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We are bidding on a contract that requires a proprietary software to be updated during the contract period. We received a quote from the company that owns the software and will come in annually to update it. A question came if this company should be treated as a Subcontractor (which of course affects our subcontracting goals) or if they are considered a vendor and should be treated like an ODC.

I have searched the RFP to see if they define either of these terms with no luck. I have found the term subcontractor defined in FAR 44.101 but cannot find a clear definition of vendor.

Can someone point me in the right direction?

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FAR out,

Does the RFP include the clause at FAR 52.219-9 Small Business Subcontracting Plan? If so, and if the question is about how the anticipated use of this software company will affect your subcontracting goals, then see the definition in that clause:

       " 'Subcontract' means any agreement (other than one involving an employer-employee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract."

Based on that definition, the software company should count as a subcontractor for purposes of the Small Business Subcontracting Plan, even if your accounting system classifies it as a vendor and treats the cost as an ODC.

 

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I agree with ktr1999.

If I've learned anything from reading WIFCON it's that the definition of "subcontractor" depends on the context. The definition found in Part 44 is different from the definition found in Part 3. Because of that, if you call the software supplier a "subcontractor" for purposes of complying with FAR Part 19, it doesn't mean that your accounting system needs to burden the transaction the same way it would for a "real" subcontractor.

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A couple of things I've gathered on the subject (some from WIFCON posts.)

A vendor provides off-the-shelf, commercially-available goods or services. The vendor will provide these same goods or services to anyone who pays the vendor. A subcontractor is a person or organization who assists in the prime contractor in performing programmatic functions. The subcontractor is somewhat of a "partner" for the prime contractor and provides goods or services specifically tailored to meet the programmatic needs of the prime contract.

Vendors

Vendors sell identical or similar products to different customers as part of their regular operations. Examples include parts vendors supplying to automobile manufacturers, produce vendors supplying to grocery stores and consulting firms serving large businesses. These vendors operate in a competitive environment in which customers typically compare product characteristics before making a purchase decision. These characteristics include suitability, performance, price and guarantee. Large companies may enter into supply contracts with several vendors to ensure that problems with one supplier do not shut down the entire supply chain.

Subcontractors

Subcontractors may work for the prime contractors of major projects or for companies that need specific tasks completed in a limited period. Companies enter into subcontracting arrangements usually because they do not have the expertise in-house, and they need the services for a period that is not long enough to justify hiring a full-time person. For example, a residential-construction company may hire subcontractors to complete the landscaping on its houses, while the prime contractor on a defense project may hire subcontractors for writing technical manuals. Subcontractors may have their own vendors and subcontractors. Continuing with the example, the landscaping company may hire subcontractors to build an interlocking driveway and buy the sod from a local vendor of gardening supplies.

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On 12/29/2016 at 8:01 AM, Username said:

A couple of things I've gathered on the subject (some from WIFCON posts.)

No, no, no, no, no.

FAR out:

You asked:

On 12/22/2016 at 3:58 PM, FAR out said:

A question came if this company should be treated as a Subcontractor (which of course affects our subcontracting goals) or if they are considered a vendor and should be treated like an ODC.

I have searched the RFP to see if they define either of these terms with no luck.

You define words in a prospective contract based on their pertinent use in the prospective contract. You must proceed contractually and systematically. In order to do that you do not check at Wifcon. You check the terms of the contract, the FAR, a statute or another regulation, or a common dictionary, and you back up your analysis with valid references.

So In order to answer your own question you first determine whether the RFP is for commercial items or for noncommercial items. If RFP is for for commercial items it presumably includes the clause at FAR 52.212-4. If so, then see paragraph (e), Definitions, which refers you to FAR 52.202-1. If the contract is for noncommercial items, then it, too, should include FAR 52.202-1, Definitions.

FAR 52.202-1 says:

Quote

When a solicitation provision or contract clause uses a word or term that is defined in the Federal Acquisition Regulation (FAR), the word or term has the same meaning as the definition in FAR 2.101 in effect at the time the solicitation was issued, unless - 

(a) The solicitation, or amended solicitation, provides a different definition;

(b) The contracting parties agree to a different definition;

(c) The part, subpart, or section of the FAR where the provision or clause is prescribed provides a different meaning; or

(d) The word or term is defined in FAR Part 31, for use in the cost principles and procedures.

