I have the following questions.
1. Since the contractor has indicated that they will exceed the amounts listed in the specific subcontract agreements, does the Government have the right to perform another analysis of the costs associated with the specific agreements to ensure there are no unallowable costs and to determine price reasonableness? If so, can you provide specific FAR clauses that would support this? With this increase in costs, the Government can't be assured that the overall amount of the approved subcontract will not be increased.
2. Should the contractor be required to submit revised subcontract agreements, noting the increase in cost for each of the agreements? It appears that since the costs in the initial agreements are no longer valid, the contractor would need to submit revised agreements.
3. Should the Government issue a revised approval for consent to subcontract based on the increased costs? The contractor implies that even though the costs has increased in two of the three agreements, the overall approved amount won't be exceeded. The Government has no assurance of this. Again, the approval that was issued was based on the costs of the three subcontract agreements. If these costs are no longer valid, it would seem the Government would need to issue a revised COA, incorporating the revised subcontract agreements with the increased costs.
There are far too many "unknowns" for me to attempt to response to the questions. Some of the unknowns, but by no means all, include the following:
Open full Question Details
1) what applicable FAR and agency clauses are included in the prime contract?
2) what type subcontracts are in place? Fixed price or cost reimbursement?
3) what is the agreed-upon portion of allowable costs the prime contractor will be reimbursed?
4) what are the terms of the contracting officers "consent to subcontract"?
The terms and conditions including clauses in the contract will govern the rights and responsibilities of the government and the prime contractor and not any FAR references that I may speculate are applicable.
The set of questions is far too complex to respond to without the complete contract file including the related consent documents. I recommend with the contracting officer assemble a team to include a senior contract analyst, senior price analyst, and experienced contracting attorney at the very least to determine a course of action.