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CAS Exemption for T&M and LH Subcontracts for Commercial Items
br549
Oct 13 2009, 01:49 PM

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A contractor has recently been awarded a long-term prime contract with responsibility for
Copper Member

operating a major Government program. The contractor has a Government-approved purchasing system, and is responsible for issuing as-yet-unidentified subcontracts as required to support the program. Subcontracts of various types and dollar values will be required. This contractor is faced with implementing the CAS exemption of T&M and Labor Hour SUBCONTRACTS for commercial items. The exemption in CFR 9903.201-1( (IMG:style_emoticons/default/cool.gif) (6) is shown, in pertinent part, as follows. "... time-and-materials, and labor-hour ... subcontracts for the acquisition of commercial items." Note that the CFR exemption doesn't mention competition. Competition; however, is an unstated condition of the exemption, at least as the exemption applies to contracts placed in accordance with FAR. FAR 12.207 ( (IMG:style_emoticons/default/cool.gif) provides that a T&M/LH type contract can be used for commercial items when the contract is awarded using competitive procedures. This was discussed and understood in the CAS Board's deliberations preceding issuance of the exemption. But what about subcontracts? This contractor's subcontracting program is not subject to the competition requirements of FAR 12.207. It is; however, subject to FAR 52.244-5(a). So, should this contractor: 1. follow the CFR language literally and exempt all T&M/LH subcontracts for commercial items, or 2. exempt only those T&M/LH subcontracts that were processed using the competitive procedures envisioned by FAR 52.244-5 (a), or 3. do something else, and if so what?

Group: Members Posts: 31 Joined: 8-December 08 From: 32953 Member No.: 21

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11/2/2011 01:46 PM

. I do not read FAR 52.244-5(a) as extending a competition requirement to the CAS exemption.207 says and what the CAS Board thought prior to the rule's promulgation is interesting. CA Member No.207 says and what the CAS Board thought prior to the rule's promulgation is interesting. my position would be to exempt all T&M subcontracts for commercial items from CAS. I concur with Don's assessment. 02:35 PM Post #2 The plain language of 9903. 01:44 PM Post #4 2 of 7 11/2/2011 01:46 PM .244-5(a) as extending a competition requirement to the CAS exemption..com/discussion/index. but does not change the clear language of the regulation.201-1( b )(6) simply does not condition the exemption on the use of competitive procedures. The clause only requires that the prime obtain subcontract competition "to the maximum practical extent consistent with the objectives and requirements of the contract. If I were the contractor. I would inform the authority responsible for performing a review of my purchasing system of my position and make sure that we were on the same page. I do not read FAR 52. Group: Members Posts: 627 Joined: 8-December 08 From: San Diego.101) are exempt from CAS.php?showtopic=386 Don Acquisition Oct 13 2009. 01:35 PM) Silver Member The plain language of 9903. Group: Members Posts: 297 Joined: 7-December 08 From: California Member No.: 7 FWIW. I would inform the authority responsible for performing a review of my purchasing system of my position and make sure that we were on the same page. The clause only requires that the prime obtain subcontract competition "to the maximum practical extent consistent with the objectives and requirements of the contract. Whynot Oct 14 2009.wifcon. my position would be to exempt all T&M subcontracts for commercial items from CAS. 12:42 AM Post #3 QUOTE (Don Acquisition @ Oct 13 2009.T." It does not require that all subcontracts be awarded competitively.201-1( b )(6) simply does not condition the exemption on the Gold Member use of competitive procedures. What FAR 12. If I were the contractor. Further. http://www. Period. Contracts (and subcontracts) for acquisition of commercial items (as that term is defined in FAR 2.CAS Exemption for T&M and LH Subcontracts for Commercial Items ." It does not require that all subcontracts be awarded competitively.: 43 here_2_help Oct 14 2009. What FAR 12. Further. but does not change the clear language of the regulation.

