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Hey Contracting professionals, I'm trying to see if the DFARS 252.242-7005 (and other clauses and systems requirements referenced therein) apply to my AbilityOne Contractor... 

  • 252.242-7005 "applies to covered contracts that are subject to the Cost Accounting Standards",
  • 48 CFR § 9903.201-1 - CAS applicability (b) [exemptions] (5) Contracts and subcontracts in which the price is set by law or regulation. 
  • Prices in the AbilityOne Program are set by the AbilityOne Comission (i.e. law or regulation).

Therefore, even if I have included the 252.242-7005 and 252.242-7006 in my award, as CAS exempt, these will not apply to the AbilityOne contractor, correct?

Thanks in advance,

prudentmindstx

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On ‎1‎/‎10‎/‎2020 at 1:49 PM, prudentmindstx said:

Hey Contracting professionals, I'm trying to see if the DFARS 252.242-7005 (and other clauses and systems requirements referenced therein) apply to my AbilityOne Contractor... 

  • 252.242-7005 "applies to covered contracts that are subject to the Cost Accounting Standards",
  • 48 CFR § 9903.201-1 - CAS applicability (b) [exemptions] (5) Contracts and subcontracts in which the price is set by law or regulation. 
  • Prices in the AbilityOne Program are set by the AbilityOne Comission (i.e. law or regulation).

Therefore, even if I have included the 252.242-7005 and 252.242-7006 in my award, as CAS exempt, these will not apply to the AbilityOne contractor, correct?

Thanks in advance,

prudentmindstx

Yes, in my opinion AbilityOne contracts are exempt from submission of certified cost or pricing data [15.403-1(b)(3)] and from CAS coverage (you cited correctly above). Accordingly, while the Accounting System Administration clause may be included (as per the prescription at 242.7503), the resulting contract is not a "covered contract" as defined by 242.70(a) -- and thus the contracting officer cannot include the 252.242-7005 clause that imposes mandatory payment withholds for business system "significant deficiencies."

You imply the 252.242-7005 is self-deleting based on applicability. I say that inclusion in the contract violates the clause prescription.

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Ability One contracts are radically different.  For one thing, if the Commission wants your requirement added to the List, you don’t have much choice. Negotiations and determining price reasonableness are different as well.  Take a look at this:

https://www.abilityone.gov/laws,_regulations_and_policy/policy_memos_pricing_memo3.html
 

You can’t get certified cost or pricing data.  Plus costs are controlled by OMB A-122.

Anyone doing or contemplating an Ability One contract needs education first.  If there’s no one to help at your agency, contact the Ability One people.  They are extremely helpful and will walk you through the process.

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In 2014, OMB Cir. A-122 was superseded by the Uniform Guidance for Grants and Cooperative Agreements found in 2 CFR 200.  On July 14, 2016, the cost principles in 2 CFR 200 were adopted as the FAR cost principles when contracting with entities such as Ability One.  The FR notice for this action stated "The cost principles under OMB's Uniform Guidance apply to contracts with non-profits, educational institutions, state and local governments, and Indian tribal governments. All other FAR contractual requirements (e.g., contract administration, audit) take precedence over the OMB Uniform Guidance when there is a conflict."

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Thanks.  That is interesting.  I don’t think Ability One is paying attention to that, at least from what I’ve heard from them.  That may be their contracts just don’t get that involved in costing details.  They quickly point out they aren’t required to submit certified cost or pricing data. 
 

 

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On ‎1‎/‎19‎/‎2020 at 2:45 PM, formerfed said:

They quickly point out they aren’t required to submit certified cost or pricing data. 

Why not?  I don't see an exemption for them in the statute.  Is it because they contend their prices are set by law or regulation?

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On 1/17/2020 at 3:16 PM, here_2_help said:

Yes, in my opinion AbilityOne contracts are exempt from submission of certified cost or pricing data [15.403-1(b)(3)] and from CAS coverage (you cited correctly above). Accordingly, while the Accounting System Administration clause may be included (as per the prescription at 242.7503), the resulting contract is not a "covered contract" as defined by 242.70(a) -- and thus the contracting officer cannot include the 252.242-7005 clause that imposes mandatory payment withholds for business system "significant deficiencies."

You imply the 252.242-7005 is self-deleting based on applicability. I say that inclusion in the contract violates the clause prescription.

 

On 1/17/2020 at 1:13 PM, Retreadfed said:

Why would 252.242-7006 not apply?  It's use is not dependent on the contract being subject to the CAS.

So, the thoughts are that:

  1. -7005 (Business Systems) clause doesn't apply (i.e. exempt under price set by law/regulation, etc) - so it's either self-deleting or a clause prescription violation (agree), 
  2. -7006 (Accounting System Admin) clause applies (is prescribed not by -7005, but by 48 CFR § 242.7503) so the accounting system criteria apply, 
  3. As such, significant deficiencies may be identified by Contracting Agency (or DCAA audit assist) under -7006,
  4. A contracting officer can disapprove an accounting system under -7006, 
  5. As such, corrective action process in -7006 applies, and... so... 
  6. Thoughts on withholds? Possible or not possible? They're in -7005. -7006 just says, "do -7005" (paraphrase, lol).

Thanks,

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2 hours ago, prudentmindstx said:

 

So, the thoughts are that:

  1. -7005 (Business Systems) clause doesn't apply (i.e. exempt under price set by law/regulation, etc) - so it's either self-deleting or a clause prescription violation (agree), 
  2. -7006 (Accounting System Admin) clause applies (is prescribed not by -7005, but by 48 CFR § 242.7503) so the accounting system criteria apply, 
  3. As such, significant deficiencies may be identified by Contracting Agency (or DCAA audit assist) under -7006,
  4. A contracting officer can disapprove an accounting system under -7006, 
  5. As such, corrective action process in -7006 applies, and... so... 
  6. Thoughts on withholds? Possible or not possible? They're in -7005. -7006 just says, "do -7005" (paraphrase, lol).

Thanks,

From my point of view, the cognizant contracting officer may always implement payment withholds to protect the government's interest. Agree with you that the function of the -7005 clause is to take away discretion and make withholds mandatory.

Also, if memory serves DFARS provides options for how to handle a contractor with a disapproved accounting system. You might want to evaluate all options before implementing payment withholds. Further, given the contractor's status under AbilityOne, you should expect to receive flak for implementing payment withholds. I suggest that the government's risk be robustly documented and that the withhold amounts be tied to that risk analysis, if that's the way you are going to go.

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26 minutes ago, here_2_help said:

I suggest that the government's risk be robustly documented and that the withhold amounts be tied to that risk analysis, if that's the way you are going to go.

Agreed. Thank you!

(Disclosure: for anyone curious, this question was generated during acq planning only. I'm not experiencing problem(s) with any AbilityOne contractor. In my experience, they've been great! Find one near you today https://www.sourceamerica.org/nonprofit-locator.)

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