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tjsmith57

Interdivisonal Transfers - Required Clauses

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I work for a company who has several large divisions and one of them procures supplies for our overall Company. If we decided to do an Interdivisional transfer, what FAR and prime contract flwo downs need to be incorporated into the Inter Company Work Order?

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If we decided to do an Interdivisional transfer, what FAR and prime contract flwo downs need to be incorporated into the Inter Company Work Order?

Are you asking for a list? No one can give you that. I'll interpret your question as asking whether you have to treat an innterorganizational transfer (which is what they're called now) as a subcontract for purposes of flowdowns.

The answer depends on whether an interorganizational transfer is a subcontract. Unfortunately (or maybe fortunately, depending on your point of view), there is no definition of subcontract that applies throughout the FAR. The definition in FAR 44.101, which applies only to FAR Part 44, is as follows:

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“Subcontract” means any contract as defined in Subpart 2.1 entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. It includes but is not limited to purchase orders, and changes and modifications to purchase orders.

The definition of contract in FAR 2.101 is as follows:

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“Contract” means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301, et seq.

There are other definitions of subcontract that apply in other contexts.

The FAR uses the term "interorganizational transfer" in only three places and only in the context of cost principles and procedures. I don't know of anything in FAR that states or suggests that an interorganizational transfer is not a subcontract for purposes of clause flowdown. On the other hand, I don't know of anything that says that they are subcontracts for that purpose.

I don't have any advice for you. But if you work for a large company they probably have policies that address the matter.

 

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Please review FAR 15.407-2(b) before you decide that work transferred between affiliated entities under a common control requires the flowdown of any clauses whatsoever.

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H2H:

In your opinion, what does that say about whether or not a particular clause must be flowed down?

See the definition of subcontract in FAR 15.401 and in FAR 12.001.

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Sorry Vern. Been on the road. To answer your question an interdivisional transfer is a make (unless a commercial item). Thus I think there are no flowdowns in the sense of prime to sub agreements. Instead the company has already agreed to all clauses in the contract and the performing division must comply with all applicable clauses in the contract 

 

H2H

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