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A prime contractor has chosen to not claim exemption to CAS, based upon 9903.201-1(15), and has subsequently flowed down the CAS requirement to its subcontractors. A subcontractor wants to be claim exemption from the CAS flowdown based upon the position that the prime contract is rightfully exempt from CAS. Does the subcontractor, not otherwise exempt from CAS, have any recourse?

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A prime contractor has chosen to not claim exemption to CAS, based upon 9903.201-1(15), and has subsequently flowed down the CAS requirement to its subcontractors. A subcontractor wants to be claim exemption from the CAS flowdown based upon the position that the prime contract is rightfully exempt from CAS. Does the subcontractor, not otherwise exempt from CAS, have any recourse?

Seems to me that whether the subcontractor's subcontract is exempt from CAS, or not, is determined based on its own situation, not the prime's. I could see an argument being made that if the prime's contract is exempt from CAS, then all subcontracts under it would also be exempt, because there would be no clause to flow down. But that's not the situation here. No matter what the subcontractor thinks should have happened, in fact the prime has a CAS-covered contract.

The prime wants to flow-down the CAS clause in its CAS-covered contract. Indeed, the CAS clause contains mandatory flow-down provisions.

In order to claim CAS exemption, the subcontractor must show that it qualifies, on its own, for a valid exemption.

That's what I think, anyway.

Hope this helps.

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Interesting. I tend to agree with H2H . But, but, but?. The CAS regulations don?t provide for the prime to choose not to claim exemption, nor do they give the CO a choice in the matter. The CO is required to insert the proper clause (for full or modified CAS ) unless the contract is exempt (FAR 30.201-4 et seq). In this case the contract apparently was exempt. Did the prime fully and truthfully complete the CAS certifications (52.230-1)? Is the CAS clause really in the prime contract, or is it there by mistake?

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Interesting. I tend to agree with H2H . But, but, but?. The CAS regulations don?t provide for the prime to choose not to claim exemption, nor do they give the CO a choice in the matter. The CO is required to insert the proper clause (for full or modified CAS ) unless the contract is exempt (FAR 30.201-4 et seq). In this case the contract apparently was exempt. Did the prime fully and truthfully complete the CAS certifications (52.230-1)? Is the CAS clause really in the prime contract, or is it there by mistake?

Is FAR 52.230-2 "the CAS clause" you're referring to? If so, isn't it self-deleting ("Unless the contract is exempt . . ."), so would it really matter if it's in the contract or not?

I agree that exemption isn't something that is claimed or not. The contract is either exempt or not, and the facts will determine that, not anyone "claiming" an exemption.

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Is FAR 52.230-2 "the CAS clause" you're referring to? If so, isn't it self-deleting ("Unless the contract is exempt . . ."), so would it really matter if it's in the contract or not?

I agree that exemption isn't something that is claimed or not. The contract is either exempt or not, and the facts will determine that, not anyone "claiming" an exemption.

Hi Navy,

First, no, none of the CAS clauses are self-deleting. See the promulgating comments by the FAR Councils on the revisions to FAR Part 30 (and CAS clauses) from a couple of years ago (2008 I believe). The C.O. has to insert the clauses that are appropriate to the situation, period.

Second, doesn't the contractor claim (or not claim) CAS exemptions through execution of the 52.230-1 CAS Notices and Certification provision, which is one of the mandatory Section K Reps & Certs? I would assert that the C.O. can only determine the proper CAS coverage based how the contractor executes that Certification. GIGO.

Hope this helps

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  • 5 months later...

Wow.

CAS is determined by the dollar values of the awarded contracts/subcontracts a company has in its fiscal year.., there you go, forget the clauses and all that other crap.

If the prime is CAS covered, then its contracts are CAS covered.., I do not want to get into the minutae of that ($50M. etc) full and modfied (some are exempt all the time), but that is what it is.

