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Have a situation where a Prime Contractor wants to give my company (the subcontractor in this case) more than 50% of the other direct costs (ODCs) under the Prime Contract. Couldn't find where that was expressly prohibited by the FAR. I don't have the Subcontract in this case and don't know what FAR clauses where used under the Award. Any advice is welcome. Thanks in advance!

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What comes to mind for me is FAR 52.215-22 and -23, which targets 70%, indirect cost, profit/fee and total cost, if these clauses are included in the prime contract.

Edited by Neil Roberts
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I agree with Neil; until/unless the percentage hits 70%, there is no express prohibition of which I'm aware.

But why is the question that springs to mind. Sure the prime can do it, but why? What is your company going to spend all the money on?

Also, let's be clear that subcontractor costs and ODCs are technically different elements of cost -- different things with (potentially) different burdening. Did you mean for the term "ODCs" to include all subcontractor costs paid by the prime? As in, "The prime wants to give my company more than 50% of all non-labor costs in its prime contract." As you can see, to better answer your question, it would be helpful to know the percentage of total contract value, rather than of just ODCs, being subcontracted to your company.

If I restate your question to be "Can the prime award more than 50% of all prime contract costs (or more than 50% of all prime non-labor costs) to my company, a small business?" then I get other concerns/other answers.

So please clarify your question so that we can give you a good answer.

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3 hours ago, JackSparrow said:

Have a situation where a Prime Contractor wants to give my company (the subcontractor in this case) more than 50% of the other direct costs (ODCs) under the Prime Contract. Couldn't find where that was expressly prohibited by the FAR. I don't have the Subcontract in this case and don't know what FAR clauses where used under the Award. Any advice is welcome. Thanks in advance!

Emphasis on "expressly" added.

Go to www.acquisition.gov and download the entire FAR in pdf format. Then open Adobe Acrobat Reader and search for "other direct costs" and "ODC" in full search. Then see if any of the references mention any limitation on the percentage of ODC that a prime can "give" to a sub. Takes less than five minutes.

Easy peasy.

FYI, the phrase "other direct costs" appears in FAR only nine times. I didn't search the FAR supplements. I figure you can do that for yourself.

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16 minutes ago, here_2_help said:

...until/unless the percentage hits 70%, there is no express prohibition of which I'm aware...

Here is my understanding:  until/unless even if the percentage hits 70%, there is still no express prohibition of which I'm aware.

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1 hour ago, Neil Roberts said:

What comes to mind for me is FAR 52.215-22 and -23, which targets 70%, indirect cost, profit/fee and total cost, if these clauses are included in the prime contract.

 

49 minutes ago, here_2_help said:

I agree with Neil; until/unless the percentage hits 70%, there is no express prohibition of which I'm aware.

It should be made clear that the 70 percent referred to in the above posts is not some limit on the amount of work that a prime or subcontractor can award to subcontractors and sub-subcontracts. It is the percentage of subcontract effort under a prime contract or subcontract at which "pass-through charges" must be reported to the contracting officer.

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Hi all. Thanks for the prompt response! At this point, we don't actually have the numbers on the contract, it's just a theoretical question of whether or not it was disallowed. My company is not a small business due to rules of affiliation but we are a small unit of the parent company. In this case we are just talking about ODCs, not all costs. Thanks again! 

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