Re: Subrecipient Clauses - Watch Out For Government-Furnished Equipment! Stephen Erickson 09 Jun 2000 19:49 EST

Several years ago I wrote a micrograph on subcontracting under federal prime
awards for NCURA. At the back of that document I address this subject and give
examplees of clauses that fall into three categories of flow-down. I cannot post
the listing to this listserv as NCURA owns the copyright, but I believe it is
still in print through NCURA.

Steve

"Frye, Todd" wrote:

> I agree with Bob and Lee's point completely.  In fact, this is just one
> peril in the what I have heard called the "white out" approach to
> subcontracting, which describes the swapping of "Government" for "Prime",
> etc.  These dangers are most prevalent in procurement contracting, vs.
> assistance.  Simply put, the best purchasing systems and subcontracts do not
> do it.  Some of the clauses in a prime procurement contract to an
> educational simply do not apply to many other types of organizations, while
> others do, etc.
>
> Also, there is the issue of some prime clauses being triggered or included
> due to the total dollar value of the Prime award, and would not apply to
> subs working on contracts for less than that amount, (e.g., $100K and $500K
> are big "kick in" thresholds where more clauses get added)
>
> Third, there is the question of contract type.  The prime may be a cost-type
> contract, which, by design, is set up to share more of the risk between the
> two parties (Prime and Government), whereas, depending on what is being
> procurred, the subcontract may be a cost plus fixed fee, or even a Fixed
> price contract, which would necessitate virtually an entirely new
> boilerplate approach.
>
> That's it today.  After all, it's Friday!!
>
> Todd
>
> ONR CHICAGO
> 312 886-5423, ext. 237
> xxxxxx@onr.navy.mil
>
> -----Original Message-----
> From: Lee Wood [mailto:xxxxxx@LELAND.STANFORD.EDU]
> Sent: Friday, June 09, 2000 11:45 AM
> To: xxxxxx@HRINET.ORG
> Subject: Subrecipient Clauses - Watch Out For Government-Furnished
> Equipment!
>
> At 6/8/00, Nancy Stewart wrote:
>
> Hi Leah,
>
> I didn't see your original post and think Steve's idea is a good one.  I
> recently
> was in the same situation and tried for language quite similar to his.  The
> company however wanted something "more specific."  After speaking with
> contract
> officer at NIH (this was a prime NIH contract) and several other RA's  I
> came up
> with the following:
>
> The SUBCONTRACTOR certifies that it shall comply with FAR 31 Contract Cost
> Principles and Procedures, Subpart 2:  Contracts with Commercial
> Organizations
> with modifications as follows:  the term "Contract" shall mean
> "Subcontract";
> "Contractor" shall mean "Subcontractor"; "Authorized Contracting Officer"
> shall
> mean "UNIVERSITY's Contracting Officer"; "U.S. Government" shall mean
> "UNIVERSITY"
> except that the terms "Authorized Contracting Officer" and "U.S. Government"
> shall
> retain their meaning relative to audits of costs, negotiation of overhead
> rates,
> and inspections.
>
> I'm far from an expert on these matters, but at the SRA Western Section
> meeting last month, Bob Silverman of ONR Seattle, presented a concurrent
> session on "Management of University Subcontractor Property". He
> specifically discussed using the "name swap" (my term) language that Nancy
> suggested above in the context of government-furnished equipment provided to
> subcontractors to Government prime contracts. This may be an infrequent
> occurrence, but we'd all be well to watch out for it.
>
> The problem is that if we tell our subcontractors to change "Government" to
> "<your university>" and "Contractor" to "<subcontracting organization>",
> etc., we may put ourselves in a potential bind when it comes to FAR
> 52.245-5: Government Property (Cost-Reimbursement, Time-and-Material, or
> Labor-Hour Contracts), paragraph (g) says:
>
> (g) Limited risk of loss.
>
> (1) The Contractor shall not be liable for loss or destruction of, or damage
> to, the Government property provided under this contract or for expenses
> incidental to such loss, destruction, or damage, except as provided in
> subparagraphs (2) and (3) below.
>
> <stuff deleted>
>
> (4) If the Contractor transfers Government property to the possession and
> control of a subcontractor, the transfer shall not affect the liability of
> the Contractor for loss or destruction of, or damage to, the property as set
> forth above...
>
> Bob Silverman's interpretation is that such "name swap" language would leave
> our institutions liable for loss or damage to government-furnished equipment
> which we have provided to our subcontractor(s).Any other interpretations?
>
> Lee
>
> ****************************************************************
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> Associate Director of Sponsored Research for the
>   School of Engineering and
>   Independent Labs, Centers and Institutes
> Office of Sponsored Research
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Stephen Erickson, Director
Office of Research Administration
Boston College
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