As far as the subs, same thing.., goes by the dollar value. If you are subcontractor and the sub you are bidding would make you CAS covered, you are CAS covered. If you are a sub and you are already CAS covered, then your sub and everything else is CAS covered (unless it is exempt).

If a FAR clause is missing.., overrated, it has no impact. I know in a classroom they tell you all the clauses matter, but in realty.. nope. You either throw all the clauses in (best idea) or try and get close and if you miss a few, so what.

There are contracts that are exempt from CAS no matter what (small business, FMS, I think, sealed bid, I cannot remember, there are others). But other than that, it is pretty straighforward.

So to answer your question; (1) somebody else touched on it with the prime, you do not have a choice, depending on the dollar value of the conmpany's contract awards, it is either is or it is not CAS covered. (2) the sub, depends on the dollar value and type of subcontract.

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If a FAR clause is missing.., overrated, it has no impact.

X DCAA, it would seem that only one example would disprove your point. If I were to point to a BCA or COFC decision where they refused to reform a contract to include a clause under the Christian doctrine, that would be sufficient, wouldn't it? You sure are fun to read, but I worry someone is going to take you seriously.

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X DCAA,

You are a wealth of misinformation. I can't tell if you are serious or if you are just pulling our leg with your posts.

CAS applies to contracts and subcontracts, not contractors and subcontractors. A contractor may have a mix of contracts that have full CAS-coverage, modified CAS-coverage, or no CAS coverage at all.

BTW, when are you going to answer Vern's question in the other thread? http://www.wifcon.com/discussion/index.php...20&start=20

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I just post what is correct and move on. I really do not see the sense in playing your guessing games.

I will respond just this once to your incorrect statements, never again. I only post when I know what I am talking about. That is why I am selective in what I respond to.

About CAS -- (1) contract or contractors, subcontracts or subcontracts.., does not matter. What makes a difference (in the real world) is whether you have a Disclosure Statement because that adds an enormous amount of administrative burden on a company and it impacts what you have to do when you change the way you allocate costs because you have to issue a Cost Impact statement. Trust me, this is so over your head, just let it go. (2) Once you have determined whether you have a disclosure statement (which affects the entire company) nothing else matters whether your contracts are FULL, or modified, or not CAS covered. CAS is simply the documentation of your cost allocation practices. These practices are based on GAAP. So in the real world, CAS means nothing except whether a company needs a disclosure statement and other administrative burdens. Make pretend you have a full CAS covered CONTRACT, so you therefore have a Disclosure Statement (covers entire company). And you have three contracts, one over $50M (full), the other modified, and the other exempt.., what matters? Do they get costs allocated differently, different systems, anything different - no, it does not matter. (3) As far as the Christian doctrine, look at my post, what did I say.., I said the best way is to stick everything in. Then you never need a Christian Doctrine bologna. I am unaware of any agency that does not have software that adds in the clause that could apply., so use all of the software's clauses it spits out in your general situation, and you are covered for everything. That is how it works in the real world and it makes sense.

That other post you keep bringing up about the catalog. I just assumed by now someone would have found the answer to that. That is so easy, I just let it go. Search on what catalog and commercial pricing is.., I am sure there are tons posted on it because it is a big initiative in DoD to use catalog prices. Now my reference to a real catalog to real customers is relating to the concept (that used to be embodied under SF 1412 reviews) that for a catalog to be real, you have to have a certain portion of your sales to the private sector. This equates to the catalog prices being at the correct amount based on the forces of the free market. Now if you had printed up a very nice catalog and your only customer was the government and government primes.., that would not be a real catalog. See how easy that is.., So DoD is saying, look, let's make sense, if they have a catalog that has a legitimate volume of sales to the private industry, let it go, the forces of the free market are a sufficient control on the price. As I said, this is such an easy concept and so well known in the real world, I just do not know how else to explain it.

