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Flow Down of Mandatory FAR and DFARS Clauses are Handled Poorly by Contractors

Posted by PhilBail, 17 July 2012 · 7,787 views

Generally speaking, contractors flow mandatory FAR and DFARS clauses to vendors in a haphazard, incoherent manner with very little updating as changes to clauses occur. Some contractors post a huge list of clauses on their website and refer to them on vendor Purchase Orders (PO's) - telling the vendors they are responsible for complying with the clauses that apply to them. Anybody know a vendor that has the time or inclination to review these lists and determine which clause apply to their purchase order.

Some contractors separate the clauses by $ thresholds. This is helpful because a vendor can easily figure out that the clauses in the $650,000 and above category don't apply to their $2,700 PO. Some contractors include two lists of clauses - one list for commercial items and one list for non-commercial items. This kind of segmentation is helpful also; especially, if the vendor is providing a commercial item and very few clauses actually apply to the PO.

Government auditors are taking shots at contractors about the way they tell vendors which FAR and DFARS clauses apply to a purchase order; but auditor opinions vary greatly.

I would like to hear about methods for clause flow down to vendors that truly meet the requirements of FAR and are relatively easy to update. Does anyone have any suggestions

I wholeheartely agree that flowdowns are handled poorly! I have now worked on almost all sides of the fence. I used to be a contract specialist for the Navy. Then I worked for a prime contractor, now I work for a university and we deal with a lot of subcontract type work from the large aviation primes. Each of these jobs has had different drivers behind what Ts and Cs ultimately go on contract. As an aside, I became much, much more familiar with the Ts and Cs in the prime contractor job than I ever did with the USG job. (I think every PCO out there should go and work for a prime, for a little while at least....it's a totally different perspective.)

Most of the large primes flow down a messed up mishmash of clauses. The supply chain buyers really often aren't all that familiar with the clauses - what they say, and why they say it. In my current position, ideally, I would negotiate the list to only those that truly apply. That can take ages though. One of my primes issues us flowdowns and behind each one, they state in what case it applies (ex - FFP over 150K). Given time constraints and the need to keep business flowing, I think that is the most efficient way to do it. How this ties to their USG prime contracts, and whether they have flowed down the proper ones to me, I don't have insight into. But, from a third tier supplier perspective, it is the easiest way to know what is on contract exactly, without forcing them to update their Ts and Cs with every order/contract.

In my previous position at the prime contractor, our goal was to create a list of clauses that we had to flowdown per the regs, as well as what we as the company wanted to flowdown. This was a neverending nightmare since as a company, we handled many contracts. Many vendors were on long terms agreements and did not take kindly to updating their Ts and Cs. The communication between those writing the contracts with the USG, and what supply chain negotiated with vendors was poor. It would require a very well-trained cadre of folks to handle this efficiently, and frankly, I just don't think the population in my midwest city is large enough to supply that group.
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The reason I started this subject is to see if anyone thinks they know the best way for primes to flow the clauses to vendors. Your comment about showing the thresholds for the various clauses is a good way to ease the pain of the vendor. What is happening now because of inconsistent and often contradictory opinions from government Contractor Purchasing System Review (CPSRs), contractors don't have a good path to follow
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What I have done recently is tailor the SF1413 for inclusion into the documents, exhibits and attachments section of contracts. Customized to the particular procurement, it lists all the clauses that are contained in that particular contract which are required by regulation to flowdown to subcontracts. During the pre-award conference the use of this form is explained to the prime.
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Troy, I would enjoy seeing an SF 1413 you have modified for a particular contract just to see how you did it. My email is phil@philbail.com
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