commercial item CPFF subcontract?

[Retreadfed]

12 hours ago, joel hoffman said:

One can’t simply pick and choose what paragraphs of Part 12 it wants to use to classify a subcontract as a commercial service, then ignore 12.207, which doesn’t provide for commercial service contracts priced other than FFP or other FP types or T&M or labor-hour.

Why can't you ignore 12.207 which addresses contract types that can be used for prime contracts.  Is it your position that 12.207 applies to subcontracts as well?

[here_2_help]

13 minutes ago, Retreadfed said:

Why can't you ignore 12.207 which addresses contract types that can be used for prime contracts.  Is it your position that 12.207 applies to subcontracts as well?

Retreadfed,

While your question is spot-on, the reality is that CPSR teams apply FAR rules to contractors all the time.

[Neil Roberts]

16 hours ago, Fara Fasat said:

If it would make the discussion easier and allow us to focus on the original question, assume that the services meet (1) of the definition -- services in support of a commercial product. There is no mention of price or rates in (1). 

To my knowledge, I know of no applicable law or regulation that "contractor with a fixed price government prime contract shall not enter into a cost reimbursement contract with a subcontractor for a commercial item or service."..  If this is the language your people are looking for.

FAR 52.244-2 if included in the prime contract, may require consent for the contemplated cost reimbursement contract.

There may be other business risks for entering into such an arrangement including but not limited to CPSR  perception.

[Fara Fasat]

Omigosh, I thought pointing to (1) of the commercial service definition would get us away from the obsession over the rates, but look where it led! 

I'll say it again -- the services being performed are on commercial products, and are the same as those performed on similar products for commercial customers. That meets (1) of the definition. 'nuff said. 

Joel, Why do you insist that something can only be commercial if it complies with all of Part 12? Whether something is commercial or not is inherent in the product, not the contracting processes being followed. Furthermore, Part 12 does not apply to subcontractors; only those parts of it that direct a prime to do something, and that the prime subsequently puts in a subcontract.

The original question was whether the prohibition against a CPFF contract at the prime level also applies to subcontracts. The answer from participants is no. Unless you can point to something that says a prime cannot do it, I think we have the answer.

By the way, I'm not going through this exercise to 'get out of' some clauses. I'm trying to figure out the right thing to do.

[joel hoffman]

1 hour ago, Fara Fasat said:

By the way, I'm not going through this exercise to 'get out of' some clauses. I'm trying to figure out the right thing to do.

On 5/24/2023 at 8:43 PM, Fara Fasat said:

“The impact is this: if the prime can treat the subcontract as a commercial services subcontract even though it is CPFF, then it will only need to include the clauses applicable to commercial subcontracts.”

and:

“I don't know why the businesses decided this; I was pulled in on the clause question.

If the decision is already made, why are you trying to figure out the right thing to do?

Concerning “what is right”? and the right thing “for whom”? Whether CPFF is the right thing for the prime? The established standard prices  for the services are apparently known. There is a FFP unit priced option available. With either CPFF or unit priced with estimated quantity commercial service, the total quantity is unknown. There is less risk to the prime with a unit priced commercial item contract with the ability to simply adjust the quantities than one that is CPFF, where both price and total quantity are unknowns.

Either way, you said you would use only clauses applicable to commercial services.

 Sorry for the font size. Can’t adjust it on my iPhone.

 

 

 

[C Culham]

1 hour ago, joel hoffman said:

Whether CPFF is the right thing for the prime?

This continues the departure from the original question.

And yet I have to ask..And why not the sub as well?  While there is the world of a Federal CO forcing a prime into something not necessarily supported in regulation, policy and/or law but implied as such my sincere hope is that a prime/sub relationship is based on mutual understanding and awareness and as such the type of contract would be a mutual decision would it not?

Heck let's apply the FAR further to a prime/subcontract via this principle FAR 1.102-4(d)!  Based on the lack of a specific citation saying otherwise a CPFF is okay under said principle.

[Jacques]

14 hours ago, C Culham said:

...[M]y sincere hope is that a prime/sub relationship is based on mutual understanding and awareness and as such the type of contract would be a mutual decision would it not?

You don't have to be absolutist about it.  Certainly, there are times when the Government can insert itself into this process, FAR Subpart 44.2 being the most obvious example.  However, there is no reason to believe on the facts in the OP that the contract includes a requirement the Government consent to any of the subcontracts, given that the prime contract is for a commercial product.  See FAR 12.301(d).  Maybe others would disagree, but when consent is required, it does not seem like Government overreaching when, e.g., FAR 44.203(b)(2) calls for the PCO to withhold consent to CPPC subcontracts (even though it may be a little paternalistic when the only one directly harmed on a FFP prime is the prime).  The additional requirement for consent doesn't change the fact the subcontract is grounded on an understanding between prime and sub.

[C Culham]

1 hour ago, Jacques said:

You don't have to be absolutist about it. 

Sorry it reads that way. 

 I already acknowledged FAR 44.2 in a previous post. 

Because you have mentioned the prime contract do not forget that it is FP which may be further suggestion that 52.244-1 thru 6 might not be in the prime  contract.  In a re-read of the thread I can not find whether this is true or not.

Overall no disagreement.

 

[Fara Fasat]

The prime is an SBIR phase 3 contract. i don't know whether the government is treating it as commercial. I can only tell you that it is fixed price, and that the prime chose the CPFF over T&M for the subcontract. I don't think those things matter for the original question, but here they are.

Joel - yes, deciding what clauses belong will be the outcome of the decision. It doesn't mean I am trying to reach one outcome or the other. Please don't read any motives into this.

[C Culham]

18 hours ago, Fara Fasat said:

The prime is an SBIR phase 3 contract.

While this has the potential of unleashing a bunch more questions I am going out on a limb and say this.

If the Phase III is, as allowed and promoted to be by the SBIR program, a sole source I could easily argue with any auditor that the CPFF subcontract as a commercial item is reasonably a non-issue.   This thread includes many of those reasonings.  

[Retreadfed]

On 6/8/2023 at 1:48 PM, Fara Fasat said:

deciding what clauses belong will be the outcome of the decision

Fara, has the subcontract already been awarded?

[Fara Fasat]

It's under review and negotiation.