B2B.Consultancy

@WifWaf I can update our experience on this. Despite generally unfavorable opinions we decided to support our non-US Client in testing this approach as a Sub-Contractor with his US-Prime in a major US Defense Acquisition Program. - The Sub-Contractor requested to the Prime exception from Certified cost and pricing data as Nontraditional Defense Contractor, - The Prime refused to lose the grip on certified cost and pricing data, also for the fear of potential non compliancy of their procurement system - The Sub requested to pass the decision to the CO and the ACO, the requested was accepted. - ACO clarified the exception was not a blanket one covering everything, but was connected to the single contract related to the request for exception, and that this was anyway not a determination of commerciality of the produced item but a simplification of the procurement process using "commercial-item-like" approach. - CO approved for the specific proposal-negotiation process the exception due to the supplier qualifying as a Nontraditional Defense Contractor ("by default" being a foreign concern not subject to full CAS coverage). It was indeed underlined that the exception was granted for that single Proposal and a new request was needed in reply to each new RFP. - negotiation process was very quick and also granted savings compared to the previous procurement cycles, based on a price analysis adjusted for updated market conditions. I may be wrong, but the same should apply to small business concerns. I thought that sharing an experience after all the very constructive exchanges I had on this forums could be beneficial to the community. Thank you all for the possibility to clear our doubts and refine the mental process with your comments, links and questions. Bye

1a: I appreciate your point of view. But we also had here at least one point of view on the rule that may intend the exception to be applied at subcontractors level. paragraph (e) of the DFARs 252.215-7010 contains the flowdown requirement which requires to flowdown the exceptions to further levels of subcontracts, this is difficult to discard: "(e) Subcontracts. The Offeror shall insert the substance of this provision, including this paragraph (e), in subcontracts exceeding the simplified acquisition threshold defined in FAR part 2." In the promulgation comments (following your suggestion), that I found at the following link, i tried to find the comment/response you were using as reference "https://www.federalregister.gov/documents/2018/01/31/2018-01781/defense-federal-acquisition-regulation-supplement-procurement-of-commercial-items-dfars-case I have found only the following: "Additionally, two respondents recommended clarifying that “subcontractors” be added to the definition of nontraditional defense contractors so that items provided by a subcontractor that meet the definition of a “nontraditional defense contractor” may be treated as commercial items. Response: Section 857 amended 10 U.S.C 2380a to provide DoD with the permissive authority to treat items and services provided by nontraditional defense contractors as commercial items. This authority was neither mandatory nor was it extended to prime contractor commercial item determinations for subcontracted items and services." As I read it, it is just saying that the Prime Contractor cannot substitute the DOD CO in commercial item determinations for subcontracted items and services. I think, but I may be wrong, that it refers to 252.215-7013. I think this because the respondents end the recommendation with "may be treated as commercial items" which is the text of the DFARS 252.215-7013, while the 252.215-7010(b)(1)(ii)(E) "only" adds an exception from submitting certified cost and pricing data, which is different. then if you read comment in section 35 of the same page, titled "35. Subcontract cost or pricing data flowdown requirements."(https://www.federalregister.gov/d/2018-01781/p-169) the respondant was suggesting many possible problems (from his point of view) in flowing down to all tiers of subcontractors. Here the comment, instead of saying that it is not applying to any subcontractor, states the opposite: "Response: Section 831 of the NDAA for FY 2013 does not relieve prime contractors from their responsibility for exercising the same due diligence as DoD contracting officers in making subcontractor commercial item determinations and evaluating their subcontractors' price reasonableness." In case I overlooked the comment that you have read, please help me locating it. I thank you all because with your comments I have found a lot of supporting information. I hope that this awesome community continue to discuss this adding pro and cons or actual business cases in which this aspect has been discussed (and with enough LUCK maybe we can find a final determination on the matter) Thank you

I think that point 2 of my original post has been discussed having all on the same opinion, for this specific point 2 I think my take-away is that the definition of NTDC do applies to a supplier that is exempt from CAS or subject to modified CAS, even if it had in the last 12 months a subcontract from a Prime, where the Prime Contract was Full CAS covered, because his subcontract cannot be considered full CAS covered, and so the definition of NTDC still applies. I don't see yet a final position (maybe I did not catch it) to support or discuss prime's rejection reasons on points 1a and 1b. I'll appreciate any further help on this.

I'm sorry for the delay in the reply, I was on a long travel. Retreadfed, Always the same DFARS, I did not change focus. I followed what you posted and, considering it a good idea, I went to read the public comments and responses to the Proposed Rule on Federal Register and I found the two responses that I posted above. From that reading I was gaining the perception that there were more comments in favor of the applicability to subcontracts than contrary to that. I also understand that responses to public comments can just give an help reading the rule, but the text of the rule is what it is. Neil Roberts: I confirm that my interest is still on the applicability of the exception conteined in DFARs 252.215-7010(b)(1)(ii)(E). In any case, to your question: yes, I verified that also FAR 25.215-12 is included in their flowdown, which should not be applicable if the above exception would be applicable (as no certified cost and pricing data will be required). Thank you and sorry again for the delayed reply

Neil, Thank you for your position, that I find very clear and helps me in further understanding the situation. I was confident that paragraph (b) was part of the flow down due to the first sentence of paragraph (c), which states that the requirements apply only IF none of the exceptions apply (the exceptions in paragraph (b)): 252.215-7010(c)Requirements for certified cost or pricing data. If the Offeror is not granted an exception from the requirement to submit certified cost or pricing data, Further, following the suggestion of here_2_help, I went through the comments and responses of the Proposed rule and I found these clarifications: Response: The standards for what information is necessary to make commercial item determinations and determinations of price reasonableness should not be relaxed for subcontractors. Prime contractors are responsible for exercising the same due diligence as DoD contracting officers in making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness. Response: This rule does not alter prime contractors’ responsibility for making subcontractor commercial item determinations and evaluating their subcontractors’ price reasonableness, regardless of whether the end item has or has not been determined to be a commercial item. I'm reading more information supporting that the subcontractor may be right in the request for exception , than evidences to reject it. Please help me with this feeling "killing" or "feeding" it to a supported decision. Thank you and all again for your opinions.

