Previous Page Next Page Prior Version PDF Version Table of Content PGI 252.215

(Revised April 26, 2007)

 

 



 252.215-7000 Pricing Adjustments.
 252.215-7001 Reserved.
 252.215-7002 Cost Estimating System Requirements.
 252.215-7003 Excessive Pass-Through Charges – Identification of Subcontract Effort.
 252.215-7004 Excessive Pass-Through Charges.


252.215-7000  Pricing Adjustments.

As prescribed in 215.408(1), use the following clause:

 

PRICING ADJUSTMENTS (DEC 1991)

 

The term “pricing adjustment,” as used in paragraph (a) of the clauses entitled “Price Reduction for Defective Cost or Pricing Data--Modifications,” “Subcontractor Cost or Pricing Data,” and “Subcontractor Cost or Pricing Data--Modifications,” means the aggregate increases and/or decreases in cost plus applicable profits.

 

(End of clause)

 

252.215-7001  Reserved.

 

252.215-7002  Cost Estimating System Requirements.

As prescribed in 215.408(2), use the following clause:

 

COST ESTIMATING SYSTEM REQUIREMENTS (DEC 2006)

 

      (a)  Definitions. 

 

      “Acceptable estimating system” means an estimating system that—

 

              (1)  Is maintained, reliable, and consistently applied;

 

              (2)  Produces verifiable, supportable, and documented cost estimates that are an acceptable basis for negotiation of fair and reasonable prices;

 

              (3)  Is consistent with and integrated with the Contractor’s related management systems; and

 

              (4)  Is subject to applicable financial control systems.          

 

      “Estimating system” means the Contractor's policies, procedures, and practices for generating estimates of costs and other data included in proposals submitted to customers in the expectation of receiving contract awards.  Estimating system includes the Contractor's—

 

              (1)  Organizational structure;

 

              (2)  Established lines of authority, duties, and responsibilities;

 

              (3)  Internal controls and managerial reviews;

 

              (4)  Flow of work, coordination, and communication; and

 

              (5)  Estimating methods, techniques, accumulation of historical costs, and other analyses used to generate cost estimates.

 

      (b)  General.  The Contractor shall establish, maintain, and comply with an acceptable estimating system.

 

      (c)  Applicability.  Paragraphs (d) and (e) of this clause apply if the Contractor is a large business and either—

 

              (1)  In its fiscal year preceding award of this contract, received Department of Defense (DoD) prime contracts or subcontracts, totaling $50 million or more for which cost or pricing data were required; or

 

              (2)  In its fiscal year preceding award of this contract—

 

                    (i)  Received DoD prime contracts or subcontracts totaling $10 million or more (but less than $50 million) for which cost or pricing data were required; and

 

                    (ii)  Was notified in writing by the Contracting Officer that paragraphs (d) and (e) of this clause apply.

 

      (d)  System requirements.

 

              (1)  The Contractor shall disclose its estimating system to the Administrative Contracting Officer (ACO) in writing.  If the Contractor wishes the Government to protect the information as privileged or confidential, the Contractor must mark the documents with the appropriate legends before submission.

 

              (2)  An estimating system disclosure is acceptable when the Contractor has provided the ACO with documentation that—

 

                    (i)  Accurately describes those policies, procedures, and practices that the Contractor currently uses in preparing cost proposals; and

 

                    (ii)  Provides sufficient detail for the Government to reasonably make an informed judgment regarding the acceptability of the Contractor's estimating practices.

 

              (3)  The Contractor shall—

 

                    (i)  Comply with its disclosed estimating system; and

 

                    (ii)  Disclose significant changes to the cost estimating system to the ACO on a timely basis.

 

      (e)  Estimating system deficiencies.

 

              (1)  The Contractor shall respond to a written report from the Government that identifies deficiencies in the Contractor's estimating system as follows:

 

                    (i)  If the Contractor agrees with the report findings and recommendations, the Contractor shall—

 

                            (A)  Within 30 days, state its agreement in writing; and

 

                            (B)  Within 60 days, correct the deficiencies or submit a corrective action plan showing proposed milestones and actions leading to elimination of the deficiencies.

 

                    (ii)  If the Contractor disagrees with the report, the Contractor shall, within 30 days, state its rationale for disagreeing.

 

              (2)  The ACO will evaluate the Contractor's response and notify the Contractor of the determination concerning remaining deficiencies and/or the adequacy of any proposed or completed corrective action.

 

(End of clause)

 

252.215-7003  Excessive Pass-Through Charges – Identification of Subcontract Effort.

As prescribed in 215.408(3), use the following provision:

 

EXCESSIVE PASS-THROUGH CHARGES –

IDENTIFICATION OF SUBCONTRACT EFFORT (APR 2007)

 

      (a)  Definition.  “Excessive pass-through charge,” as used in this provision, is defined in the clause of this solicitation entitled “Excessive Pass-Through Charges” (DFARS 252.215-7004).

