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Hello all,

Our Government customer is requesting subcontractor quotes for a FFP proposal.  The whole prime contract is FFP.

Isn't there a FAR clause that prohibits the Government from requesting this detail where the Government should be performing Price Analysis?

Your feedback is appreciated!

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I believe that the short answer to your question is no.

Are you considering subcontracting cost and subcontractor quote to be the same? I do not believe so.  My understanding is that the subcontracting cost will include the prime's profit; whereas, the subcontractor quote is just that.

Depending on the terms of the contract, FAR Part 15.404-3 might apply.  If so, then the contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs (15.404-3(a)).

Even when 15.404-3 does not apply, the CO might be trying to use data other than certified cost or pricing data provided by the offeror (prime) as the means to determine price fair and reasonableness. See 15.404-1(b)(2)(vii). 

There is nothing that prevents the CO from removing "certified" from the instructions and utilizing FAR Table 15-2.

Excerpt from Table 15-2-

II. -- Cost Elements

A. Materials and services. Provide a consolidated priced summary of individual material quantities included in the various tasks, orders, or contract line items being proposed and the basis for pricing (vendor quotes, invoice prices, etc.). Include raw materials, parts, components, assemblies, and services to be produced or performed by others. For all items proposed, identify the item and show the source, quantity, and price. Conduct price analyses of all subcontractor proposals. Conduct cost analyses for all subcontracts when certified cost or pricing data are submitted by the subcontractor. Include these analyses as part of your own certified cost or pricing data submissions for subcontracts expected to exceed the appropriate threshold in FAR 15.403-4. Submit the subcontractor certified cost or pricing data and data other than certified cost or pricing data as part of your own certified cost or pricing data as required in paragraph IIA(2) of this table. These requirements also apply to all subcontractors if required to submit certified cost or pricing data.

(1) Adequate Price Competition. Provide data showing the degree of competition and the basis for establishing the source and reasonableness of price for those acquisitions (such as subcontracts, purchase orders, material order, etc.) exceeding, or expected to exceed, the appropriate threshold set forth at FAR 15.403-4 priced on the basis of adequate price competition. For interorganizational transfers priced at other than the cost of comparable competitive commercial work of the division, subsidiary, or affiliate of the contractor, explain the pricing method (see FAR 31.205-26(e)).

(2) All Other. Obtain certified cost or pricing data from prospective sources for those acquisitions (such as subcontracts, purchase orders, material order, etc.) exceeding the threshold set forth in FAR 15.403-4 and not otherwise exempt, in accordance with FAR 15.403-1(b) (i.e., adequate price competition, commercial items, prices set by law or regulation or waiver). Also provide data showing the basis for establishing source and reasonableness of price. In addition, provide a summary of your cost analysis and a copy of certified cost or pricing data submitted by the prospective source in support of each subcontract, or purchase order that is the lower of either $13.5 million or more, or both more than the pertinent cost or pricing data threshold and more than 10 percent of the prime contractor’s proposed price. Also submit any information reasonably required to explain your estimating process (including the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price). The Contracting Officer may require you to submit cost or pricing data in support of proposals in lower amounts. Subcontractor certified cost or pricing data must be accurate, complete and current as of the date of final price agreement, or an earlier date agreed upon by the parties, given on the prime contractor’s Certificate of Current Cost or Pricing Data. The prime contractor is responsible for updating a prospective subcontractor’s data. For standard commercial items fabricated by the offeror that are generally stocked in inventory, provide a separate cost breakdown, if priced based on cost. For interorganizational transfers priced at cost, provide a separate breakdown of cost elements. Analyze the certified cost or pricing data and submit the results of your analysis of the prospective source’s proposal. When submission of a prospective source’s certified cost or pricing data is required as described in this paragraph, it must be included as part of your own cost or pricing data. You must also submit any data other than certified cost or pricing data obtained from a subcontractor, either actually or by specific identification, along with the results of any analysis performed on that data.

 

Essentially, I believe that there are times when the prime is responsible for providing their subcontracting cost. For all other times, it might be in the primes best interest to provide their subcontractor's quote. Especially if the outcome of the modification, assuming this is post award, will increase the cost of the contract. If so, the burden is on the prime to demonstrate that their price is fair and reasonable. Otherwise, the CO might not have enough information to determine that the price is fair and reasonable.  

 

Hope this helps.

 

 

 

 

 

 

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Isn't there a FAR clause that prohibits the Government from requesting this detail where the Government should be performing Price Analysis?

Unfortunately, there is no clause which reads "The CO shall not request pricing data which makes no sense considering the situation and which cannot be properly evaluated anyway".

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Guest Vern Edwards

Well, if you're going to answer, why not provide a professional's answer?

