government subcontracts

Are You Getting Your Consent to Subcontract?

If the answer is either a) no or b) what is consent? Then the topic of this blog could be hugely important to you; particularly if you are performing cost type government contracts.

The clause 52.244-2 Subcontracts is most likely contained in your government contracts and is most likely incorporated by reference.   This clause dictates that a contractor, if they do not have an approved purchasing system, must obtain consent to subcontract if the subcontract meets the following conditions:

(1) Is of the cost-reimbursement, time-and-materials, or labor-hour type; or

(2) Is fixed-price and exceeds—

(i) For a contract awarded by the Department of Defense, the Coast Guard, or the National Aeronautics and Space Administration, the greater of the simplified acquisition threshold or 5 percent of the total estimated cost of the contract; or

(ii) For a contract awarded by a civilian agency other than the Coast Guard and the National Aeronautics and Space Administration, either the simplified acquisition threshold or 5 percent of the total estimated cost of the contract.

Also note that per FAR Part 44, the definition of “subcontracts” includes all types of purchasing conducted under the contract. Whether your company calls it “purchasing”, or you use “vendors” or “consultants”, that is all subcontracting in the eyes of the FAR.

The contents of a consent request are dictated by the FAR, but the ramifications of not obtaining consent are not.  The government (as usual) hasn’t been consistent over the years on requiring consent, checking up on your consent or hitting you in audits on consent. Nor is there consistency across agencies or even among offices. Some offices state that if you name your subs in your proposal and that proposal is incorporated by reference into the contract, then they gave consent. However, your ACO and DCAA auditor may not agree.

We recently have run into a situation, during an incurred cost audit, where the client did not have proof they obtained consent required by 52.244-2.  Due to the lack of consent, DCAA was suggesting that ALL those subcontract costs be disallowed.  This is HUGE negative impact on a company.

It is better to be safe than sorry. Check your contracts for 52.244-2 Subcontracts, decide if it is applicable and either

1) Ask the CO to list the names of your subcontractors in (j) of the clause before you sign the contract; or

2) Obtain the consent as required regardless if you think you received de facto consent.

This one small step may help you out more than you realize in the long run.

Getting Your Company’s Foot In the Government’s Door – Past Performance

The U.S. Government has enormous buying power; virtually buying everything and anything you can imagine.  Just today there were requirements posted for everything from cadet socks to wetland mitigation to landing gear.  Right now there are more than 22,300 active federal opportunities.  Small businesses can fulfill a huge portion of these opportunities (set-asides or not).  But what if you’re new?

I have had quite a number of small businesses ask me how they “get in” to winning some of these opportunities.  There are of course a number of factors that determine the success of a small business in the government contracting world.  However, past performance is at the top of the list.  But, if your company hasn’t been in business very long and don’t have much to show the government about how successful you’ve been in fulfilling similar needs, what to do?

1) Still go after the requirements you feel qualified for.  You may not get them, but, if you can afford the B&P costs you still reap benefits.  You are getting your name out there and you’re honing your skills at reviewing and proposing on  government contracts.  Both benefits are essential to really landing a contract in the future.

2) SUBCONTRACT.  This is important.  Prime contractors who already have figured out the government contract game will be willing to add you to their larger contract teams if you prove to them you are qualified and provide quality at the right price.  Being added to a team is a lot easier than going after contracts directly.  You also gain the benefit of learning from your prime and getting your name in front the government at some tier of the project/offer.

How do you find primes?  Look around your industry. Which large companies are winning contracts? Who do you hear about in your market research? Attend industry days for upcoming contracts that are too big for any one contractor to accomplish.  Network with those people who have listed themselves as interested parties on FBO.  Look at FPDS and see what agencies are buying from which contractors.   Also, don’t limit your options geographically. Government purchasing doesn’t follow state lines all the time.

Whatever you can do to add to your past performance list and record successes under your companies belt will help you for the big day for when you can legitimately compete for the big one.