 

      (b)  General.  The offeror’s proposal shall exclude excessive pass-through charges.

 

      (c)  Performance of work by the Contractor or a subcontractor.

 

              (1)  The offeror shall identify in its proposal the percent of effort it intends to perform, and the percent expected to be performed by each subcontractor, under the contract, task order, or delivery order.

 

              (2)  If the offeror intends to subcontract more than 70 percent of the total cost of work to be performed under the contract, task order, or delivery order, the offeror shall identify in its proposal—

 

                    (i)  The amount of the offeror’s indirect costs and profit applicable to the work to be performed by the subcontractor(s); and

 

                    (ii)  A description of the value added by the offeror as related to the work to be performed by the subcontractor(s).

 

              (3)  If any subcontractor proposed under the contract, task order, or delivery order intends to subcontract to a lower-tier subcontractor more than 70 percent of the total cost of work to be performed under its subcontract, the offeror shall identify in its proposal—

 

                    (i)  The amount of the subcontractor’s indirect costs and profit applicable to the work to be performed by the lower-tier subcontractor(s); and

 

                    (ii)  A description of the value added by the subcontractor as related to the work to be performed by the lower-tier subcontractor(s).

 

(End of provision)

 

252.215-7004  Excessive Pass-Through Charges.

As prescribed in 215.408(3), use the following clause:

 

EXCESSIVE PASS-THROUGH CHARGES (APR 2007)

 

      (a)  Definitions.  As used in this clause—

 

              “Excessive pass-through charge,” with respect to a Contractor or subcontractor that adds no or negligible value to a contract or subcontract, means a charge to the Government by the Contractor or subcontractor that is for indirect costs or profit on work performed by a subcontractor (other than charges for the costs of managing subcontracts and applicable indirect costs and profit based on such costs).

 

              “No or negligible value” means the Contractor or subcontractor cannot demonstrate to the Contracting Officer that its effort added substantive value to the contract or subcontract in accomplishing the work performed under the contract.

 

      (b)  General.  The Government will not pay excessive pass-through charges.  The Contracting Officer shall determine if excessive pass-through charges exist.

 

      (c)  Performance of work by the Contractor or a subcontractor.

 

              (1)  If the Contractor changes the amount of subcontract effort identified in its proposal such that it exceeds 70 percent of the total cost of work to be performed under the contract, task order, or delivery order, the Contractor shall provide the Contracting Officer with a description of the value added by the Contractor as related to the subcontract effort.

 

              (2)  If any subcontractor identified in the proposal changes the amount of lower-tier subcontractor effort such that it exceeds 70 percent of the total cost of the work to be performed under its subcontract, the Contractor shall provide the Contracting Officer with a description of the value added by the subcontractor as related to the work to be performed by the lower-tier subcontractor(s).

 

              (3)  If any subcontractor not identified in the proposal subcontracts to a lower-tier subcontractor more than 70 percent of the total cost of work to be performed under its subcontract, the Contractor shall provide the Contracting Officer with a description of the value added by the subcontractor as related to the work to be performed by the lower-tier subcontractor(s).

 

      (d)  Recovery of excessive pass-through charges.  If the Contracting Officer determines that excessive pass-through charges exist—

 

              (1)  For fixed-price contracts, the Government shall be entitled to a price reduction for the amount of excessive pass-through charges included in the contract price; and

 

              (2)  For other than fixed-price contracts, the excessive pass-through charges are unallowable in accordance with the provisions in Subpart 31.2 of the Federal Acquisition Regulation (FAR) and Subpart 231.2 of the Defense FAR Supplement.

 

      (e)  Access to records.     

 

              (1)  The Contracting Officer, or authorized representative, shall have the right to examine and audit all the Contractor’s records (as defined at FAR 52.215-2(a)) necessary to determine whether the Contractor proposed, billed, or claimed excessive pass-through charges.

 

              (2)  For those subcontracts to which paragraph (f) of this clause applies, the Contracting Officer, or authorized representative, shall have the right to examine and audit all the subcontractor’s records (as defined at FAR 52.215-2(a)) necessary to determine whether the subcontractor proposed, billed, or claimed excessive pass-through charges.

 

      (f)  Flowdown.  The Contractor shall insert the substance of this clause, including this paragraph (f), in all subcontracts under this contract, except for—

 

              (1)  Firm-fixed-price subcontracts awarded on the basis of adequate price competition;

 

              (2)  Fixed-price subcontracts with economic price adjustment, awarded on the basis of adequate price competition;

 

              (3)  Firm-fixed-price subcontracts for the acquisition of a commercial item; or

 

              (4)  Fixed-price subcontracts with economic price adjustment, for the acquisition of a commercial item.

 

(End of clause)

 

 

 

 


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