Subcontract under FFP TO

[Miranda Clad]

Hello All! I just started a new job at a company that is small and has no process/procedures/etc., we just issue agreements without collecting any documents from companies. Yikes, I know! We have several IDIQ awards and a GSA schedule. Under GSA we have FFP TO and issue a subcontract to outsource services under that TO. We have a deliverables payment schedule in our TO. My PM wants me to modify the current subcontract to remove references to prime award and TO so that the LCAT under that subcontract could charge time to different prime awards and TOs that are FFP. His argument is that those TOs are FFP and we are "not billing the government", the government pays us and we then pay the subcontractor. He said it is indirectly billed; no FAR provisions will apply. What are your thoughts?

[here_2_help]

If I have a subcontractor who is able to charge multiple cost objectives -- i.e., different projects with different Ts&Cs -- I would want to have a separate agreement for each project. That is to make sure the various prime contract clauses flow down correctly. This is also to make sure costs get to the correct project.

However, if the subcontractor can charge multiple projects, then maybe the agreement needs to be 100% indirect. (See the FAR discussion of "indirect costs"). If the agreement is charged solely to indirect cost objectives -- i.e., overhead or G&A -- then I agree that no prime contract terms will flow down. I disagree that "no FAR provisions will apply" because some of those FAR Ts & Cs apply to indirect costs not just direct costs. 

Hope this helps.

[Miranda Clad]

42 minutes ago, here_2_help said:

If I have a subcontractor who is able to charge multiple cost objectives -- i.e., different projects with different Ts&Cs -- I would want to have a separate agreement for each project. That is to make sure the various prime contract clauses flow down correctly. This is also to make sure costs get to the correct project.

However, if the subcontractor can charge multiple projects, then maybe the agreement needs to be 100% indirect. (See the FAR discussion of "indirect costs"). If the agreement is charged solely to indirect cost objectives -- i.e., overhead or G&A -- then I agree that no prime contract terms will flow down. I disagree that "no FAR provisions will apply" because some of those FAR Ts & Cs apply to indirect costs not just direct costs. 

Hope this helps.

Thank you! That is what my PM wants me to do, modify the current agreement that is tied to the award and make it "indirect" where the staff will perform work under 2 (possibly more) FFP TOs that are under different prime contracts. His argument is that those TOs are FFP and we do not need to submit invoices for the subcontractor to the government and the sub is not directly billed to the government. I do not agree

[here_2_help]

1 hour ago, Miranda Clad said:

Thank you! That is what my PM wants me to do, modify the current agreement that is tied to the award and make it "indirect" where the staff will perform work under 2 (possibly more) FFP TOs that are under different prime contracts. His argument is that those TOs are FFP and we do not need to submit invoices for the subcontractor to the government and the sub is not directly billed to the government. I do not agree

No, you cannot perform work -- or have subcontractors perform work -- in support of a FFP TO and charge that work to overhead. That is cost shifting and is frowned upon. If the work benefits a single TO then it needs to be charged to the TO.