FAR 1.108(a) says that if there is no official definition, you go to a "common" dictionary.

So now ask yourself, what "subcontracting goals" am I thinking about? Are they specified somewhere in the RFP or elsewhere? If in the RFP, is the term used in a solicitation provision or contract clause? If so, what does the provision or clause say? Does it define the term or does it refer me to a statute, such as the small business statutes in Title 15 of the United States Code, or to another regulation, such as the small business regulations in Title 13 of the Code of Federal Regulations. If so, does the statute or regulation define the term? If not, then what do common dictionaries say?

THAT is how a contracting pro should begin the search for the meaning of a prospective contract or an official word, not by "gathering" something from Wifcon posts that came from who knows who and who knows where, but through contractually-oriented and systematic search.

It ain't easy. That's why there are contracting professionals. When in doubt, seek one out.

I don't know what subcontracting goals you're talking about, but if you're talking about the ones from FAR Subpart 19.7, look at the definition of subcontract in FAR 19.701. Pursuant to that definition, subcontract and vendor are one and the same. See also FAR 52.219-9, as pointed out to you earlier by ktr1999.

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I for one, am not a contracting professional, though I have experience in prime contract administration, subcontract administration, and procurement (all from the contractor's side). If anything, I'm a compliance professional, in that I get paid for helping contractors comply with various solicitation provisions and contract clauses (as well as some statutes upon occasion).

As has been made frequently clear on this site, questions will receive answers. The value of those answers, if any, is best determined by the interlocutor.

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I remember when I attended my first NDIA meeting in Washington, D.C. In the room were Karen Manos, Terry Albertson, Darrell Oyer, Nelson Shapiro, Lou Rosen, Rod Mateer, and a number of other "giants" in field, I was petrified that I was going to say something stupid. But after a couple of meetings i realized that I had valuable insight to share because I was down in the trenches, dealing with real issues and challenges. They had theory and legal knowledge but I had actual experience. Then I realized I could bring my issues and challenges to the meetings, ask a couple of questions, and get free advice. Advice my company would have been paying (at that time) $500 an hour to get in another venue.

I just had to think about my question in advance, and phrase it so that I could get the answer(s) I needed.

I don't see why everybody doesn't adopt a similar attitude. There's value to be had, if variable in quality of response. Certainly, a "no, no, no, no" from somebody with 40 (or more!) years of expertise should be seen to be worth more than a "sure, go ahead" from somebody who just graduated law school or whatever.

But then, I'm the guy who publicly argued with Lou Rosen about CAS language.

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It looks to me as if subcontractor is a subset of vendor.

A subcontractor performs part of the prime contract.  If the vendor does that, it is a subcontractor.  If it does not, then it is not.

Staples would likely be vendor other than a subcontractor (a material-man?)  even if the goods purchased from it were used on and charged to a single contract. 

A staffing company (or any company, even Lockheed Martin) which provides staff but does not direct the people once assigned to its customer would be a vendor other than a subcontractor.

Verizon would be vendor other than a subcontractor if it sold commercial telephone service, such as a single line on a desk, and the line was used exclusively for a single contract.

 

 

Legal Definition of vendor

  1. :  one that sells something

< https://www.merriam-webster.com/dictionary/vendor >
 

Definition of subcontractor

  1. :  an individual or business firm contracting to perform part or all of another's contract

< https://www.merriam-webster.com/dictionary/subcontractor >
 

Definition of materialman

plural

materialmen

  1. :  one who supplies materials (as in the building trades)

< https://www.merriam-webster.com/dictionary/materialman >

What is VENDOR?

The person who transfers property by sale, particularly real estate, "seller" being more commonly used for one who sells personalty. He is the vendor who negotiates the sale, and becomes the recipient of the consideration, though the title comes to the vendee from another source, and not from the vendor. Rutland v. Brister, 53 Miss. 685.

 

What is MATERIAL MAN?

Provider of construction or renovation project materials. A mechanic's lien from the property owner or builder guaranteeing payment for the materials is typically given to the material man

< http://thelawdictionary.org/material-man/ >

 

< http://thelawdictionary.org/vendor/ >
 

What is SUBCONTRACTOR?

Secondary or junior contractor working with the main contractor.

 
 

Subcontractor

A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract.

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