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  • Question

    Should a Prime Contractor flow 52.227-1 Authorization and Consent to a foreign subtier if performance of the subcontract and delivery are outside the US? In general, should a Prime Contractor follow the instructions in the actual clause or the prescription clause?


    Answer

    An answer to a previous Ask  A Professor question regarding FAR Clause 52.227-1, Authorization and Consent, was posted on 6/12/2017 under the Contracting subject area.  The previous response helps explain the purpose of the clause, so it may worth taking a look at as well.  Here is an excerpt:
     
      "FAR Clause 52.227-1, Authorization and Consent, is prescribed by FAR 27.201-2, and it serves to notify the performing contractor and any third party
      that the government permits and agrees (authorizes and consents) for the performing contractor to "all use and manufacture, in performing this contract
      or any subcontract at any tier" on THIS government contract.
     
       By including the clause at FAR 52.227-1 the government is stating for the performing contractor and third parties that the government recognizes that
      "the exclusive remedy for patent or copyright infringement by or on behalf of the government is a suit for monetary damages against the government in the
      Court of Federal Claims. There is no injunctive relief available, and there is no direct cause of action against a contractor that is infringing a patent or copyright
      with the authorization or consent of the Government (e.g., while performing a contract)." See FAR 27.201-1.
     
       In effect, the government is protecting the performing contractor from infringement claims from third parties by inserting the clause at FAR 52.227-1."
     
    The clause prescription found at FAR 17.201-2, as you mentioned in the AAP background submitted with your question, is the instructions to the contracting officer for determining the applicability of the clause for THIS contract (This contract being your contract with the Government as the prime).  I assume the PCO included the clause in the contract with the prime, to begin with, because delivery by the prime is within the US (although performance of the subcontract may occur outside the US),  so the foreign exclusion would not be applicable.  Since this clause is in your contract with the Government, the clause serves as your instructions for flowing down the clause to  your subcontracts (including any lower-tier subcontracts).  My literal interpretation of para (b) of this clause is that the prime contractor shall flow down the substance of this clause in ALL of your subcontracts expected to exceed the simplified acquisition threshold.
     
    However, I strongly recommend seeking the advice of your legal counsel and consulting with the contracting officer about the applicability and flow down of the clause to your subcontractors including those outside the US.

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