05:54 PM Post #6 QUOTE (Whynot @ Oct 14 2009.101 makes a distinction based on acquisition method.php?showtopic=386 Do you mean commercial items that are acquired through commercial acquisition Bronze Member methods (FAR Part 12) or commercial items regardless of how they are acquired (ie FAR Part 15)? Group: Members Posts: 201 Joined: 30-December 08 Member No. 12:51 PM) Silver Member I hit the add reply button too soon. If I'm wrong.. 01:51 PM Post #5 I hit the add reply button too soon.CAS Exemption for T&M and LH Subcontracts for Commercial Items . http://www. 12:44 PM) Silver Member Do you mean commercial items that are acquired through commercial acquisition methods (FAR Part 12) or commercial items regardless of how they are acquired (ie FAR Part 15)? Can you mix and match a FAR Part 15 prime T&M contract and a commercial T&M subcontract for the provision of the labor portion of the prime T&M contract? Group: Members Posts: 297 Joined: 7-December 08 From: California Member No. Bronze Member Does the commercial subcontract have to utilize unique commercial prime contract labor Group: Members Posts: 201 Joined: 30-December 08 Member No.wifcon. 06:08 PM Post #7 QUOTE (Whynot @ Oct 14 2009..T.: 7 I do not believe that the definition of "commercial item" found in 2.: 174 categories to maintain the integrity of their commerciality or can the subcontract use exisiting prime contractor labor categories which would then be a mix of commercial and non-commercial labor? here_2_help Oct 14 2009.: 174 Can you mix and match a FAR Part 15 prime T&M contract and a commercial T&M subcontract for the provision of the labor portion of the prime T&M contract? Whynot Oct 14 2009. here_2_help Oct 14 2009. Does the commercial subcontract have to utilize unique commercial prime contract Group: Members Posts: 297 3 of 7 11/2/2011 01:46 PM .com/discussion/index. I'm sure I'll be corrected forthwith.

php?showtopic=386 Joined: 7-December 08 From: California Member No. http://www.com/discussion/index. regardless if the hourly rates are fixed? Aren't hours considered to be a cost element? 4 of 7 11/2/2011 01:46 PM . What am I missing? br549 Oct 26 2009.: 7 labor categories to maintain the integrity of their commerciality or can the subcontract use exisiting prime contractor labor categories which would then be a mix of commercial and non-commercial labor? Your question confuses me. Copper Member Ed Group: Members Posts: 31 Joined: 8-December 08 From: 32953 Member No. Common sense prevails. Are we saying that commercial T&M subcontracts would qualify for the above FFP commercial item subcontract exemption? Don't the quantity of hours in a T&M subcontract arrangement really equate to incurred costs.: 174 that price adjustment is not based on actual costs incurred) contracts and subcontracts for the acquisition of commercial items. 01:36 PM Post #9 I am not sure I follow the CAS exemption: Bronze Member 9903. 11:03 AM Post #8 Belated thanks to Don and H2H.CAS Exemption for T&M and LH Subcontracts for Commercial Items . If the prime contract is a commercial item acquisition then 52. The question of separate rates for the prime and subcontractor seems to be answered by 52..201-1(6) Firm fixed-priced and fixed-price with economic price adjustment (provided Group: Members Posts: 201 Joined: 30-December 08 Member No.212-4 would be included and that would seem to permit a non-commercial subcontractor to be reimbursed at the prime's commercial hourly rates (see Alternate 1 language).232-7 if the prime contract is a non-commercial item acquisition.T..wifcon.: 21 Whynot Oct 26 2009.

