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    Here’s our 5 questions: Q1. Can a contractor buying from a "related party" be able to charge profit at both ends? My research seem to indicate YES as long as it is at-arms-length. Q2. Can a contractor charge indirect cost (such as G&A) on the material even though it is merely “passing through”? Again, I think it is YES since it is done in accordance with the practices established in the disclosure statement. However, FAR 52.215-23 Limitations on Pass-Through Charges (please see link below) should give the contracting officer the right to recover any excess pass-through. Q3. Can the government disclose to the prime contractor information regarding profit for the purpose of "government interest"? I believe that the answer is NO given that the subcontractor has expressly disallow such disclosure. Q4. The proposed profit (cell IJ38 of WGL tab) should it be consist of the profit at TA end only or both TA and TF combined? I think it should be only TA. Q5: Is there a FAR restriction on “excess” profit at the subcontractor level? I don’t think so. Please let me know what you think. https://www.acquisition.gov/far/52.215-23

    Answer

    These questions pertain to pass-through charges so FAR 15.404-1(h) provides the starting point for research. If this applies to your scenario, then ensure to document accordingly. Depending on contract type and the terms of the contract, prime and subcontractors should be able to both include profit/fee, indirect costs or G&A in their pricing IAW with any applicable disclosure statements. The government should not release information that has been expressly designated as not releasable. 

      If the contract has clause 52.215-23, that allows the Contracting Officer to determine if costs add "no or neglibilbe value" to a contract or a subcontract. This requires the indepedent business acumen of that Contracting Officer. As a reminder, there are restrictions for certain contract types regarding profit in terms of either not being allowed (FAR part 16) or how much profit is allowed IAW FAR 15.404-4(c)(4). Note DFARS PGI 215.404-1(h) helps provide some clarity in reviewing and justify pass-through costs.

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