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X DCAA,

What motivates your posts? If you just "post what is correct" and move on, what's the point? It doesn't seem that you're concerned about training inexperienced contracting folk, given the cavalier advice you give. It you were, it would seem that you would be willing to defend your positions. I'm not sure I've seen a single reference to an authority in your posts. Why should anyone believe you? If I were more worried about newbies, [edit: --and if I had the depth and breadth of knowledge--] I would be tempted to follow you around from thread to thread making sure any incorrect statements you made were rebutted. Consider a disclaimer in your signature pointing out that, unlike anyone else who posts here, you won't defend your posts. As it stands, I guess I'll have to be satisfied to just change my settings to ignore you.

In terms of the other thread, try reading it again. You aren't even close to answering the question posed, which is about invoicing on a CPFF contract. Anything can be "easy" if you answer a different question. Example: Q: "Explain the theory of relativity." A: "2 + 2 = 4" Easy.

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I only post when I know what I am talking about.

Trust me, this is so over your head, just let it go.

CAS is simply the documentation of your cost allocation practices. These practices are based on GAAP. So in the real world, CAS means nothing except whether a company needs a disclosure statement and other administrative burdens.

You know, X DCAA, if there was an "ignore" feature on this forum, I would put you on my list. You are wrong and, what's worse, you are obviously wrong.

First, CAS and GAAP are two different things and most contractors have different allocation metholdogies for financial reporting than they use for Government contract accounting. I could cite legal cases to support that assertion, but just look at FAR 31.201-2(a)(3) which clearly shows a difference.

Second, a contractor can't be found to be in noncompliance with a Standard with which it is not required to be in compliance (e.g., 403, 410, 418 are Standards that become effective only with full coverage). So modified vs. full coverage absolutely does matter. For example, if a contractor not subject to CAS 410 wants to allocate its G&A expense pool on a revenue or cost of sales base, then it can--because CAS 410 (which would prohibit those two allocation bases) simply doesn't apply. I remember the time when some ex-DCAA auditors working for the EPA IG asserted my company was in noncompliance with CAS 403 with respect to a contract that was only modified ... it was quite fun rebutting that audit report. And quite easy, too.

Third, if CAS doesn't matter, why did the 1995 revisions to CAS 412 and 413 spark "an explosion of litigation" in the words of former OFPP Administrator Angela Styles? Why do companies subject to CAS 403 requirements for the first time get to submit a Request for Equitable Adjustment for any increased contract costs that result? Why is DOD freaking out over the upcoming changes to CAS 412 and 413 that will result from the legislatively mandated "harmonization" with the Pension Protection Act, which are going to increase some big contractor's pension costs ~ 60% over the next five years?

It may not be apparent to you but Vern and Joel and Don and others demand a pretty dang high level of quality out of those who have the guts to post answers here. We don't always meet those high standards but it gives us something to shoot for.

Bottom line: If you can't bring the same level of quality to your posts as you would for an expert report to a court of law, then I would suggest you not bother.

Seriously.

H2H

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Is there really a way to do that?

Click the "My Controls" link above. On the left hand menu, go down to the Options section, choose "Manage Ignored Users."

If you have set up to ignore a user, the fact the user has posted will show up, but the content of the post only shows up if you choose to show it.

I just assumed everyone had added me to their ignore user list, given the response I got to my OCI post. :)

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Perhaps X DCAA will heed Here_2_Help's constructive advice in Post #12. If he does that, and is willing to explain and defend his position (i.e., 'play our guessing games'), then maybe there won't be a need for either everyone to ignore him or to become "X WIFCON." (I didn't mean to start a lynching party.)

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Click the "My Controls" link above. On the left hand menu, go down to the Options section, choose "Manage Ignored Users."

If you have set up to ignore a user, the fact the user has posted will show up, but the content of the post only shows up if you choose to show it.

I just assumed everyone had added me to their ignore user list, given the response I got to my OCI post. :)

Thanks, Jacques.

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