52.219-8 & 52.219-9 Subcontractor Flowdowns

[siwilliams]

We are issuing $5 million subcontract award for a project we're working on as the prime. We included 52.219-8 and 52.219-9 in the terms and conditions. The subcontractor took exception as the current effort is for NRE. I don't know if it really makes a difference at this point but thinking that they shouldn't take exception but provide a response that as this is an NRE effort the current goals are at zero. The next phase of the effort is an option for production which is why I feel we should leave the clauses. Any thoughts?

[Navy_Contracting_4]

What is the significance/relevance of the effort being NRE? There's no exception to the requirement for submitting and negotiating a subcontracting plan for NRE efforts, is there?

[siwilliams]

That's what I was thinking as well but that was the reason the subcontractor gave for taking exception. I believe their logic is that they would have no subcontractors (i.e., no subcontracting possibilities). There's still no reason to remove the clauses - they would just need to report "no opportunities", correct?

[Navy_Contracting_4]

If there are no subocontracting possibilities, then 52.219-9 should not be included.. See FAR 19.708((1) -- "Insert the clause at 52.219-9 . . . in solicitations and contracts that offer subcontracting possibilities . . ."

If you have an option for production, and there are subcontracting possibilities, then you should include the clause, obtain a subcontracting plan, and negotiate and incorporate it into the contract, noting that it becomes effective if and only if the option is exercised.

[Heretalearn]

And zero is not a goal.

[Retreadfed]

Navy, note that the OP said they are negotiating a subcontract. There are different criteria for inclusion of 52.219-9 in subcontracts than for inclusion in prime contracts. 52.219-9(d)(9) says "the offeror will require all subcontractors (except small business concerns) that receive subcontracts in excess of $650,000 ($1.5 million for construction of any public facility with further subcontracting possibilities) to adopt a plan similar to the plan that complies with the requirements of this clause." For inclusion of 52.219-9 in subcontracts, the requirement for further subcontracting possiblities only applies to construction contracts as it is only found in the eliptical phrase relating to those contracts. If the contract is a supply or service contract, there is no such limitation. Odd as it seems, a subcontracting plan is required from a large business subcontractor on a subcontract with a value of over $600K even if the subcontract does not offer subcontracting possibilities. In this regard, the statute says "the offeror or bidder will require all subcontractors (except small business concerns) who receive subcontracts in excess of $1,000,000 in the case of a contract for the construction of any public facility, or in excess of $500,000 in the case of all other contracts, to adopt a plan similar to the plan required" by 52.219-9.

[Navy_Contracting_4]

Thank you for pointing out my mistake, Retreadfed. I had completely forgotten that. I think the oddity you highlight is something that could, and should, be fixed merely by moving a ")".

[Retreadfed]

I'm not sure of that. From reading the statute, it seems congress wants a plan from subcontractors regardless of whether the subcontract offers subcontracting opportunities.