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  • Question

    Is the prime entitled to M&H or G&A on top of fully burdened subcontractor prices?


    Answer

    Good question.  Every case is different, but if that is how the prime's normal cost accounting system is set-up then yes they would be entitled to the O/H.

    See FAR Table 15-2 (at FAR 15.408) II Cost Elements.  The subcontractors costs are part of Materials and services and they help make up the base that the prime's O/H rates will be applied to in order to calculate the prime's O/H pool (rate=pool/base).  Remember, it takes effort by the prime to manage their subs.

    Additional guidance on settling equitable adjustments due to change orders can be found at: 

    FAR – Part 43 Contract Modifications
    DFARS – 243.204-70 Certification of Requests for Equitable Adjustment
    DFARS – 243.205-71 Request for Equitable Adjustment
    DFARS PGI 243-204

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