incorporating far subcontractor flowdown terms in...
TRANSCRIPT
Incorporating FAR Subcontractor Flowdown
Terms in Government Contracts: Guidance for
Primes and Subs
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 1.
THURSDAY, MARCH 1, 2018
Presenting a live 90-minute webinar with interactive Q&A
Cara A. Wulf, Esq., McCarter & English, Boston
Micah T. Zomer, Special Counsel, Foley & Lardner, Washington, D.C.
Tips for Optimal Quality
Sound Quality
If you are listening via your computer speakers, please note that the quality
of your sound will vary depending on the speed and quality of your internet
connection.
If the sound quality is not satisfactory, you may listen via the phone: dial
1-866-961-8499 and enter your PIN when prompted. Otherwise, please
send us a chat or e-mail [email protected] immediately so we can address
the problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
Viewing Quality
To maximize your screen, press the F11 key on your keyboard. To exit full screen,
press the F11 key again.
FOR LIVE EVENT ONLY
Continuing Education Credits
In order for us to process your continuing education credit, you must confirm your
participation in this webinar by completing and submitting the Attendance
Affirmation/Evaluation after the webinar.
A link to the Attendance Affirmation/Evaluation will be in the thank you email
that you will receive immediately following the program.
For additional information about continuing education, call us at 1-800-926-7926
ext. 2.
FOR LIVE EVENT ONLY
Program Materials
If you have not printed the conference materials for this program, please
complete the following steps:
• Click on the ^ symbol next to “Conference Materials” in the middle of the left-
hand column on your screen.
• Click on the tab labeled “Handouts” that appears, and there you will see a
PDF of the slides for today's program.
• Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.
FOR LIVE EVENT ONLY
EDITABLE FRAME TITLE SLIDE
The frame graphic can be
customized to include an image.
To customize:
In a web browser, go to
http://imagelibrary
and do a keyword search for an
image. Save desired image to
your computer. In PowerPoint,
click the icon to insert the image
saved from the library.
The image should be cropped to
1.6”h x 1.65”w.
A PowerPoint Toolkit file has also
been saved in the Image Library.
It includes sample tables, charts
and iconography that follow the
Foley brand. Copy/paste from the
Toolkit file to include branded
graphics in your presentation.
For Help with Foley PPT
templates or graphics, contact
Marketing Central at
1.800.276.6604.
NOTE: Every presentation
should include the
“Disclaimer – contact info”
slide layout as well.
Key Considerations for Subcontract Flowdowns
Micah Zomer
TITLE & CONTENT
Agenda
FAR Basics
Definition of Subcontract Flowdowns
Prime and Subcontractor Perspectives
Mandatory Flowdowns
Non-Mandatory Flowdowns
Commercial Item Flowdowns
Approaches to Drafting Flowdowns
Identifying Applicable Version
Defining Terms/Parties
6
TITLE & CONTENT
FAR Basics Formation and administration of U.S. Government prime contracts is
subject to and governed by the Federal Acquisition Regulation (FAR) and 20+ agency FAR supplements
– e.g., Department of Defense FAR Supplement (DFARS), Department of Energy Acquisition Regulation (DEAR), etc.
FAR codified at Title 48, Chapter 1 of the Code of Federal Regulations (CFR); agency supplemental regulations are codified at subsequent chapters (e.g., DFARS codified at Title 48, Chapter 2)
FAR and supplemental regulations can be accessed through various websites:
– www.acquisition.gov
– www.farsite.hill.af.mil
7
TITLE & CONTENT
FAR Basics
8
TITLE & CONTENT
FAR Basics FAR Subpart 52.2 (and DFARS Subpart 252.2) contains the text of
the clauses that are included in government solicitations and contracts
Prescription before each clause cites to the “enabling” provision, which dictates when the clause should be included in a solicitation or contract
– Application of clause depends on a number of factors, including:
Contract type (e.g., fixed-price, cost reimbursement, commercial item, etc.)
Type of work to be performed (e.g., sale of goods, provision of services, construction, architect-engineer, etc.)
Total anticipated contract value (inclusive of all options)
9
TITLE & CONTENT
FAR Basics
52.203-7 Anti-Kickback Procedures.