There is no contract clause (see the definition in FAR 2.101) that prohibits a CO from asking for cost information. However, if you feel that the CO is asking for information unnecessarily, the following passages in FAR Part 15 might be of interest and persuasive.

First, FAR 15.402, "Pricing Policy," paragraph (a)(2):

Quote

When certified cost or pricing data are not required by 15.403-4, shall obtain data other than certified cost or pricing data as necessary to establish a fair and reasonable price, generally using the following order of preference in determining the type of data required: (i) No additional data from the offeror, if the price is based on adequate price competition, except as provided by 15.403-3(b)...

Second, FAR 15.402(a)(3):

Quote

Obtain the type and quantity of data necessary to establish a fair and reasonable price, but not more data than is necessary. Requesting unnecessary data can lead to increased proposal preparation costs, generally extend acquisition lead time, and consume additional contractor and Government resources. Use techniques such as, but not limited to, price analysis, cost analysis, and/or cost realism analysis to establish a fair and reasonable price. If a fair and reasonable price cannot be established by the contracting officer from the analyses of the data obtained or submitted to date, the contracting officer shall require the submission of additional data sufficient for the contracting officer to support the determination of the fair and reasonable price.

Third, FAR 15.403-3(a)(1)(ii):

Quote

(a)(1) In those acquisitions that do not require certified cost or pricing data, the contracting officer shall... (ii) Require submission of data other than certified cost or pricing data, as defined in 2..101, from the offeror to the extent necessary to determine a fair and reasonable price (10 U.S.C. 2306a(d)(1) and 41 U.S.C. 3505(a) if the contracting officer determines that adequate data from sources other than the offeror are not available....

Emphasis added.

Fourth, FAR 15.403-3(b):

Quote

   Adequate price competition. When adequate price competition exists (see 15.403-1(c)(1)), generally no additional data are necessary to determine the reasonableness of price. However, if there are unusual circumstances where it is concluded that additional data are necessary to determine the reasonableness of price, the contracting officer shall, to the maximum extent practicable, obtain the additional data from sources other than the offeror...

If selling a commercial item, see also FAR 15.403-3(c)(2).

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Well, if you're going to answer, why not provide a professional's answer?

 I also don't use the word "idiot"  on professional forums,  don't make a habit of accusing entire groups of people I've never met of being "incompetent", nor  do I lack the basic social skills of a fully functioning adult.  But some day, in the not-too-distant future,  I hope to  develop my chops to the point where I too can cut-and-paste from  FAR Part 15, as opposed to summing up the issue succinctly and with a little humor.

 

 

 

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Guest Vern Edwards

Boom! :P 

Did I hurt your feelings?

So in addition to providing half-baked answers, you are polite. Good.

You come across as someone who wants a Q&A rep. Good. We need more good A's. But I hope it won't take you too long to develop your chops. As soon as you've learned to cut and paste, I'll look forward to your in-depth analyses.

My response, unlike yours, was succinct with authoritative supporting details that reveal the subtleties in the rules. Authoritative supporting details are my specialty, for which cutting and pasting comes in handy.

I look forward to reading more of your stuff. I'm hopeful it will get better in time. We don't need more idiots and incompetents in an idiot- and incompetent-rich field.

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On 2/10/2016 at 8:41 AM, jeff4757 said:

Hello all,

Our Government customer is requesting subcontractor quotes for a FFP proposal.  The whole prime contract is FFP.

Isn't there a FAR clause that prohibits the Government from requesting this detail where the Government should be performing Price Analysis?

Your feedback is appreciated!

As is often the case in this forum, the original poster didn't explain the context of their question.  The firm has a government customer. 

There is an existing(?) or will be(?) a FFP prime contract.  Which is the case?

There is some firm fixed price proposal involved for  1) the prime contract?  or 2) for a modification to the contract? 

The customer is requesting subcontractor "quotes" - Do they want the prime to obtain competitive "quotes"? or to provide amounts of the "quotes" received? or to provide the actual "quotes"? or to provide the amount of a single "quote" or to provide a copy of a single "quote"?  Which is the case?

IF the government and a firm who may or may not already have a prime contract are negotiating a FFP contract,  a FFP task order or modification thereto and IF the price will include the subcontract, there is nothing wrong with the government evaluating a subcontract "quote" or "proposal" and negotiating it, if necessary.  Most everything is negotiable before there is a resulting contract, order or modification.

And - I have seen instances where primes or prospective primes proposed prices that didn't match the actual subcontract "quotes" or proposals, the terms of the subs' quotes or proposals varied or deviated from the requirements, or we have discovered that the prime had already negotiated a lower price than the quote or proposal they submitted.  So - nothing is guaranteed, even if you obtain the actual "quote" or proposal.

 

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