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Is a Prime Contractor required to compete a commercial procurement in order to issue a T&M/LH subcontract?  Understand that FAR 12.207(b) requires Contracting Officers to use competitive procedures when awarding a T&M or LH commercial contract, however, that requirement would seem to be referring to the prime contract negotiated between the Government and the contractor. As many have pointed out on other posts, the FAR doesn't apply to contractors. It applies to acquisitions which are made by the government.

I'd think if a Prime Contractor has made a CID and is able to make a fair and reasonable determination, that they would be able to award a T&M or LH subk on a commercial basis without being required to compete.  Appreciate your thoughts on this.

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I am not aware of any FAR clauses that may be included in a prime contract and specifically mandates that a prime contractor is required to compete a T&M or LH commercial subcontract. However, FAR 52. 244-5 Competition in Subcontracting may be included in some prime contract types. If so, it provides "The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract." Also, as a practical matter, there are other acquisition requirements (such as  CPSR reviews, for example) and business practices that prime's employ which result in competition being the standard practice and requirement unless a noncompetitive source is justified.

Edited by Neil Roberts
changed non competition to noncompetitive
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12 hours ago, Brett 81 said:

Is a Prime Contractor required to compete a commercial procurement in order to issue a T&M/LH subcontract? 

 

1 hour ago, Neil Roberts said:

(such as  CPSR reviews, for example) and business practices that prime's employ which result in competition being the standard practice and requirement unless a noncompetitive source is justified.

A look see at this may add detail to Neil's response as it provides what the Government will look for in a CPSR review.  May help you understand a standard you may want to adopt.

Do an internet search on - 

Contractor Purchasing
System Review (CPSR)
Guidebook
February 26, 2019

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On 12/15/2021 at 8:54 AM, Brett 81 said:

Is a Prime Contractor required to compete a commercial procurement in order to issue a T&M/LH subcontract?  Understand that FAR 12.207(b) requires Contracting Officers to use competitive procedures when awarding a T&M or LH commercial contract, however, that requirement would seem to be referring to the prime contract negotiated between the Government and the contractor. As many have pointed out on other posts, the FAR doesn't apply to contractors. It applies to acquisitions which are made by the government.

I'd think if a Prime Contractor has made a CID and is able to make a fair and reasonable determination, that they would be able to award a T&M or LH subk on a commercial basis without being required to compete.  Appreciate your thoughts on this.

What you are appear to be doing is adding a T&M component to the prime contract for commercial services, which has been formed as FFP.

If the government is going to be billed for T&M services rather than the established contract terms and conditions, the contract is adding “acquisition of commercial [products? and/or?] services”.

Then I feel that the government would have to agree and that the government should then require competition for acquisition of the T&M per 12.207(b).

“12.207 Contract type.

(a) Except as provided in paragraph (b) of this section, agencies shall use firm-fixed-price contracts or fixed-price contracts with economic price adjustment for the acquisition of commercial products or commercial services. 

(b)

(1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be used for the acquisition of commercial services when - 

(i) The service is acquired under a contract awarded using - 

(A) Competitive procedures (e.g., the procedures in 6.102, the set-aside procedures in Subpart 19.5, or competition conducted in accordance with Part 13);

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19 minutes ago, joel hoffman said:

What you are appear to be doing is adding a T&M component to the prime contract for commercial services, which has been formed as FFP.

If the government is going to be billed for T&M services rather than the established contract terms and conditions, the contract is adding “acquisition of commercial [products? and/or?] services”.

Then I feel that the government would have to agree and that the government should then require competition for acquisition of the T&M per 12.207(b).

“12.207 Contract type.

(a) Except as provided in paragraph (b) of this section, agencies shall use firm-fixed-price contracts or fixed-price contracts with economic price adjustment for the acquisition of commercial products or commercial services. 

(b)

(1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be used for the acquisition of commercial services when - 

(i) The service is acquired under a contract awarded using - 

(A) Competitive procedures (e.g., the procedures in 6.102, the set-aside procedures in Subpart 19.5, or competition conducted in accordance with Part 13);

If the subcontract doesn’t affect the established price(s) then I’d say the prime can acquire services however it deems fit. But if it does, then it affects how the government is acquiring the services and the contractor isn’t authorized to add a T&M component to what the government must pay for. 

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