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I have a substantial CPFF Contract awarded to my company at one location. We have a location in a different state (different cage code etc.) that will work on the contract as well via an IOT. The out of state location has an approved purchasing system whereas my location does not. The out of state location is planning to issue a subcontract. Keeping in mind, the contract was issued to my location without the approved purchasing system which ACO gets the notification/consent request? Mine or the one at the other company location. Also, is consent required or advanced notification? (if issued from my purchasing department at my location definitely requires consent.) There's NRE in the subcontract, otherwise its FFP and its in access of 5% contract value.
Do you know of any defense contractor(s) that have excluded any interorganizational transfers from the population submitted to DCMA for CPSR review? If so, did they go so far as to exclude interorganizational transfers at price for commercial items? Do you think it is reasonable for a defense contractor to interpret FAR 44.101 and FAR 44.303 to allow for exclusion of any (or all) interorganizational transfers (at price or cost)?
What would you say to a defense contractor who wanted to take the following approach in preparing a sole-source FFP proposal subject to TINA for a DoD customer? Scenario: KTR-A wants to include its sister company KTR-B in a sole-source FFP acquisition by a DoD customer. KTR-A prepares a SOW for a NON-commercial item and issues a RFP to KTR-B and a number of qualified, responsible competitors. It turns out that KTR-B beats everyone else out on performance, schedule, and price (including proposed profit). KTR-A negotiates a "subcontract" [really an inter-organizational transfer (IOT) at price] with KTR-B and includes KTR-B's certified cost or pricing data as part of KTR-A's submission to the DoD customer. KTR-A does not submit a cost or price analysis (PNM) for KTR-B's proposal since it is does not meet the definition of a "subcontract" in FAR 15.401 and would be categorized as a "make item" for FAR 15.407-2. KTR-A discloses in its proposal the profit rate negotiated with KTR-B and states that the subcontract was awarded based on adequate competition. Questions: 1. Does a DCAA auditor have any clear regulatory basis to question KTR-B's proposed profit and KTR-A's proposed profit on top of KTR-B's proposed profit? 2. Does a DCAA auditor have any clear regulatory basis to unsupport KTR-B's proposed profit until being provided additional information on the subcontract competition? 3. Do you consider FAR Part 44 to positively define a subcontract in its normative sense and FAR Part 31 to positively define an IOT in its normative sense? 4. Would you say that a CPSR reviewer should only look at any make or buy documentation for this particular IOT and not expect a PNM to have been written?