As prescribed in 3.502-3, insert the following clause:
ANTI-KICKBACK PROCEDURES (MAY 2014)
3.502-3 Contract clause.
The contracting officer shall insert the clause at 52.203-
7, Anti-Kickback Procedures, in solicitations and
contracts exceeding the simplified acquisition threshold,
other than those for commercial items (see Part 12).
10
TITLE & CONTENT
Definition of Subcontract Flowdowns
Subcontract flowdowns are the FAR 52.2 clauses that a prime contractor must or should “flow down” to its subcontractors
Some flowdowns, as with standard terms and conditions, are a method of allocating risks between the parties
Other flowdowns are required for a higher-tiered contractor (Prime) to comply with its prime contract / subcontract
11
TITLE & CONTENT
Prime’s Perspective There are some clauses in the prime contract that must be flowed-
down, or the Prime will be in breach
But, not all provisions must be or even can be flowed-down
– EFT Payment Provisions through the System for Award Management (SAM)
– Disputes Clause
Since the subcontract is likely only for a subset of the Prime’s requirements, some provisions are likely not applicable
There are other clauses which, while not mandatory, should be modified and flowed-down in order to protect the Prime’s interests (e.g., Termination Clauses, Stop-Work Order, Changes)
12
TITLE & CONTENT
Subcontractor’s Perspective Subcontractor needs to accept the clauses the Prime must
include to cover its legitimate risk (e.g., termination, warranty, etc.)
Subcontractor needs to be able to identify the clauses that are not mandatory flowdowns, that do not cover a Prime’s legitimate risk, or that cause a burden on the subcontractor
Challenge for the subcontractor is to convince the Prime that these superfluous clauses add unnecessary costs, are overly burdensome to the subcontractor, or are just unfair
Subcontractor needs to consider whether, once accepted, it will be able to flow down clauses to its own lower-tier subcontractors
13
TITLE & CONTENT
Mandatory Flowdown Clauses
Mandatory flowdown clauses are those that a Prime is required to include in subcontracts, as required by the clause
– Inclusion of these clauses is non-negotiable
The flow down of “mandatory” clauses is often conditional based on:
– Contract type
– Type of work to be performed
– Total anticipated subcontract value (including all options)
14
TITLE & CONTENT
Mandatory Flowdown Clauses 52.225-13 Restrictions on Certain Foreign Purchases
(c) The Contractor shall insert this clause, including this paragraph (c), in all subcontracts.
52.222-41 Service Contract Labor Standards
(l) Subcontracts. The Contractor agrees to insert this clause in all subcontracts subject to
the Service Contract Labor Standards statute.
252.225-7016 Restriction on Acquisition of Ball and Roller Bearings
(f) The Contractor shall insert the substance of this clause, including this paragraph (f), in
all subcontracts, except those for—
(1) Commercial items; or
(2) Items that do not contain ball or roller bearings.
15
TITLE & CONTENT
Non-Mandatory Flowdown Clauses
There are a number of clauses that, while not mandatory, should be modified and flowed-down in order to protect the Prime’s interest
– Examples include:
Changes
Termination for Convenience
Termination for Default
Stop-Work Order
DPAS
16
TITLE & CONTENT
Non-Mandatory Flowdown Clauses
Changes Clauses (FAR 52.243-1 – Fixed-Price)
– Prime’s Perspective
Prime needs to flow down the ability to make unilateral changes with its subcontractors in the event of a government unilateral change
Prime should shorten the notice time period referenced at paragraph (c) of the clause from 30 days to 15 days
– Subcontractor’s Perspective
Subcontractor should draw a distinction between a government-directed change and a Prime-directed change
17
TITLE & CONTENT
Non-Mandatory Flowdown Clauses Termination for Convenience (FAR 52.249-2 – Fixed-Price Supply and
Service)
– Permits the Government to unilaterally terminate for convenience the prime contract at any time
– Prime’s Perspective
Should flow down this clause to all subcontractors
Should shorten the 1-year termination settlement proposal period, so that the Prime can include any subcontractor proposals in the Prime’s proposal to the government
– Subcontractor’s Perspective
Limit application so that the Prime may only terminate for convenience the subcontract only when the prime contract has been terminated for convenience by the government
18
TITLE & CONTENT
Commercial Item Flowdowns
The FAR limits the clauses a Prime may flow down to subcontracts for commercial items
– FAR 52.212-5(e)(1) and FAR 52.244-6(c)(1) list clauses that a Prime is required to include in its commercial item subcontracts; many of these “required” clauses only apply under certain conditions
– FAR 52.212-5(e)(2) and FAR 52.244-6(c)(2) both provide that, in addition to the listed clauses, a Prime may flow- down to subcontracts for commercial items “a minimal number of additional clauses necessary to satisfy its contractual obligations.”
