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tjsmith1957

Labor Hour Subk and Work Orders

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I have been hired by a company to develop their Procurement Policies & Procedures and to review Subk files. I reviewed a file against an IDIQ Prime Contract. The Subk Manager did not issue the sub an IDIQ, instead they issued a straight LH Subk with no funding and then issues Work Orders against the Subk, with no SOW, no flow downs etc. I have never seen Orders issued against a Subk other than IDIQ< is this standard practice?

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Obviously, the situation you describe is "unusual" and, in my view, not a good subcontracting practice. If the prime is going to issue a LH SubK, then it should come with everything, including funding and a SOW. If the prime wants to issue individual Work Orders then it needs to issue an ID/IQ or else a BOA.

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On 9/18/2019 at 1:35 PM, tjsmith1957 said:

I reviewed a file against an IDIQ Prime Contract. The Subk Manager did not issue the sub an IDIQ, instead they issued a straight LH Subk with no funding and then issues Work Orders against the Subk, with no SOW, no flow downs etc. I have never seen Orders issued against a Subk other than IDIQ< is this standard practice?

It is not a standard practice in my experience.  However, that does not make it wrong.  Prime contractors do not have to apply FAR concepts when entering into subcontracts unless those concepts, such as the requirement to submit obtain certified cost or pricing data, are required by the prime contract.  Instead, they can generally develop their own business practices that work best for them.

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On 9/18/2019 at 10:35 AM, tjsmith1957 said:

I have been hired by a company to develop their Procurement Policies & Procedures and to review Subk files. I reviewed a file against an IDIQ Prime Contract. The Subk Manager did not issue the sub an IDIQ, instead they issued a straight LH Subk with no funding and then issues Work Orders against the Subk, with no SOW, no flow downs etc. I have never seen Orders issued against a Subk other than IDIQ< is this standard practice?

A CPSR compliant company process would not permit a subcontract to be released without a SOW and lack of flowdowns, at least those that are mandatory and included in the prime. Fixed price subcontracts do not need funding as it is considered fully funded unless otherwise indicated with partial funding.  But, not quite sure how such a subcontract would be administered or clear enough without contract language addressing how this works with labor hours and rates, and the subcontract had a total price. It seems possible to me to have an LH subcontract with "Work Orders," depending on how the whole scheme is explained in the contract. It sounds like procurement is in a weak position at this firm. You haven't indicated what was required by its Procurement Policies and Procedures, so you can address changes with this example.    

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tj,

what you found is non compliant by any standard it sounds like a poorly written and executed BOA. A BOA is not a contract, so the company that hired you would need a unique PO number for every "work order" for invoice tracking and accounting, or conflict resolution. Very strange. The BOA will contain general terms and conditions, ordering (FAR 16.703). The example you found is apparently lacking what it should be this is from Acqnotes.com :

 

  • Contains contract clauses applying to future contracts between the parties during its term
  • Contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the basic ordering agreement.
  • Contains methods for pricing, issuing and delivering future orders
  • Contains a description of supplies and services to be provided

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On ‎9‎/‎20‎/‎2019 at 11:48 PM, general_correspondence said:

what you found is non compliant

Non-compliant with what?  The FAR does not govern contracting between a prime and sub.   Subcontracts are primarily commercial arrangements between the prime and sub and are subject to state law.  As for the government, primes only have to award subcontracts in accordance with the terms of the prime contract that address subcontracting.  Further, Federal fiscal law, such as the Anti-Deficiency Act and Recording statute do not apply to contractors.

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14 hours ago, Retreadfed said:

Non-compliant with what?  The FAR does not govern contracting between a prime and sub.   Subcontracts are primarily commercial arrangements between the prime and sub and are subject to state law.  As for the government, primes only have to award subcontracts in accordance with the terms of the prime contract that address subcontracting.  Further, Federal fiscal law, such as the Anti-Deficiency Act and Recording statute do not apply to contractors.

Retread, there's merit in your post; however, in my opinion it ignores the reality that many contractors are subject to CPSRs. CPSR reviewers tend to base their findings on Federal government standards and contracting practices. It may not be right but that's the way it often is. Consequently, contractors subject to CPSRs are wise to take those standards and practices into account.

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2 hours ago, here_2_help said:

...many contractors are subject to CPSRs.

Contractors are subject to CPSRs contractually when the prime contract includes FAR 52.244-2 Subcontracts

Edited by Neil Roberts
typo

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1 hour ago, Neil Roberts said:

Contractors are subject to CPSRs contractually when the prime contract includes FAR 52.244-2 Subcontracts

Where do you find this requirement in 52.244-2?

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4 hours ago, here_2_help said:

CPSR reviewers tend to base their findings on Federal government standards and contracting practices.

Unless you have CAS covered DoD contracts, what are the consequences of failing a CPSR except for having to get consent to subcontract?

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1 hour ago, Retreadfed said:

Where do you find this requirement in 52.244-2?

(i) The Government reserves the right to review the Contractor’s purchasing system as set forth in FAR Subpart 44.3. 

 

1 hour ago, Retreadfed said:

Unless you have CAS covered DoD contracts, what are the consequences of failing a CPSR except for having to get consent to subcontract?

There are substantial business consequences. Chief among them are inability to successfully compete against others for awards such as those having significant subcontracting or risk. An approved Purchasing System is the gold standard and valued by Agencies and Contracting Officers. When it is required, it may be called out in the solicitation.   Also, it is a significant schedule risk to have procurements reviewed before award if required by CPSR deficiencies. 

Edited by Neil Roberts
incomplete sentence

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40 minutes ago, Neil Roberts said:

When it is required, it may be called out in the solicitation.

I see this sometimes and think it is very discriminatory.  A contractor has no control over whether the government will conduct a CPSR.  Pursuant to FAR 44.203, the ACO has considerable discretion in regard to whether to conduct a CPSR.  Further, many small business concerns do not meet the threshold for a CPSR.  Thus, to require contractors to have an approved purchasing system in order to be awarded a contract is very unfair and does not take into account the government's role in this regard.  The fact that a contractor does not have an approved purchasing system does not mean that the contractor has deficiencies in its system.

As for your other points, they are not valid in my experience, 24 years of procurement with DoD and 20 more years working with contractors after retirement.  In my experience, most agencies don't care if a contractor has an approved purchasing system.  After all, it is not a FAR requirement for a contractor to have an approved purchasing system.

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