixed-price contract or subcontract (or task or delivery order) that is--(i) awarded on the basis of adequate price competition....

DOD used statutory authority to except contracts value at less than the TINA threshold from the statutory pass-through rule. However, DOD cannot apply the policy to contracts to which the statute prohibits its application. I do not understand your reasoning.

Share this post


Link to post
Share on other sites

Vern,

FAR 15.408(n)(2)(i)( B ) implements the statute for DoD. It states:

For DoD, insert the clause when—

(1) The total estimated contract or order value exceeds the threshold for obtaining cost or pricing data in 15.403-4; and

(2) The contemplated contract type is expected to be any contract type except—

  • (i) A firm-fixed-price contract awarded on the basis of adequate price competition;

    (ii) A fixed-price contract with economic price adjustment awarded on the basis of adequate price competition

    (iii) A firm-fixed-price contract for the acquisition of a commercial item;

    (iv) A fixed-price contract with economic price adjustment, for the acquisition of a commercial item;

    (v) A fixed-price incentive contract awarded on the basis of adequate price competition; or

    (vi) A fixed-price incentive contract for the acquisition of a commercial item.

Note the "any contract type" except--...(i) A firm-fixed-price contract awarded on the basis of adequate price competition.

FAR 15.408(n)(2)(ii) provides guidance on the use of the clause below the stated threshold:

The clause may be used when the total estimated contract or order value is below the thresholds identified in 15.408(n)(2)(i) and for any contract type, when the contracting officer determines that inclusion of the clause is appropriate.

Unlike FAR 15.408(n)(2)(i)( B ), it does not limit the application by "contract type" as that term is used in the paragraph. It does not say "any contract type except the following--".

Share this post


Link to post
Share on other sites

Vern,

FAR 15.408(n)(2)(i)( B ) implements the statute for DoD.

...Note the "any contract type" except--...(i) A firm-fixed-price contract awarded on the basis of adequate price competition.

So, as previously stated for DoD, the clause is not to be inserted for a FFP construction contract that exceeds the threshold, awarded under adequate price competition.

Share this post


Link to post
Share on other sites

The statute in question (Section 852 of the FY 2007 NDAA) was originally implemented in the DFARS in an interim rule on April 26, 2007 (72 FR 20758-02). The prescriptions for the implementing provision and clause appeared as follows:

Use the provision at 252.215-7003, Excessive Pass-Through Charges—Identification of Subcontract Effort, and the clause at 252.215-7004, Excessive Pass-Through Charges, in all solicitations and contracts (including task or delivery orders) except for—

(i) Firm-fixed-price contracts awarded on the basis of adequate price competition;

(ii) Fixed-price contracts with economic price adjustment, awarded on the basis of adequate price competition;

(iii) Firm-fixed-price contracts for the acquisition of a commercial item; or

(iv) Fixed-price contracts with economic price adjustment, for the acquisition of a commercial item.

On May 13, 2008, a second interim rule was issued (73 FR 27464-02). The preamble contained the following comment and response:

Comment: The final rule should include a contract threshold that triggers the applicability of the rule (e.g., $100,000 for construction contracts and $50 million for major systems acquisition, or $650,000).

DoD Response: This interim rule includes a threshold tied to the cost or pricing data threshold, which provides for periodic inflation adjustment. In addition, the clause also allows for contracting officer discretion below that threshold based on potential risks or other considerations.

The prescription for the implementing clause was changed to read as follows:

Use the clause at 252.215-7004, Excessive Pass-Through Charges, in solicitations and contracts (including task or delivery orders)—

(A) With a total value that exceeds the threshold for obtaining cost or pricing data in accordance withFAR 15.403-4, except for—

(1) Firm-fixed-price contracts awarded on the basis of adequate price competition;

(2) Fixed-price contracts with economic price adjustment, awarded on the basis of adequate price competition;

(3) Firm-fixed-price contracts for the acquisition of a commercial item; or

(4) Fixed-price contracts with economic price adjustment, for the acquisition of a commercial item; or

(B) With a total value at or below the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4, when the contracting officer determines that inclusion of the clause is appropriate.

In response to the second interim rule, the Professional Service Council submitted the following comment on July 14, 2008:

DFARS 215.408(3) prescribes the circumstances when the solicitation provision at 252.215-7003 should be used, and includes a floor for application of the requirement where the total value of the solicitation is above the TINA threshold unless one of four exceptions applies. The section also provides authority for including the clause even where the total value is below that threshold if the contracting officer determines that inclusion of the clause is appropriate. A similar construct is included in 215.408(4) regarding the circumstances when the clause at 252.215-7004 is to be included. While we support creating a general threshold, the construct of the rule in both places implies that the four statutory exclusions would not be available if the total value of the solicitation is below the TINA threshold and the contracting officer determines to include the clause. However, the statute is clear on the exclusion of certain types of contracts without regard to their dollar value. Therefore, we recommend that both DFARS 215.408(3) and DFARS 215.408(4) be amended to also apply the exceptions to solicitations with a value below the TINA threshold even where the contracting officer has determined to include the two clauses.

