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I am a subcontractor to a larger Prime on a Government contract. Recently, the Prime has submitted a new contract modification in regards to Government paid training. The modification is below:

As part of the Program, “Prime” and the Customer are committed to providing employees who work on the Program the ability to participate in professional development opportunities. As a result, “Prime” offers Subcontractor employees opportunities to receive training (“Training”) via course and conference attendance, in conformance with Exhibit G, which are funded by the Customer.

If Subcontractor employee(s) attend Training and then voluntarily leave the Program within one year of receiving the Training, Subcontractor hereby agrees to reimburse “Prime” one hundred percent of the Training cost. “Prime”, in turn, will reimburse the customer one hundred percent of the fees and travel expenses associated with the Training.

Subcontractor agrees that reimbursement of such Training costs will be accomplished over a mutually agreed upon period, not to exceed one year from the date of Subcontractor employees last day on the Program.

I question the validity and legality of this modification from both a Government contract perspective and state law perspective. I have requested to see the government’s request for this modification and have been told it was a verbal request. Can you provide some clarity on the legality of this modification?

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It doesn't look illegal to me. What law(s) do you think it violates? What law(s) do you think prevent the parties from agreeing to the scheme?

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The training is paid for by the government for an employee. As a business owner I do have a policy for company paid training and reimbursement if the employee leaves with a certain period of time but this has to be prorated over the period of time that the employee worked from the time of the training to the term of the agreement, ie I pay $3000 for training in which I require a year commitment, the employee leaves after six months, I can only require repayment of $1500.

Additionally, they require all travel which comes from a different bucket of dollars from training costs. Additionally, I have never heard of the government requiring repayment of travel for a valid trip. Regardless of whether the employee leaves the contract early the trip is still valid.

Also, what happens after the contract passes into the next Option Year.

In this agreement the requirement really falls onto the company not the employee. The company is required to reimburse the Prime. Then I have to go after the employee for training that I did not pay for but was paid for by the government.

Additionally, there are training events that last a day and events that require travel and last multiple weeks. There is absolutely no differentiation between any of these events.

I am not a lawyer, I am not sure what laws may or may not be violated but it doesn't smell right to me and usually that means that there is something that isn't right.

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That there are business risks at issue for you doesn't make the arrangement illegal. Is the "prime" seeking your input and counsel with regard to constructing the modification, and have you advised it of your concerns - or is the "prime" intending or attempting to impose it upon you unilaterally somehow once the prime and agency have negotiated the mod?

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Yes, I have expressed my issues and concerns. So far it has been a one way discussion. If I do not sign the mod then none of my personnel will be eligible for government paid training. I have asked for the formal requirement to be flowed down to me from the government, but I was told there is none, this was a verbal agreement between the prime and the government.

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See FAR 31.205-44. Training and education costs are allowable with some limitations. Employee training may be essential to acceptable and effective contract performance.

A practice is not "invalid and illegal" just because you don't like it or don't understand it.

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Thank you for the reference.

I get that just because I don't like something that I won't have to abide by it anyway. I spent 25 years in the military, so I did a lot of things I did not like. I came to this forum for your expertise not comments on me. I will endeavor to phrase my future questions to not offend your legal reasoning.

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The reference FAR 31.205-44 does not cover reimbursing the government for these costs after the training has been completed and paid for by the government. It merely clarifies what is allowed by the government. This is not in question.
The issue here is the reimburse to the government after the training is completed and paid for by the government and the employee leaves the program at some date in the future.

I have spoken to several Contract professional and none have ever heard of this and are unaware of how this would be executed. How do you reimburse the government for what was a valid cost, who is liable for the reimbursement and what section of the FAR addresses it. I don't have an issue with the intent, I have issue with how it can be executed.

If someone can clarify that for me, I would be grateful.

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I don't know. Maybe it's the prime's company policy to recover such costs from employees who depart before a certain deadline. The government does that with its own employees in some cases. See 5 U.S.C. 4108. Maybe the prime plans to return such recovered costs to the government when the government has reimbursed the prime for them.

Ask your prime.

And you might get comments on you whether you came here for them or not, 25 years in the military notwithstanding. That comes with free expertise. If you want expertise on your own terms, pay for it.

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Ok, I get that the Prime may have a policy for it's employees and the government has it for their employees (I am well aware of these contracts, I signed many) how does that allow them to push it onto my company? Wouldn't that be between the receiver of the training and the government too?

Furthermore, how do I collect dollars (legally) from an employee who leaves when the cost of training/travel/etc. is not my burden (my company did not pay for it) but the governments?

And finally, who am I obligated to reimburse, the government ( a check to the US Treasury) or the Prime (who did not pay the training in the first place). How is this managed legally?

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Vern, obviously we have gotten off on the wrong foot. I did not and do pretend that I am the only person who has done things they don't like. I am sure you are a great American. I just asking for a little consideration in how you respond to me. I am trying to be polite to you, as you deserve that respect.

