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Help!!  I've got two sources telling me two completely different things with regard to 52.215-12 on a large dollar FFP contract.  One source says that even though 52.215-12 does not apply to us as we bid this competitively, that it does apply to any Subs/Vendors if those Subs/Vendors were not competitively bid.  The other source says that since 52.215-12 does not apply to us as we were competitively bid, that it also does not apply to our Subs/Vendors.  Who is right in this situation?  

 

  

 

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I don't see how a clause that is not in your contract can be enforced, let alone be flowed-down to subcontractors under that prime contract.

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1 hour ago, Jetsterkitty said:

One source says that even though 52.215-12 does not apply to us

Well, if it's in your contract, it applies to you....

But it does seem kind of odd. Certified C&P data from subs on a competitive award is pointless.  The -13 'Modifications' permutation of the clause would make more sense in this scenario.

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It's in our Contract, so I know it applies in the sense that it was flowed down, but we competitively bid the effort, so we would be exempt from the cost or pricing data requirement.  My question is would our subs/vendors be subject to is since it doesn't apply to us as the Prime?

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Send a note to the contracting officer requesting a contract modification to delete the clause.  Make your case with facts and FAR citations, not like you did here.  Make it clear if you are a prime contractor, or a first- or lower-tier subcontractor.  Be prepared to answer a question about why you didn't object to the clause during the solicitation phase.

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Generally, I've always been told that if TINA doesn't apply to the prime, then it doesn't apply to the subKs. Let's set up a hypothetical, just for grins:

Contract A's firm, fixed-price is determined to be fair & reasonable via price analysis alone, since competition was achieved. Contractor Z was the low-bidder and received the award. Contractor Z's proposed price included 2 subcontractors ("1" and "2"). Each of those two subcontracts' prices exceeded $750,000. Neither of them was awarded pursuant to competition.

Question 1: Should Contractor Z have obtained certified cost or pricing data from Subcontractor 1 and Subcontractor 2, even though its prime contract was awarded pursuant to competition?

My answer: I don't think so.

Question 2: Should Contractor Z have performed cost analysis, in addition to price analysis, in order to ensure the two subcontract prices were fair & reasonable? Remember, its government customer was not performing cost analysis, so why should it bother? Remember, the contract award value is FFP, so why does the government care whether or not Contractor Z is paying fair & reasonable prices?

My answer: Probably not, unless Purchasing policies call for such an analysis to be made.

 

Now consider a post-award scenario where the government requests a proposal for an equitable adjustment via the Changes clause. Contractor Z's estimated costs are in excess of $750,000. Subcontractor 1's estimated change costs are in excess of $750,000. (Subcontractor 2 was not impacted.) At this point there is no competition because the contract has already been awarded.

Question 3: Is Contractor Z required to submit certified cost or pricing data in support of its change order proposal?

My answer: Yes.

Question 4: Is Contractor Z required to obtain certified cost or pricing data from Subcontractor 1? Is Contractor Z required to perform cost and price analysis on Subcontractor 1's change order proposal?

My answer: Yes and yes.

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28 minutes ago, Jetsterkitty said:

doesn't apply to us as the Prime

You should think more carefully about "apply to us." Consider two different uses of "apply to us":

(1) satisfies the specific conditions of the prescription clause* in the FAR, i.e. the facts indicate that the contracting officer shall include the clause in the contract

(2) the clause is in the contract you signed

For a contractor performing on a signed government contract, (2) is what really matters.**

Arguments about (1) should be made before the contractor signs the contract.

*The clauses in FAR Part 52 generally begin with "As prescribed in FAR X.XXX, insert the following clause..." FAR X.XXX is the prescription clause. It gives contracting officers direction or guidance for when to use the clause in solicitations or contracts.

**Yes, PepeTheFrog understand the Christian doctrine, but remember: The Christian doctrine only helps you as a bargaining bluff until a judge applies it in your favor. Are you wiling to go to court over this?