On October 14, 2009, the FAR Council issued an interim rule to implement Section 852 of the FY 2007 NDAA in the FAR. The DFARS case was incorporated into the FAR case. The interim rule did not contain a response to the comment submitted by the PSC. The prescription for the implementing clause, now at FAR 15.408(n)(2)(i), read as follows:

Except as provided in paragraph (n)(2)(ii) of this section, the contracting officer shall insert the clause 52.215-23, Limitations on Pass-Through Charges, in solicitations and contracts including task or delivery orders as follows:

(A) For civilian agencies, insert the clause when—

(1) The total estimated contract or order value exceeds the simplified acquisition threshold as defined in section 2.101 and

(2) The contemplated contract type is expected to be a cost-reimbursement type contract as defined in Subpart 16.3; or

(B) For DoD, insert the clause when—

(1) The total estimated contract or order value exceeds the threshold for obtaining cost or pricing data in 15.403-4; and

(2) The contemplated contract type is expected to be any contract type except—

(i) A firm-fixed-price contract awarded on the basis of adequate price competition;

(ii) A fixed-price contract with economic price adjustment awarded on the basis of adequate price competition;

(iii) A firm-fixed-price contract for the acquisition of a commercial item; or

(iv) A fixed-price contract with economic price adjustment, for the acquisition of a commercial item.

(ii) The clause may be used when the total estimated contract or order value is below the thresholds identified in 15.408(n)(2)(i) and for any contract type, when the contracting officer determines that inclusion of the clause is appropriate.

[bold added].

Instead of limiting the applicability of the clause below the cost or pricing data threshold to certain prescribed contract types, as the PSC suggested, the FAR Council explicitly stated that the clause may be used "for any contract type" without exception.

Share this post


Link to post
Share on other sites

Don:

So, you are saying that DOD has decided to ignore the statute's positive prohibition against applying the pass-through policy to FFP contracts awarded after adequate price competition. You are saying that DOD has decided that it is okay to apply the policy to FFP contracts awarded after adequate price competition if the contract is valued at less than the TINA threshold, even though the statute says that DOD's regulations "shall not" apply the pass-through policy to such contracts.

Do I understand you correctly?

Share this post


Link to post
Share on other sites

Don:

So, you are saying that DOD has decided to ignore the statute's positive prohibition against applying the pass-through policy to FFP contracts awarded after adequate price competition. You are saying that DOD has decided that it is okay to apply the policy to FFP contracts awarded after adequate price competition if the contract is valued at less than the TINA threshold, even though the statute says that DOD's regulations "shall not" apply the pass-through policy to such contracts.

Do I understand you correctly?

It was actually the FAR Council that added "for any contract type" without exception at FAR 15.408(n)(2)(ii)--not DoD. I don't know for sure if the FAR Council deliberately decided to permit application of the pass-through policy to contracts below the TINA threshold or if they did so by mistake. There was no explanation of why "for any contract type" was added in the FR notice.

Share this post


Link to post
Share on other sites

Well, Don, since the statute says "shall not apply," maybe the FAR is in violation of statute and unenforceable. What do you think?

Share this post


Link to post
Share on other sites

Follow-up for all. Good news, the KO has "seen the light" and today issued an amendment to the solicitation removing reference to this clause (without the need for a solicitation protest). Well done!

I can already see that my next battle is going to be convincing the KO that inclusion of the clause for FFP acquisitions below the TINA threshold is still not "appropriate". A lot of good information in this thread to help that cause.

Thank you!

Share this post


Link to post
Share on other sites

If they do include it for contracts under the threshold, I would suggest that you ask to see the decisional documentation of the rational for considering it to be appropriate for a FFP competitively awarded construction contract.

EDITED TO ADD MY SUMMARY ASSESSMENT:

The contract already states limits on subcontracting. Current construction industry practice often involves general contractors subcontracting specialty trades - the GC that self performs a wide variety of trades is few and far between and will likely be a very large contractor that isn't interested in dink sized contracts anyway. Public policy encourages wide participation by small business (e.g., subcontracting goals and plans). And, as I explained earlier, the prime is responsible and at risk for the time, quality, safety and cost performance or failures of its subs. It is standard industry practice to allow the prime to charge markups and fee on its subcontract costs. Much of the clause pertaining to government recovery of excess costs isn't applicable to competitively bid or negotiated contracts, as stated herein.

If the intent is to have some control over negotiated modifications to a construction contract, the Contractor already must demonstrate that the level or sub levels of subcontracting are reasonable vs. the prime or it's applicable sub self-performing the work .

I just don't see the "appropriateness" of including the clause in construction contracts, especially those that are awarded under competition and probably most of those that are negotiated.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this  

×