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Flowdowns below the Micro-Purchase Threshold

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I was informed by the DMCA that the contractor is required to flow down 52.245-1 Goverment Property to all subcontractors (based off 52.245-1 (b)(3)).  I attempted to argue that since the orders were below the MPT there should be no requirement to flowdown the provision (based on FAR 13.201 (d)) 

FAR 13.201 (d) Micro-purchases do not require provisions or clauses, except as provided at 13.202 and 32.1110. This paragraph takes precedence over any other FAR requirement to the contrary, but does not prohibit the use of any clause.

However, I was unsuccessful in making my argument.  I also see that other prime contractors also flow down 52.245-1 along with a host of other subcontract provisions in there general terms below the MPT.  What is the logic requiring the inclusion of this provision specifically?

The other argument I attempted to make was that the Government property received (for repair) had a unit cost well below the simplified acquisition threshold and therefore should be exempt from the provision based on FAR 45.107 (d)

(d) Purchase orders for property repair need not include a Government property clause when the unit acquisition cost of Government property to be repaired does not exceed the simplified acquisition threshold, unless other Government property (not for repair) is provided.

Note: No other property was provided. 

Please provide your thoughts on my reasoning. 

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Z, the FAR sections that you cite relate to guidance for government personnel to use when awarding prime contracts.  They are not clauses binding on contractors.  On the other hand, if FAR 52.245-1 is in your prime contract, it is binding on you and you have to comply.  If you want to avoid the flow down requirement, find a clause in your contract that says you do not have to include the clause in contracts below the MPT.

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The logic requiring flowdown of 52.245-1 to suppliers include situations where the supplier is using/in possession of Contractor furnished government owned property or facilities and/or Government furnished property or facilities, and the like, in performing work under the prime regardless of the price of the subcontract. Also, the clause requires that Contractors shall flow down prime contract terms and conditions including those addressing liability for loss of Government property, which is included in 52.245-1. Logically, failure to flow 52.245-1 may put the Contractors approved property system and/or approved purchasing system at risk.   

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On 5/15/2017 at 6:48 AM, Retreadfed said:

Z, the FAR sections that you cite relate to guidance for government personnel to use when awarding prime contracts.  They are not clauses binding on contractors.  On the other hand, if FAR 52.245-1 is in your prime contract, it is binding on you and you have to comply.  If you want to avoid the flow down requirement, find a clause in your contract that says you do not have to include the clause in contracts below the MPT.

Thanks Retreadfed!  I was interpreting 13.201(d) to also exclude the contractors responsibility to flowdown subcontract provisions as well for their subcontracts that are below the MPT.  This logic was predicated on the second sentence in the section which states; it takes precedence over any other FAR requirement to the contrary (which includes FAR part 52). 

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If FAR 52.245-1 is in your contract, it is a contractual requirement, not a regulatory requirement.  Part 52 of the FAR also provides guidance to contracting officers in that each sections starts with words such as "Insert this clause in all contracts."

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