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I have seen this situation many times. You say you were awarded a competitively awarded contract. In my experience, Contracting Officers issuing solicitations do not always know at the outset whether the contract will be awarded on a competitive or negotiated basis and include negotiated solicitation terms to be on the safe side. Therefore, FAR 52.215-12 may be inserted into the solicitation. Upon award of a competitive contract (not clear sure how you know the basis of the award), the Contracting Officer out of pressure, expediency, inexperience etc., may simply incorporate all the solicitation terms and conditions into the award with no objection from the prime (they really wanted the work and feared that taking exception would put them at a competitive disadvantage). In my opinion, if 52.215-12 is included in the prime contract, failure to flow it to suppliers and obtain the required certified cost or pricing data is a potential breach of contract between the prime and the Government. There are those in the subcontract world that do not think about that and do not flow 52.215-12 even when in the prime contract, because (a) it seems not to have made sense for it to have been included in a competitively awarded prime contract and/or (b) if the prime doesn't have to furnish cost or pricing data, subcontractors certainly do not either. It may even be that the prime subcontracts might be excluded from a CPSR review if the prime is competitively awarded. Some might take comfort that there is little risk that the Government would review such a subcontract, or if it does, would not be expecting that the prime would be obtaining subcontract cost or pricing data.

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11 hours ago, Jetsterkitty said:

Help!!  I've got two sources telling me two completely different things with regard to 52.215-12 on a large dollar FFP contract.  One source says that even though 52.215-12 does not apply to us as we bid this competitively, that it does apply to any Subs/Vendors if those Subs/Vendors were not competitively bid.  The other source says that since 52.215-12 does not apply to us as we were competitively bid, that it also does not apply to our Subs/Vendors.  Who is right in this situation? 

I believe that the other source is correct. 

 

Quote

 

15.403-4 -- Requiring Certified Cost or Pricing Data (10 U.S.C. 2306a and 41 U.S.C. Chapter 35).

(a)

(1) The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies [ ] Unless an exception applies, certified cost or pricing data are required before accomplishing any of the following actions expected to exceed the current threshold [ ] :

  • [ ] (ii) The award of a subcontract at any tier, if the contractor and each higher-tier subcontractor were required to furnish cost or pricing data...

 

  •  

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I apologize for formatting errors on this $&@#% iPad .  

I believe that the above states that the KO shall require certified cost or pricing data for a non-competitive subcontract award expected to exceed the threshold ONLY if the PRiME (AND a higherhigher-tier sub, if applicable) were required to furnish C or P data. The prime contract was competitively awarded, thus the exception at 15.403-1 (b)(1) applied to the prime contract.

So, if the clause was mistakenly included in the contract, the FAR still says NOT to require C or P data from a subcontractor if the prime was exempt from providing it. 

Of course, the clauses at 52.215-11 and 13 apply to prime and subcontract pricing of contract modifications that exceed the threshold.

Thats the way I read it.

Note: The underlying Statutes at 10 U.S.C. 2306a and 41 U.S.C. 3502, regarding when C or P data are required for offerors, contractors, prospective subcontractors and subcontractors,  are a lot easier to read than plowing through FAR 15.403. In my opinion, the FAR language emphasizes that the KO is NOT to require C&P data when the Law doesn't require it.  If memory serves me right, that emphasis was included in the 1996 FAR rewrite, which also reorganized the order of the subject so that the exceptions to requiring/obtaining C&P data were described before the requirements were described.

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Relying solely on FAR 15-403-4 and/or the public law (as pointed out above by joel hoffman) to formulate a position still leaves questions in my mind surrounding the words "required" and "furnished." Is cost or pricing data "required" if 52.215-12 was included in the solicitation but the Government did not ask for it to be "furnished?" Same question with respect to its inclusion in the contract. Also, what is the support the a prime contractor can rely on/point to that an award to it was "competitive" and that therefore cost or pricing data was not "required?"      

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Neil, read the statutes. The offeror for a subcontract doesn't have to furnish it if the prime and higher tier subcontractors to the prospective sub did not have to furnish it. 

I am curious as to whether or not the government included 52.215-10 in the contract. 

