B-169434, SEP 27, 1971
Highlights
THE PROPOSED REVISIONS ARE IN RESPONSE TO SUGGESTIONS IN A GAO REPORT TO THE SECRETARY OF DEFENSE DATED NOVEMBER 23. CONTRACTORS WOULD BE REQUIRED TO INCLUDE IN THE ADVANCE NOTIFICATION OF PROPOSED SUBCONTRACTS TO THE CONTRACTING OFFICER A MEMORANDUM OF NEGOTIATION SETTING FORTH THE PRINCIPAL ELEMENTS OF SUBCONTRACT PRICE NEGOTIATIONS WHICH ARE IN EXCESS OF $100. THIS SUBJECTS THE PRIME CONTRACTOR TO THE SAME REQUIREMENTS IN CONNECTION WITH THE RECORDS OF NEGOTIATION OF SUBCONTRACTS AS ARE APPLICABLE TO THE CONTRACTING OFFICER IN CONNECTION WITH PRIME CONTRACTS. WHEN INCENTIVES ARE USED. PROVISION IS ALSO MADE FOR THE RETENTION OF CERTAIN CONTRACTOR AND SUBCONTRACTOR RECORDS. WHILE WE DO NOT BELIEVE THE DIFFERENCE IN LANGUAGE IS INTENDED TO DENOTE ANY SUBSTANTIVE DIFFERENCE IN PROCEDURE.
B-169434, SEP 27, 1971
PROPOSED CHANGES TO ASPR REVIEW AND COMMENT ON PROPOSED CHANGES TO THE SUBCONTRACTS CLAUSES IN ASPR 7-104.23(A), 7-203.8(A) AND 7-402.8(A) AND TO ASPR APPENDIX M 201.3. THE PROPOSED REVISIONS WOULD (1) PROVIDE THE CONTRACTING OFFICER WITH BETTER VISIBILITY OVER CONTRACTOR'S SUBCONTRACT NEGOTIATIONS AND (2) DOCUMENT CONTRACTOR COMPLIANCE WITH PUBLIC LAW 87 653 SUBCONTRACT REQUIREMENTS. GAO HAS NO OBJECTION TO THE PROPOSED REVISIONS.
TO CAPTAIN E. C. CHAPMAN:
WE REFER TO YOUR LETTER DATED JUNE 17, 1971, WITH ENCLOSURES, FURNISHING FOR OUR REVIEW AND COMMENT PROPOSED CHANGES TO THE SUBCONTRACTS CLAUSES IN ASPR 7-104.23(A), 7-203.8(A) AND 7-402.8(A) AND TO ASPR APPENDIX M-201.3.
THE PROPOSED REVISIONS ARE IN RESPONSE TO SUGGESTIONS IN A GAO REPORT TO THE SECRETARY OF DEFENSE DATED NOVEMBER 23, 1970.
THE PROPOSED REVISIONS WOULD (1) PROVIDE THE CONTRACTING OFFICER WITH BETTER VISIBILITY OVER CONTRACTOR'S SUBCONTRACT NEGOTIATIONS AND (2) DOCUMENT CONTRACTOR COMPLIANCE WITH PUBLIC LAW 87-653 SUBCONTRACT REQUIREMENTS.
THE REVISIONS APPLY TO BOTH FIXED-PRICE AND COST-REIMBURSEMENT TYPE SUPPLY CONTRACTS AND TO COST-REIMBURSEMENT TYPE RESEARCH AND DEVELOPMENT CONTRACTS. CONTRACTORS WOULD BE REQUIRED TO INCLUDE IN THE ADVANCE NOTIFICATION OF PROPOSED SUBCONTRACTS TO THE CONTRACTING OFFICER A MEMORANDUM OF NEGOTIATION SETTING FORTH THE PRINCIPAL ELEMENTS OF SUBCONTRACT PRICE NEGOTIATIONS WHICH ARE IN EXCESS OF $100,000. THIS SUBJECTS THE PRIME CONTRACTOR TO THE SAME REQUIREMENTS IN CONNECTION WITH THE RECORDS OF NEGOTIATION OF SUBCONTRACTS AS ARE APPLICABLE TO THE CONTRACTING OFFICER IN CONNECTION WITH PRIME CONTRACTS.
THE REVISIONS ALSO PROVIDE THAT THE ADVANCE NOTIFICATION SHALL INCLUDE, WHEN INCENTIVES ARE USED, A MEMORANDUM OF NEGOTIATION EXPLAINING THE INCENTIVE FEE/PROFIT PLAN AND IDENTIFYING EACH CRITICAL ELEMENT. PROVISION IS ALSO MADE FOR THE RETENTION OF CERTAIN CONTRACTOR AND SUBCONTRACTOR RECORDS.
IT HAS BEEN BROUGHT TO OUR ATTENTION THAT THERE EXISTS AN APPARENT INCONSISTENCY BETWEEN THE CLAUSES IN ASPR 7-203.8(A) AND ASPR 7 402.8(A) AS COMPARED TO THOSE IN ASPR 7-104.23(A). SUBPARAGRAPH (A) OF ASPR 7- 203.8(A) AND ASPR 7-402.8(A) BOTH PROVIDE, IN PART:
"THE CONTRACTOR SHALL GIVE ADVANCE NOTIFICATION TO THE CONTRACTING OFFICER OF ANY PROPOSED SUBCONTRACT *** ."
SUBPARAGRAPH (B) OF ASPR 7-104.23(A), IN CONTRAST, PROVIDES IN PART:
"THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER REASONABLY IN ADVANCE OF ENTERING INTO ANY SUBCONTRACT *** ."
WHILE WE DO NOT BELIEVE THE DIFFERENCE IN LANGUAGE IS INTENDED TO DENOTE ANY SUBSTANTIVE DIFFERENCE IN PROCEDURE, YOU MAY WISH TO MAKE THE LANGUAGE UNIFORM IN ORDER TO AVOID ANY POSSIBLE MISINTERPRETATION.
WE HAVE NO OBJECTION TO THESE PROPOSED REVISIONS.