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Responsibility to analyze subcontract proposals far

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Responsibility to Analyze Subcontract Proposals (FAR 15.404-3(b)). The firm awarding the subcontract(the offeror or a higher-tier subcontractor), is responsible for subcontract pricing. At the same time, thecontracting officer is responsible for the total price paid by the Government, and must be satisfied thateach subcontracting tier has performed an adequate cost or price analysis of each subcontract proposal.Part of that responsibility is to assure that the subcontracting activity has performed an appropriate priceor cost analysis.Price Analysis. The firm awarding a subcontract must perform a price analysis when no costanalysis is performed and should perform a price analysis in conjunction with any cost analysis toensure overall price reasonableness. This analysis should be similar to one that you wouldperform in pricing a similar contract under similar circumstances.Cost Analysis. The firm awarding a subcontract must analyze:oAny required subcontractor cost or pricingdata, andoAny subcontractor cost informationother than cost or pricing data required todetermine cost reasonableness or cost realism.
The firm awarding a subcontract must include the results of these analyses as part of its own cost orpricing data submission. Lower-tier subcontract analyses become part of higher-tier submissions, andeventually the prime contractor's submission to the Government.The results of these analyses should help the firm awarding the subcontract to arrive at a fair andreasonable subcontract price. Those same results should provide you with information that will help youarrive at a fair and reasonable contract price.Consider a firm's failure to analyze subcontract costs as a potentially significant estimating systemdeficiency. If you believe that an analysis is inadequate or that the subcontract price is unreasonable,question the costs involved. Remember that a firm's failure to perform and submit an adequate analysiscould lead to contract overpricing.Responsibility to Obtain Subcontract Cost or Pricing Data (FAR 15.404-3(c)). Unless the subcontractqualifies for an exception to statutory cost or pricing data requirements, any contractor or subcontractorrequired to submit cost or pricing data must also obtain cost or pricing data before:Awarding any subcontract or purchase order expected to exceed the cost or pricing datathreshold, orIssuing any modification with a price adjustment amount expected to exceed the cost or pricingdata threshold.Responsibility to Submit Subcontract Cost or Pricing Data (FAR 15.404-3(c)). An offeror required tosubmit cost or pricing data to the Government must also submit (or cause submission of) cost or pricingdata from prospective subcontractors in support of each subcontract priced at the lower of either:$11,500,000 or more, orBoth more the cost or pricing data threshold and more than 10 percent of the prime contractor'sproposed price, unless the contracting officer believes such submission is unnecessary.

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Term
Winter
Professor
Mike Dodd
Tags
Government, Cost Accounting, contract costs, Cost Accounting Standards Board

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