ScottR

The prime will purchase the raw material from another supplier and then provide that raw material to us for production.

We are a subcontractor, not the prime contractor. The prime has flowed down the standard FAR GFP clauses.

I'm starting to talk myself into that as well. No change to drawings, specs, production process. No change to the raw materials either - it's just that one item will be provided as CFM, not purchased by us.

Thank you Don. I think what you are saying is that we should re-price the part, less the CFM, using current costs and profit. In this scenario, the new price could actually end up higher than the existing price.

Good Day. We have been providing production parts under a FFP contract for several years at agreed-upon annual prices. Our customer wants to start providing one of the raw material items as Customer Furnished Material. They have asked us to provide a price for the part that no longer contains that raw material item. I see this as a Change Order and I am looking for the proper method to price it in accordance with FAR 15.408. This was originally awarded as a sole source and the value is over $2M, so completion of a Certificate of Current Cost or Pricing Data was required. With this re-price, a Certificate will again be required. I don't think it is as simple as removing the raw material costs because the price was agreed upon 5 years ago and other costs (labor, material, indirect rates) have changed since then. Is it proper to re-price the entire part, bottoms-up less the CFM, and provide that new price to the customer? Thanks.

Again, thank you all for your replies. I hope you all had a nice holiday season. I am gaining a lot of useful information here. To answer Vern's questions: Is ScottR's master terms agreement a contract? Is it enforceable in court? Or is it just an agreement, like a basic agreement or a basic ordering agreement. See FAR Subpart 16.7. Response: Yes, it is a contract and is enforceable in a court of law. And if it is a contract, is it a subcontract to a government prime contract or to a subcontract to a government prime contract? Response: In short, I would say that it is a subcontract under a USG Prime Contract. Indeed, this is where it gets interesting. Our customer is the prime contractor under several USG prime contracts for the USAF and US Navy for delivery of parts for engines. Since there are multiple prime contracts, we have agreed to this MTA (in essence, it's a Basic Ordering Agreement), which sets up an overarching set of T&Cs, including FAR & DFARS clauses. Under the BOA, a sole source Purchase Agreement (call it a delivery order or task order if you wish) was proposed with prices for parts and it is over $2M, which put us into a position where we needed to certify our cost or pricing data upon price agreement. The question of whether this is a subcontract or not is a good one, but not heading toward the answer that I was looking for. From my original post: Problem: The MTA has a clause that says, "Supplier agrees to furnish cost or pricing data certified as to currency, accuracy and completeness every three (3) years or as frequently as required by Buyer's Customer". In this case, the "Buyer's Customer" is the USG. Question: I have been searching and cannot put my fingers on a FAR or DFARS clause that contains that 3-year requirement. Does it even exist under USG contracts or is this just a term that was made up by our customer for the purposes of trying to gather COPD data every three years? Based on the responses that I have seen, nobody has pointed to a specific FAR or DFAR clause that has this requirement, so I am led to believe that it is merely an agreement that was made between our two companies at the time the MTA was drawn up.

Thank you for your responses so far. To answer your questions about the MTA: My company and another company have a Master Terms Agreement between us. This MTA sets up an overarching set of terms and conditions. Under the MTA we and our customer will create Long Term Agreements for production of parts. Those LTAs will fall under the MTA terms and conditions and any other program-specific terms that pertain only to that LTA. We are a subcontractor and our customer is a Prime Contractor on a USG contract. We are a sole source provider of the parts and the value of the LTA is over $2M. Prior to award of the LTA, we went through the sweep and certification process. I understand the requirements of certified cost or pricing data. The background is good to know, but the real question that I have is about the language that says "Supplier agrees to furnish cost or pricing data certified as to currency, accuracy and completeness every three (3) years or as frequently as required by Buyer's Customer". The Buyer's Customer is the USG. Based on WifWaf's response above, it sounds like that the 3-Year requirement is not a FAR or DFARS requirement and is something that our Customer agreed to with their USG customer for whatever reasons they had at that time.

Background: We have a Master Terms Agreement with a customer. Under that MTA, individual Long Term Agreements will be issued for production of parts. Accordingly, we have a 10-Year LTA for production of parts. Problem: The MTA has a clause that says, "Supplier agrees to furnish cost or pricing data certified as to currency, accuracy and completeness every three (3) years or as frequently as required by Buyer's Customer". In this case, the "Buyer's Customer" is the USG. Question: I have been searching and cannot put my fingers on a FAR or DFARS clause that contains that 3-year requirement. Does it even exist under USG contracts or is this just a term that was made up by our customer for the purposes of trying to gather COPD data every three years?

Thanks for the replies. After re-reviewing our Changes clause in the subcontract, we have a path forward, but can't stop performance without risking a termination.

We were issued a change order by a prime contractor on a DPAS rated FFP production contract. After 8 months, the price has still not been settled due to prime contractor delays in negotiations. It is understood that FAR 43.201(b) says that the contractor "must continue performance of the contract as changed". However, since the customer has failed to "negotiate equitable adjustments resulting from change orders in the shortest practicable time" (43.204(b)(1)), do we have any recourse to drive them to the table? Can we withhold shipments until price agreement is reached?