04:03 PM Post #12 QUOTE (Whynot @ Oct 26 2009. 12:34 PM) Platinum Member Ok I am ready to be clued in.com/discussion/index.wifcon..gif) Whynot Oct 26 2009. Are we saying that commercial T&M subcontracts would qualify for the above FFP commercial item subcontract exemption? Don't the quantity of hours in a T&M subcontract arrangement really equate to incurred costs.: 2 5 of 7 11/2/2011 01:46 PM . Where is the CAS exemption for subcontract commercial items that are not either FFP or FP with economic price adjustment?. 02:10 PM Post #10 QUOTE (Whynot @ Oct 27 2009.. Portland. and we can also assume that per H2H the commercial subcontractor labor will be sold under a prime CAS covered labor category .093 Joined: 3-December 08 From: Arlington VA.: 831 Clueless. 01:21 AM) Copper Member I am not sure I follow the CAS exemption: 9903..not require their own separate labor category. 02:34 PM Post #11 Ok I am ready to be clued in. Bronze Member Where is the CAS exemption for subcontract commercial items that are not either FFP or Group: Members Posts: 201 Joined: 30-December 08 Member No.CAS Exemption for T&M and LH Subcontracts for Commercial Items .php?showtopic=386 Seeker Oct 26 2009.: 174 FP with economic price adjustment? We can all assume that the prime contract is subject to CAS. OR Member No. Vern Edwards Oct 26 2009. otherwise we would not be having these discussions. regardless if the hourly rates are fixed? Aren't hours considered to be a cost element? Group: Members Posts: 37 Joined: 20-August 09 From: United States Member No..T. http://www. Group: Members Posts: 2. Make it quick and painless please. (IMG:style_emoticons/default/dry. Make it quick and painless please.201-1(6) Firm fixed-priced and fixed-price with economic price adjustment (provided that price adjustment is not based on actual costs incurred) contracts and subcontracts for the acquisition of commercial items.

5 million. (3) Contracts and subcontracts with small businesses. 08:01 AM Post #13 6 of 7 11/2/2011 01:46 PM . any contract or subcontract awarded to a foreign concern. and labor-hour contracts and subcontracts for the acquisition of commercial items.wifcon.T.401 and 9904. (6) Firm fixed-priced. (5) Contracts and subcontracts in which the price is set by law or regulation.. http://www.. (2) Negotiated contracts and subcontracts not in excess of $650. time-and-materials. and possessions.com/discussion/index. insofar as the requirements of CAS other than 9904. (15) Firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data.5 million or greater. provided that.CAS Exemption for T&M and LH Subcontracts for Commercial Items . fixed-priced with economic price adjustment (provided that price adjustment is not based on actual costs incurred). For purposes of this paragraph (b)(2) an order issued by one segment to another segment shall be treated as a subcontract. (14) Contracts and subcontracts to be executed and performed entirely outside the United States. (7) Contracts or subcontracts of less than $7. (b) The following categories of contracts and subcontracts are exempt from all CAS requirements: (1) Sealed bid contracts.php?showtopic=386 How old is your copy of the CFR? You want it quick and painless? QUOTE 48 CFR 9903.402 are concerned. its territories. (4) Contracts and subcontracts with foreign governments or their agents or instrumentalities or.000. at the time of award. (8)–(12) [Reserved] (13) Subcontractors under the NATO PHM Ship program to be performed outside the United States by a foreign concern.201-1 CAS applicability. Whynot Oct 27 2009. the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.

Inc.Subcontracts & Subcontract Management Go Lo-Fi Version Time is now: 2nd November 2011 .T.wifcon. http://www.Board 2.com/discussion/index.: 174 Enter Keywords Search Topic « Next Oldest · Subcontracts & Subcontract Management · Next Newest » 1 User(s) are reading this topic (1 Guests and 0 Anonymous Users) 0 Members: |-. 7 of 7 11/2/2011 01:46 PM .af.mil/vffara...htm they got the old one too.hill. Group: Members Posts: 201 Joined: 30-December 08 Member No.05:35 AM Powered By IP.6 © 2011 IPS.php?showtopic=386 Got it.3. Bronze Member I looked at the http://farsite.CAS Exemption for T&M and LH Subcontracts for Commercial Items .