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It is common practice for terms of service to indicate that to the extent the supplier is supporting a federal contract, certain FAR (etc) clauses shall be incorporated into the purchase order; and if it is in support of a grant, certain other requirements are incorporated.  What is not typically addressed in the terms of service, however, is how a supplier will know if a PO is in support of a federal contract/grant.  It is not practical for many contractors to include this information on the PO - especially when a supplier is supporting numerous customers, some of which may be federal.  When it is not practical to id each and every PO that may be considered a subk, what are best practices for putting supplier on notice - or is notice even required? 

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I am not aware of a specific requirement for such notice in a procurement commitment document to a supplier. However, somewhere in your company's finance system, each and every such commitment should be identified to the specific related customer contract number. As a practical matter, entering the applicable customer contract number into a searchable database for the related procurement document, allows finance to accumulate the procurement $ commitment for each customer contract and permits Supplier Management and others to search whenever needed. If your company has some other method that is acceptable to Supplier Management and Finance, it seems to be a business decision. I am surprised that entering the customer contract number into a set field on the procurement document and/or searchable database, is "not practical."  

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11 hours ago, Neil Roberts said:

I am not aware of a specific requirement for such notice in a procurement commitment document to a supplier. However, somewhere in your company's finance system, each and every such commitment should be identified to the specific related customer contract number. As a practical matter, entering the applicable customer contract number into a searchable database for the related procurement document, allows finance to accumulate the procurement $ commitment for each customer contract and permits Supplier Management and others to search whenever needed. If your company has some other method that is acceptable to Supplier Management and Finance, it seems to be a business decision. I am surprised that entering the customer contract number into a set field on the procurement document and/or searchable database, is "not practical."  

Thank you for your input.  The impractical aspect is when your supplier is supporting 100's of customers (some of which may be government end users).  Under the FAR's broad definition of subcontractor (for most purposes the definition is very broad - there are more specific definitions with respect to certain parts/clauses), such a supplier may be deemed a subcontractor. If the terms of purchase simply say "to the extent a purchase order is in support of a federal acquisition contract, supplier must comply with [certain FAR clauses]" and the purchase order is silent on whether it is supporting a federal contract, there needs to be a way for supplier to know the breadth of its compliance obligations and there is risk for the buyer because it could be liable for the subcontractor's failure to comply.

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45 minutes ago, govcon24-7 said:

Under the FAR's broad definition of subcontractor (for most purposes the definition is very broad - there are more specific definitions with respect to certain parts/clauses), such a supplier may be deemed a subcontractor. 

There's your problem, right there. Your entity hasn't defined the term "subcontract" for itself. As you noted, the FAR contains many definitions of that term and so each contractor must stake its claim via policy/procedure.

Also, the awarding entity has an obligation to identify which of its awards to suppliers are related to a Federal prime contract or higher-tier subcontract. I can think of several reasons why they need to do that, and it's possible that a failure to properly identify Federal subcontract awards could lead to a disapproval of the awarding entity's purchasing system. If the standard Ts & Cs don't properly execute that obligation, I don't see how you are properly flowing-down the appropriate clauses to the supplier.

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2 hours ago, govcon24-7 said:

The impractical aspect is when your supplier is supporting 100's of customers (some of which may be government end users).  Under the FAR's broad definition of subcontractor (for most purposes the definition is very broad - there are more specific definitions with respect to certain parts/clauses), such a supplier may be deemed a subcontractor. If the terms of purchase simply say "to the extent a purchase order is in support of a federal acquisition contract, supplier must comply with [certain FAR clauses]" and the purchase order is silent on whether it is supporting a federal contract, there needs to be a way for supplier to know the breadth of its compliance obligations and there is risk for the buyer because it could be liable for the subcontractor's failure to comply.

Is it your impression that every firm which sells goods to a government prime contractor or subcontractor is itself a government subcontractor? Even firms whose goods are purchased for general stock inventory?

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21 minutes ago, Vern Edwards said:

Is it your impression that every firm which sells goods to a government prime contractor or subcontractor is itself a government subcontractor? Even firms whose goods are purchased for general stock inventory?

There is limited guidance on where to draw the line - and the fact that certain definitions of subcontractor make clear that such "general suppliers" are excluded from the definition only further supports the breadth of the definitions which don't include such carve-outs.  Just looking for best practices for commercial item subs that are flowing down requirements to even lower tiers.

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1 hour ago, govcon24-7 said:

Just looking for best practices for commercial item subs that are flowing down requirements to even lower tiers.

I know some people who can offer training in this particular area for such entities.

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My experience at the major prime, major subcontract level and non-government contract commercial world is to expect that every supplier at every level read its customer's contract. In doing so, flow whatever is required by that contract to be flowed to the next level supplier, and also flow whatever business flowdowns it deems needed to comply with the terms of that contract. This is apart from what I said above about whether or not its customer contract number or ID should be included on the face of or elsewhere in the purchase contract to the next level supplier. In that sense, one thing has nothing to do with the other.  

Edited by Neil Roberts
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