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Hello I was reading the above DFARS clause and am struggling to figure out if this would apply to a contract ( I am a subcontractor). 

The clause starts with: "

"The following paragraphs (a) through (e) of this clause do not apply unless the Contractor is subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1."

 The contract would be FFP contract for commercial items. It is my understanding that if commercial items are involved, you are exempt from CAS. This originally would lead me to believe that paragraphs a through e would not apply.

I read the rest of the clause to be thorough and ran into paragraph (e) for subcontracts. 

"The Contractor shall include the substance of this clause, including this paragraph (e), in subcontracts, including subcontracts for commercial items, that are for electronic parts or assemblies containing electronic parts, unless the subcontractor is the original manufacturer." 

I believe I should be reading this as this DFARS clause is applicable to us because our prime is subject to the CAS but we are not required to flow down to our subs. Is this a correct reading? 

Or..should I be reading this as, this is not applicable to us as I should be reading this as not applicable per the first quoted line? 

Thank you

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7 minutes ago, Retreadfed said:

Is this clause in your subcontract?

Hello, they have quoted the clause in the Purchase Order. We have not accepted it. 

My understanding is that they are required to include it in all their contracts but I am unsure if we are required to comply when I read it even if it is on the PO (subcontract). 

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You did not quote all of Subsection (e).  Note that it requires prime contractors to delete the introductory language when including the clause in subcontracts.  Thus, the language limiting application to contracts subject to the CAS does not apply at the subcontract level.  Therefore, it is required to be in your subcontract and you are bound to comply with it just as you would with any other term of your subcontract otherwise you will be in breach of your subcontract.

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2 hours ago, StePa said:

I believe I should be reading this as this DFARS clause is applicable to us because our prime is subject to the CAS but we are not required to flow down to our subs. Is this a correct reading? 

If the prime contract is commercial, then it shouldn't contain DFARS 252.246-7007.

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3 minutes ago, Don Mansfield said:

If the prime contract is commercial, then it shouldn't contain DFARS 252.246-7007.

Don, I do not see anything in the DFARS that says do not include the clause in contracts for commercial items.  Confusingly, the introductory language to the clause says it generally does not apply to contracts that are not subject to the CAS, which would mean that (a)-(e) of the clause do not apply to contracts for commercial items.  However, (e) requires the clause minus the introductory language to be included in subcontracts for commercial items. 

However, I am confused by the introductory language.  It says that (e) does not apply unless the contract is subject to the CAS.  If the contract is for commercial items, and not subject to the CAS, (e) would not apply to the contractor.  In that case, it could be argued that the prime is not required to include the clause in subcontracts, unless the prime contract is subject to the CAS.

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Retreadfed,

The only DFARS clauses authorized for use in contracts for commercial items are listed at DFARS 212.301(f). DFARS 252.246-7007 is not listed. 

Also, note that the prescription for the clause doesn't contain the phrase "including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items." The DAR Council uses that convention to indicate a provision or clause is for use in a solicitation or contract for commercial items. So, if a prescription is silent regarding applicability to commercial items, it doesn't apply.

Couldn't be more confusing. https://www.federalregister.gov/documents/2013/06/25/2013-15030/defense-federal-acquisition-regulation-supplement-solicitation-provisions-and-contract-clauses-for

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1 hour ago, Retreadfed said:

Funny that the clause does not apply to contracts for commercial items, but is to be included in subcontracts for commercial items.

You can read the DAR Council's reasoning on p. 26099: https://www.acq.osd.mil/dpap/dars/dfars/changenotice/2014/20140506/fr_2012-D055.pdf 

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Question for StePa (Special Test Equipment Procurement Agent?): Do you know if the Government prime contract is for a commercial end item or not. And if so, how do you know.

 

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Apologies all. I am unsure if the Prime contract is commercial. My reference was to the subcontract aka our contract with the prime being commercial. 

StePa is just a shorter version of my first and last name @Neil Roberts . Sorry for the confusion. 

Thanks for the links Don. I will read up on them before adding anything else. Thank you everyone for contributing so far. 

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