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Trying to best determine a subcontract type for a Sub. The Prime contract is a CPAF-LOE type effort for an O&M/Integration CLIN (service) that will be issued to the Sub. The Sub is requesting that we do not flow a CPAF-LOE subk down to them. The Primes Award Fee amount was obviously based on labor from the Primes cost proposal and split over time between 6-month periods. I realize there are a few options but I'm mostly considering either a T&M or FFP-LOE/AF type subk.

  • T&M would obviously be the easiest to manage however, I concerned with a few things;
    • 1) no way to penalize sub for not hitting their LOE target, thus impacting the Prime.
    • 2) The Subs fee will be rolled into their fully burdened rate that will go towards the Primes cost to the Customer. I'm worried about passing fee along as cost and possibly a fee on fee situation
  • FFP-LOE/AF seems like the best subk method although would involve more administration. This KTR type allows the Prime to both manage LOE and AF and reduces DCAA concern with the FFP contract type.

So, over to you guys to help with your opinions for which subk makes most sense.

Thanks in advance for your time and opinions and I realize I'm probably over complicating this endeavor.

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I'm wondering what services the subK will be providing to the prime, and whether the staffing levels can be assured by means other than contract type. For example, can you create a clause that mandates a certain LOE with appropriate damages (liquidated?) for failing to maintain. Or maybe a CPIF type where the incentive fee is tied to the prime's award fee %.

Just some thoughts.

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@JGJohn, there seem to be multiple aspects of your quest. To address some to begin with:

1. The prime is required to flow all prime contact included mandatory flowdowns to the supplier regardless of supplier contract type. In addition, the prime should flow any and all other provisions needed to ensure that the prime contract obligations are met.

2. There is nothing that I am aware of that prohibits a prime contractor from flowing a cost type contract to a supplier, which normally includes fee. Not clear to me what you are worrying about when you say "fee on fee situation." Is there a particular FAR or Agency regulation you have in mind, or ???

3. Please clarify what DCAA concern there is with a FFP supplier contract.

4. What did the prime contractor propose to the government for this subcontract work, if at all?

5. What do you mean by FFP Award Fee subcontract? This sounds contradictory...paying a supplier a firm fixed price then awarding an additional amount for doing its job.    

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