19
TITLE & CONTENT
Commercial Item Flowdowns
The DFARS similarly limits the clauses a Prime may flow down to subcontracts for commercial items
– DFARS 252.224-7000, “Subcontracts for Commercial Items”:
(a) The Contractor is not required to flow down the terms of any Defense Federal Acquisition Regulation Supplement (DFARS) clause in subcontracts for commercial items at any tier under this contract, unless so specified in the particular clause.
(b) While not required, the Contractor may flow down to subcontracts for commercial items a minimal number of additional clauses necessary to satisfy its contractual obligation.
20
TITLE & CONTENT
Commercial Item Flowdowns Additional limits on the clauses that may be flowed down to
commercial item subcontracts
– FAR 12.504 and DFARS 212.504: Lists laws that are not applicable to subcontracts at any tier for the acquisition of commercial items
– Exemptions for commercial item subcontracts are identified directly in some of the clauses themselves, for example:
FAR 52.203-14, “Display of Hotline Poster(s)”
FAR 52.219-9, “Small Business Subcontracting Plan”
Given the limitations on flowdown clauses in commercial item subcontracts, it is important to for the Prime and Subcontractor to determine upfront whether the supplies/services at issue are “commercial items” as defined at FAR 2.101
21
TITLE & CONTENT
Approaches to Drafting Flowdowns
Incorporation by reference versus in full text
–FAR 52.102: Clauses should be incorporated by reference to the maximum practical extent, rather than being incorporated in full text
22
TITLE & CONTENT
Approaches to Drafting Flowdowns
The FAR contemplates that Primes develop flowdowns on a contract-by-contract basis
– Requires a great deal of time and resources; not feasible for most companies
More common method is for the Prime to develop a document (or documents) that contains the FAR, DFARS, and supplemental acquisition regulation flowdowns from all of its prime contracts and then separate those clauses into various categories
23
TITLE & CONTENT
Approaches to Drafting Flowdowns Categories of Clauses
– Based on Value
The following clauses apply to subcontracts/orders with a value of $150,000 or more
– Based on Type of Work
The following clauses apply to subcontracts/orders for services
– Based on Contract Type
The following clauses apply to cost-reimbursement subcontracts/orders
The following clauses apply to non-commercial item subcontracts/orders
– Hybrid
The following clauses apply to non-commercial item subcontracts/orders with a values of $150,000 or more
24
TITLE & CONTENT
Approaches to Drafting Flowdowns
Include language next to clause identifying the conditions under which the clause applies
– These conditions, if any, are usually (but not always) set forth in the flowdown paragraph of the clause
Identifying applicability conditions provides guidance to subcontractors as to which clauses apply to them, which helps streamline the negotiation process
25
TITLE & CONTENT
Identifying Applicable Version Primes are required to flow down the version of the clause that is
in the Prime’s contract
Important for parties to understand which version of clause applies
– Subcontractor’s substantive compliance obligations may differ based on version of the clause
e.g., March 2015 version of FAR 52.222-50, Combatting Trafficking in Persons, requires some contractors to develop compliance plan; no such requirement in earlier versions of the clause
– Flowdown obligations may differ based on the version of the clause, as flowdown thresholds change
e.g., FAR 52.203-13, Contractor Code of Business Ethics and Conduct, flowdown threshold increased from $5M to $5.5M
26
TITLE & CONTENT
Identifying Applicable Version Prime’s Perspective
– Best practice is to specifically identify the date of the applicable version for each applicable prime contract
– Other option is to include the version of the clause that applies most broadly and provides the Prime with the most protection
e.g., Should choose the version of the clause with lower dollar threshold
Subcontractor’s Perspective
– Subcontractor should ensure that it knows which version applies; do not assume it’s the current version
Earlier versions of FAR clauses can be accessed at the “Archives” tab of www.acquisiton.gov website
27
TITLE & CONTENT
Identifying Applicable Version
28
TITLE & CONTENT
Defining Terms/Parties
