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Greetings, First, I'm new to the forum and will start out by saying thank you to all those that contribute. These forums are extremely helpful! Questions: Assume an existing DoD contract that meets the prescription in FAR 15.408(n) for inclusion of the clause 52.215-23 Limitation on Pass-Through Charges. The clause is not included in the Contract. Would this clause be read into the contract by operation of the Christian Doctrine? 52.215-22 is also not included in the contract, in case you are wondering. Assume the answer to 1. is "yes", and the prime contractor later intends to award a subcontract that was not included in the contractor's original proposal. The subcontractor's proposal to the prime includes lower-tier subcontractor costs that exceed 70% of the total estimated cost of the subcontract. In this situation, could the indirect costs or fee on work performed by the lower-tier subcontractor be considered excessive pass-through? It is debatable whether the subcontractor adds no or negligible value to the lower-tier subcontract. Would you submit the notification pursuant to 52.215-23© considering your answer to 1. above? -
What is the best way to structure "pass-through" expenses like reimbursement for utility charges? HYPOTHETICAL: Let's say the agency has a mission to take care of foreclosed properties. The agency has a requirement for property management services. The agency has a bunch of foreclosed properties. The agency is trying to do a solicitation to get a contractor to take care of these properties. The KTR will have to do maintenance, mow the lawn, paint the house, etc. Spruce up the property and get it ready for sale. In doing this, the agency anticipates that the KTR will encounter "pass-through" expenses such as the following: - Lead Based Paint stabilization - Repair caused by Vandalism (agency will require the KTR to do this repair) - Wood destroying organism (termites) and other damage that agency will require the KTR to repair - Utility Charges for Occupied Properties - Homeowner Association Dues A colleague of mine, who is a federal contracting professional, believes that these "pass-through expenses" are the same as the "pass-through charges" referred to in FAR 15.408(n), FAR 52.215-22, Limitation on Pass-Through Charges-ID of Subcontract Effort, and FAR 52.215-23, Limitations on Pass-Through Charges. I disagree. My colleague contends that, the agency's solicitation should be categorized as a cost-reimbursement contract type, and that these FAR clauses on "pass-through charges" must be included. I disagree. When I read theses FAR clauses on pass-through charges, I don't see how the fact pattern I just described fits the definition of "pass-through charges" in FAR 52.215-23(a). It sounds to me that "pass-through charges" refers to a subcontractor's costs. The situation described in the fact pattern does NOT concern costs by a subcontractor. These seem to me like DIRECT COSTS that the agency must reimburse the contractor for, just like TRAVEL COSTS. Travel Costs are often viewed as Other Direct Costs (ODCs). QUESTIONS: Is my colleague right that these expenses are "pass-through charges" per FAR 15.408, and that this must be done as a cost-reimbursement contract type? Can anyone suggest the best way to structure the pricing of these "pass-through expenses"? Should the solicitation just present them as ODCs like Travel Costs? Since they are unknowns and cannot be predicted with any accuracy, then, for fairness, would it be best for the solicitation to simply set a NTE CEILING, just like with travel costs? What do you think about the agency just figuring out an estimate for these ODCs, like X amount of dollars, and applying it equally to each proposal that is received?