I don't think that a KO can simply include a clause that isn't applicable to the situation and extend the law to require C&P data without some kind of deviation approval. 

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I'm confused (which seems to be my perpetual state) about what the facts are here.  Jetsterkitty keeps talking about a "contract" but says 52.215-12 was "flowed down" to his/her company.  This brings up the question of whether we are talking about a prime contract or a subcontract.  Also, I agree with Joel that it would be good to know if 52.215-10 is in the (sub)contract.  In this regard, most of us realize that prime contractors frequently blindly incorporate the clauses from their prime contracts into subcontracts without thinking of their application.

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joel,

Should the parties read their contract as it should have been written, or as it actually is written?  You seem to be suggesting the former -- I tend to prefer the latter.  That's why I think the contractor (assuming the original poster is a prime contractor) should simply get the Government to agree to delete the clause by contract modification (or at least an agreement that the clause is not effective).

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19 hours ago, Jetsterkitty said:

My question is would our subs/vendors be subject to is since it doesn't apply to us as the Prime?

 

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2 hours ago, ji20874 said:

joel,

Should the parties read their contract as it should have been written, or as it actually is written?  You seem to be suggesting the former -- I tend to prefer the latter.  That's why I think the contractor (assuming the original poster is a prime contractor) should simply get the Government to agree to delete the clause by contract modification (or at least an agreement that the clause is not effective).

I agree that the contractor should "get" the government to agree to delete the clause because the KO wasn't supposed to include either clause 52.215-10 and -12  in the prime contract, if the prime contract was competitively awarded. The FAR Matrix designates the clause as "Required when Applicable". 

The KO cannot require the sub to submit C&P data under the circumstances described per FAR 15.403-4 (a) (1) and 10 U.S.C. 2306a and 41 U.S.C. Chapter 35. 

The contractor should become familiar with its rights as well as its responsibilities under the cost or pricing and defective pricing clauses, especially when compliance with a clause that isn't supposed to be included might increase the cost of subcontracts and might require additional prime contract administrative effort. 

14 hours ago, joel hoffman said:

...The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies

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There are practical business decisions that should be made by a firm in relation to supplier management and flowdowns. Is the business going to operate by reading the prime and flowing FAR clauses included in the prime that require flowdown and compliance, or is the business going to second guess every clause in the prime and do research to determine whether it should have been in the prime? Second guessing is easier if the firm has only a few prime contracts. However, if the firm wants to grow its business, my view is complying with the prime contract is the best and most cost competitive approach with the least risk. 

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58 minutes ago, Neil Roberts said:

There are practical business decisions that should be made by a firm in relation to supplier management and flowdowns. Is the business going to operate by reading the prime and flowing FAR clauses included in the prime that require flowdown and compliance, or is the business going to second guess every clause in the prime and do research to determine whether it should have been in the prime? Second guessing is easier if the firm has only a few prime contracts. However, if the firm wants to grow its business, my view is complying with the prime contract is the best and most cost competitive approach with the least risk. 

I don't understand why a prime would want to potentially increase its costs by applying needless, onerous requirements to its subcontractors, if it doesn't want to. There is no benefit to the government here for requiring CERTIFIED cost or pricing data from a subcontractor. 

The prime contractor can certainly demand similar cost breakdown data for use in  negotiating with a sub. That would be between the prime and the sub. 

But the TINA provisions wouldn't apply for purposes of relief. The government and contractor have already established the prime contractor price and the government didn't rely on the subsequent subcontract price under the defective pricing provisions of TINA where the contractor is later buying out the job..

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Maybe I'm missing something (as usual) but what would compel the prime to obtain certified CorP data for a subcontract modification made post-award that exceeded the TINA threshold, if the clause were deleted from the contract?

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Help, subcontract modifications are covered by a separate clause, 52.215-13.  Subcontractor Cost or Pricing Data - Modifications

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1 hour ago, joel hoffman said:

Help, subcontract modifications are covered by a separate clause, 52.215-13.  Subcontractor Cost or Pricing Data - Modifications

Well, that would be what I'm missing, then.

 

Thanks

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