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

****************************************************************
Lee Wood (Mr.)
Associate Director of Sponsored Research for the
 School of Engineering and
 Independent Labs, Centers and Institutes
Office of Sponsored Research
Stanford University
651 Serra Street, Room 110
Stanford, CA 94305-6215
Mail Code: 6215
Phone: (650)723-5681
Fax:   (650)725-4598
Email: xxxxxx@stanford.edu
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