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  • Question

    It is understood that FAR 15.408 requires that profit, fee, etc should be submitted, however, as a subcontractor to the Prime, are we obligated to provide this level of detail? Or can we instead request a DCMA assist audit and submit a sanitized proposal to the Prime?


    Answer

    Summary Answer: 
     
    In the situation described, a subcontractor is not obligated by Federal Acquisition Regulation to submit any particular level of cost or profit/fee element detail to a prime contractor.  However, the prime contractor is obligated to perform adequate cost or price analysis before pricing the contract action and the cognizant prime contractor’s Government contracting officer is obligated make a determination of the price reasonableness of the prime contractor’s prices, which include any subcontractor prices.   
     
    If the prime contractor does not conduct or cannot (e.g., denied access to records by subcontractor) conduct appropriate cost or price analyses, at his/her discretion the cognizant Government contracting officer may assist the prime contractor including requesting assistance of field pricing analysts or audit support.  
     
    If a subcontractor wishes to limit data disclosures or access to records demanded by a prime contractors, either the prime contractor or the subcontractor, or maybe both, may need to engage the cognizant Government contracting officer for assistance.  
     
    Discussion/Analysis:
     
    The Federal Acquisition Regulation (FAR) section cited in the question posed, §15.408 (Solicitation provisions and contract clauses), primarily prescribes when Government contracting officers are to include contract clauses in prime contracts.  I don’t read FAR § 15.408 to “require[ ] profit, fee, etc [ ] be submitted”, at least not directly.  However, clauses identified in § 15.408 of particular and specific interest to subcontractors that may have been incorporated into the prime contract at issue include:
     
    ·  FAR 52.215-12 SUBCONTRACTOR CERTIFIED COST OR PRICING DATA (OCT 2010)
    ·  FAR 52.215-13 SUBCONTRACTOR CERTIFIED COST OR PRICING DATA – MODIFICATIONS (OCT 2010)
     
    Also, of particular interest and included in § 15.408 is:
     
    ·  Table 15-2 --- Instructions For Submitting Cost/Price Proposals When Certified Cost or Pricing Data Are Required 
     
    If one or both of the above clauses are incorporated into the prime contract, the prime contractor may be required to obtain Certified Cost or Pricing Data (see FAR 15.403-4 for threshold determination) from subcontractors consistent with Table 15-2, before pricing the subcontract action.  
     
    The negotiation and related price proposal analysis of subcontractor submitted proposals are for the prime contractor to address and be responsible for and not the primary responsibility of the Government.  However, the Government contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs (see FAR 15.404-3).  In sum, if the prime contractor does not conduct or cannot (e.g., denied access to records by subcontractor) conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices, it may be appropriate for the Government contracting officer to provide assistance to the prime contractor.  That is, if he/she decides doing so is necessary and will serve a Government interest (see DFARS Procedures, Guidance, and Information (PGI)  215.404-3).  It is the cognizant Government contracting officer who must request any needed assistance of field pricing or audit support.  

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