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CHILINVLN

Purchasing HW on behalf of Gov Client

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I'm typically in the business of only providing labor, however, we're being asked to provide hardware and I want to be sure this is handled correctly.  I have a contracts person who is stating that we're not allowed to put any markup on hardware, even though we incur costs.  i find this strange and it doesn't make sense to me.  This would be a new task order on an existing BPA based off our Schedule 70.

Can someone please tell me how we would structure our pricing for purchasing hardware on behalf of the Gov through a reseller (e.g. CDWG or elsewhere) and be able to put some type of markup on it?  Is there a specific FAR clause that I can reference?

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What contract type do you have?  If it's a Time and Materials type, then you acquire supplies on the basis of "actual cost for materials".  See FAR 16.6.

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The task order is not yet awarded, it can be any type we want under the BPA.  Other task orders have typically been T&M, so I would anticipate the preference to the same here.

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Here's the concern I have. 

FAR 51 - Deviation Ordering Guide has this statement:

Question: Can the buying contractor add any additional markup/fee onto the items procured under the FAR 51 authority, even if the fee is associated with a legitimate cost like a material handling charge?

Answer: No. The items procured under the authority must be passed through to the Federal Government at the MAS contract price less any applicable discount. No markup of any kind is permitted on this portion of the order.

 

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Chil, what does FAR Part 51 have to do with this?  You said the HW will be provided under a task order (should be delivery order) against an existing BPA based on your Schedule 70.  From this, it seems that the price for the HW would be stated in your Schedule contract.

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A few weeks ago, we received a letter that authorized us to place orders under the GSA Multiple Award Schedule program as an alternative source in procuring equipment and supplies for services for the exclusive use and ownership of the Government.  That letter states that we are responsible for compliance with the applicable acquisition policies and procedures prescribed in FAR 51.1, particularly 51.103.

That's why I brought up FAR Part 51.

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What you are referring to is GSA's FAR 51 Deviation.  You can read about it at http://www.gsa.gov/portal/mediaId/202559/fileName/MAS_DeviationOrderingGuide_121514.action

You will find the following in this guide:   When purchasing from a Schedule contract, purchase items at the Schedule contract price (or lower) with no fee/surcharge/markup. If items are provided by the selling contractor at lower than the contract price, the buying contractor must pass on the savings by invoicing the Federal Government accordingly.

So, in short if you are purchasing off of GSA for the government, you cannot mark it up one single penny.

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A "M" portion of a T&M contract is to obtain materials for the contractor's use in performing the contract, not for delivery to the Government.  FAR Subpart 51.1 allows contractors to obtain supplies or services from Government supply sources for the contractor's use in performing the contract, not for delivery to the Government.

 

CONTRACT FOR OTHER THAN COMMERCIAL ITEMS:  The prohibition on profit applicable to the "M" portion of a T&M contract (see FAR 52.232-7( b )( 7 )) applies to materials that the contractor uses or consumes.  However, you may include indirect costs on these materials on your invoices/vouchers (see FAR 52.232-7( b )( 5 )).  Your contracts person errs in saying you are not allowed to put any mark-up on hardware, so long as mark-up as you are using the term fits within the definition of indirect costs in FAR 52.232-7( b )( 5 ).

 

CONTRACT FOR COMMERCIAL ITEMS:  The only mark-ups allowed are those contemplated by para. ( i )( 1 )( ii )( D )( 1 ) and ( 2 ) of Alt I to the clause at FAR 52.212-4.  ODCs are allowed only if they are mentioned in ( 1 ), and indirect charges are only allowed as a fixed price agreed to by the parties at the formation of the contract and shown in ( 2 ).  Your contracts person might be right in saying you are not allowed to put any mark-up on hardware, if the fill-in for ( 2 ) is already set.  Since you're under a schedule contract, this is what applies to you.

 

For FAR Subpart 51.1 purchases, the contractor passes through the purchase price of items procured with no fee or markup (see page 10 of the document Desparado linked, item 14) -- the contractor does not pass through the actual items; rather, the items are supposed to be used or consumed by the contractor during performance of the contract.

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Chil, I am still confused.  Are the items on your FSS contract?  If they are, why would you be authorized to procure items off your own contract?

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