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They didn't push it onto your company. The mod says that it "offers" it to you. Don't like the policy? Then don't accept the offer.

Yeah, we have gotten off on the wrong foot. I guess what got you exercised was this: "A practice is not 'invalid and illegal' just because you don't like it or don't understand it."

If that upset you, then you are a tender leaf for someone who spent 25 years in the military. I didn't mean to hurt your feelings. So to the extent that I have any expertise, I won't give it freely to you again.

Take care and good luck.

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There aren't any pat answers to your quandary (except the one Vern Edwards gave you in the first paragraph of his post #14)., Your details are a little sketchy and ambiguous in places for anyone to give you answers which would be much practical use to you.

Presumably you have a subcontract with the contractor only, so all of your obligations and protections flow from the subcontract and are owed to the "Prime" Contractor. (I'm a little puzzled that you're being asked as a to counter-execute the "prime" contract modification, but I don't know that that's unheard of.) If you turn down the offer your employees won't be eligible for government-paid training. There's your business decision.

Do you mean then they can't get the training, or that you can't get it paid for it? I'd be asking myself whether the "Prime" would still want to use my company if my employees don't get the training, and whether my subcontract would allow them to dispense with me for that reason. I'd also be asking myself whether the "offer" is a change to the original subcontract specifications for which, under the subcontract, I should be immune from unreimbursed costs. These are questions for a lawyer.

Your other questions are mostly logistical. To whom you might write a check would depend upon to whom you could owe reimbursement. How you could conceivably collect from employees could well be covered by law, and you should have an attorney review at least that portion of it. Based on the details given, I don't see how options (by which I suppose you mean option periods) would enter into it.

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Ok, I appreciate that..

Clarification, I am not being asked to counter-execute an agreement between the Prime and the government. I am being pushed a modification to my contract with the Prime, presumably via this verbal agreement with the Prime and the government.

Yes, my employees will not be able to attend government paid training without me signing this contract modification.

The logistical issue of collecting from the employees is actually the hardest part. As current legal findings have favored employees in this area and allow them to reimburse cost through a prorated means. This agreement the Prime would have me sign does not allow for that and therefore I (my company) would be obligated for the full amount while the employee would only be obligated to pay me a prorated amount. Therefore, yes, I am taking a "business risk" that I am certainly trying to mitigate.

There rules by which our contracts are governed to prevent companies and others from being leveraged into unreasonable requirements by other companies and the government. No one can seem to point out to me that this is covered under any aspect of any rule.

I have had people say it is absurd and absolutely illegal and I have had others say it sounds fine but, I still have not had anyone tell me where in the FAR this is covered? Therefore, I question the validity and yes, I don't like it. Primarily, because I believe the Prime is using it as a tool to limit training to it's subcontractors.

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where in the FAR this is covered?

Aren't subcontracts are generally matters of state law? The FAR covers many or most contracts between the Government and prime contractors, not subcontracts. I don't think you'll find what you're looking for in the FAR.

prevent companies and others from being leveraged into unreasonable requirements by other companies and the government

Aren't companies with lesser bargaining power "leveraged" into all sorts of things all the time?

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I understand the FAR covers contracts between the Government and the Prime contractor.

That is part of the issue, the prime says this is a requirement by the government and they are flowing it down to us.

I am asking where in the FAR it allows this?

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Late to the party it seems...but general thoughts

@RFS2015 - Just because the FAR doesn't state something doesn't make it "illegal or impractical" -

If there is an agreement between the Prime and Gov - in this scenario, I would just ask that the Prime provide you a copy of a written statement (or email) from the Gov CO that outlines the policy. If they are unwilling to give you that, then you need to weigh the risk (as you have stated above) of training cost vs your staff. Is the training beneficial, will it increase your staff quality, efficiency, potential to raise your rates to other contractors, potentially allowing a greater return on your investment (staff) in other areas?

Note: I do not believe it would be illegal for you to have your staff sign an education agreement that states if they leave or are fired (for cause) within 1-year from training that they have to reimburse the training cost. I have worked at more than one company that had education requirements that required reimbursement of education costs and some were longer than a year, it all depended on the training.

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BZ, You are correct, it is not illegal and I find it to be good business practice to require employees to sign a contract for training or education cost reimbursement that I (my company) pays them to attend. My quandary is that this is government paid training.

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In Post #19 you asked: "I am asking where in the FAR it allows this?"

I thought I answered that question in Post #20. Now you say: "My quandary is that this is government paid training."

Do you have another question? If so, can you state your inquiry in a single, complete sentence? Are you asking:

1. Is it permissible (legal, valid) for the government to pay for the training?

2. Is it permissible (legal, valid) for the prime to ask us to repay them if the employee leaves early?

3. Is it permissible (legal, valid) for the prime to give the money I repay back to the government?

Or are you asking something else?

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