You are right, "exception" is the right one in this case, it would be an exception from submitting certified cost and pricing data. Thank you for the clarification. You are right, my question was on DFARs 252.215-7010. With the statement above I was referring the other 4 exceptions that are listed in DFARs 252.215-7010(b)(1)(ii), before the (E), I thought that all of them (or none of them if I got your position) should be applicable to the sub-contractor. Hopefully I clarified my understanding.

Yes it does, specifically after 252.215-7010 "Contracting Officer means the Buyer", where the Buyer is defined as the Prime. is there a definition of sub-offeror? why the clause itself require the flowdown, if it cannot be used from a sub-contractor while sub-Offering? If this statement would be true, I think that we would have a bigger problem, because also the exceptions (b)(1)(ii)(A), (B), (C) and (D) would not apply to a sub-contractor... while it results to me are commonly used to require the exception for those categories of products. I do appreciate your point of view. Thank you.

I agree on this, it is the rule in DFARs 252.215-7013. This applies the Part 12 to the procurement which is a far more relaxed requirement than "just" the exemption from certified cost and pricing data, which is what the 7010(b)(1)(ii)(E) seems to allow. It contains the requirement to what is necessary to ask for the exemption, that for the NTDCs is just the written statement... This change was planned because many (all?) NTDC do not have in place systems to certify the data, even if quality and price of products/services may satisfy the Customer, this gap in system/processes was exposing them to potential following problems... which has been a fear preventing many to offer in this arena. The original intent was to enlarge the supplier base as far as I understood. Thank you for the time you have spent on this.

I appreciate your reply, It is connected with the definition of NTDC, as far as I understand prime's position is that if you performed as subcontractor of a prime on a contract that for the prime is full CAS covered, you cannot claim the exemption because you do not fall anymore in the definition below. "Nontraditional defense contractor means an entity that is not currently performing and has not performed any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement" Could you please help me understanding where is written that this esemption is not applicable to subcontractors? The flowdown seems to me to be mandatory. Thank you

Hi, the environment of this request is a DOD production project, a subcontractor submitting a proposal following a FFP RFP, requested by a US prime contractor on Part 15, on an alternative source subcontractor, for parts produced on Prime's design. The request is on the applicability of the DFARs 252.215-7010(b)(1)(ii)(E): exemption from submitting certified cost or pricing data for Nontraditional Defence Contractors (NTDC). (rule modified in Jan 2018) 1. the prime contractor is stating that the supplier (subcontractor) cannot request this exemption from submitting certified cost or pricing data, because: a. this exemption is allowed only at prime contract level. b. the contract is not for commercial items. 2. the prime is also stating that if the subcontractor is running a subcontract where a prime contract is full CAS covered, the subcontractor (that qualifies for modified coverage, e.g small business or foreign concern) cannot claim to be a Nontraditional Defence Contractor, because it has at least one prime contract which is full CAS covered. I do not have enough experience to state if it is an overkill to request certified cost or pricing data or it is a just right application of the rules. I would appreciate some references that can eliminate the doubt and allow to take a supported position. Thank you.

I meant that the rule states that - the Offeror may submit a written request for exemption than - The Contracting Officer may require additional supporting information, but only to the extent necessary to determine whether an exception should be granted But if a US small business in the written request proves that it does not have currently nor had in the last year Fully CAS covered contracts, or for example ALL non US Companies that are subject only to modified CAS coverage, just for being foreign concern they fall into the "Nontraditional defence contractor" definition and are automatically exempt, because I don't see what kind of "additional supporting information" can be reasonably requested being as it is by rules. Thank you for considering my opinion. But please someone spend a cent to review the two questions in my previous post.

(post edited after further analysis of the rule, hyperlinks inserted and more clear questions) Hi, It was brought to my attention that there is also another significant possibility of simplification for a "nontraditional defense contractor", introduced with this DFARs change, which is in 252.215-7010 (b)(1)(ii)(E). It states that if a nontraditional defense contractor just submits a written request for exemption based on this 252.215-7010 (b)(1)(ii)(E) becomes automatically exempt from the submission of certified cost or pricing data, without the discretionality of the CO to accept it or not. This is easier whenever the supplier is obviously never subject to Full CAS because of it's nature. (E.g. small businesses and foreign concerns, considering the exemptions in 9903.201-1 "CAS Applicability" respectively at points (b)(3) and (b)(4)) Considering the above cited exemption granted from the Full coverage, the exemption from submitting certified cost and pricing data becomes applicable to a very large number of Companies: most of US small businesses and All non US Companies. It is not like the simplification that could be reached with the application of PART 12 requirements the CO may decide to apply, but the exemption on 252.215-7010 (b)(1)(ii)(E) is not subject to the CO determination and it still produces a non-negligible reduction in effort (cost and time) for all the stakeholders of the acquisition process (CO, DCAA/DCMA, Contractors and Subcontractors). What do you think about this process improvement? Question 1) Do you agree that the supplier does not have the need to wait for confirmation that the exemption is applicable? Question 2) Is this exemption 252.215-7010 (b)(1)(ii)(E) applicable also to the subcontractors being the DFARs part of the flowdowns? Or can a CO/prime contractor decide not to flowdown the clause or declare not applicable a portion of it (like specifically subpara (b)(1)(ii)(E))? Thank you for any constructive opinion you may add.