FAR/DFARS clauses include terms which are geared to prime contracts
When flowing down the clauses, the Prime should alter these terms to fit the subcontract
– “Contract” means “Subcontract”
– “Contracting Officer” means an authorized representative of Buyer
– “Contractor” means “Seller”
– “Government” means “Buyer”
– “Disputes clause” means the disputes clause of the subcontract
29
TITLE & CONTENT
Defining Terms/Parties
Substitution of parties is not appropriate for some clauses
– For the intellectual property clauses, the rights and responsibilities should be between the Subcontractor and the Government, not between the Subcontractor and the Prime
30
TITLE & CONTENT
Takeaways Read the text of the clauses to determine whether the clauses are
mandatory flowdowns and identify any conditions under which the flowdowns apply
Flow down and modify those clauses necessary to mitigate and allocate legitimate risks (e.g., Changes and Termination clauses)
Determine early on whether the supplies/services at issue are “commercial items” and identify those clauses inapplicable to commercial item subcontracts
Identify the approach to drafting flowdowns appropriate for your company
Clearly identify which version of the clause applies
Include language defining the terms/parties so that the clauses make sense in the context of the subcontract
31
BOSTON | HARTFORD | STAMFORD | NEW YORK | NEWARK | EAST BRUNSWICK | PHILADELPHIA | WILMINGTON | WASHINGTON, DC
www.mccarter.com McCarter & English, LLP
Incorporating FAR Subcontractor
Flowdown Terms in Government
Contracts: Guidance for Primes and Subs
Cara A. Wulf
Cara A. Wulf
McCarter & English, LLP
265 Franklin St.
Boston, MA 02110
(617) 449-6583
33
Outline
What is a Subcontractor?
Common Types of Subcontracts
The Christian Doctrine
Representations and Certifications
Subcontract Negotiation Techniques
34
“Subcontract/or” Defined
Several definitions in the FAR – importantly, FAR 2.101 (the overall
FAR definitional provision) does not define “Subcontract” or
“Subcontractor” – but it does define “Contract”:
– Contract means a mutually binding legal relationship obligating the
seller to furnish the supplies or services (including construction) and the
buyer to pay for them. It includes all types of commitments that obligate
the Government to an expenditure of appropriated funds and that,
except as otherwise authorized, are in writing. In addition to bilateral
instruments, contracts include (but are not limited to) awards and
notices of awards; job orders or task letters issued under basic ordering
agreements; letter contracts; orders, such as purchase orders, under
which the contract becomes effective by written acceptance or
performance; and bilateral contract modifications. Contracts do not
include grants and cooperative agreements covered by 31 U.S.C. 6301,
et seq. For discussion of various types of contracts, see part 16.
35
“Subcontract/or” Defined
FAR 44.101, Subcontracting Policies and Procedures;
Definitions
Subcontract means any contract as defined in subpart
2.1 entered into by a subcontractor to furnish supplies or
services for performance of a prime contract or a
subcontract. It includes but is not limited to purchase
orders, and changes and modifications to purchase
orders.
Subcontractor means any supplier, distributor, vendor, or
firm that furnishes supplies or services to or for a prime
contractor or another subcontractor.
36
“Subcontract/or” Defined
FAR 19.701, Small Business
Subcontracting; Definitions
Subcontract means any agreement (other
than one involving an employer-employee
relationship) entered into by a Government
prime contractor or subcontractor calling
for supplies and/or services required for
performance of the contract, contract
modification, or subcontract.
37
“Subcontract/or” Defined
FAR 3.502-1, Subcontractor Kickbacks
Subcontract, means a contract or contractual action entered
into by a prime contractor or subcontractor for the purpose of
obtaining supplies, materials, equipment, or service of any
kind under a prime contract.
Subcontractor, (1) means any person, other than the prime
contractor, who offers to furnish or furnishes any supplies,
materials, equipment, or services of any kind under a prime
contract or a subcontract entered into in connection with such
prime contract, and (2) includes any person who offers to
furnish or furnishes general supplies to the prime contractor or
a higher tier subcontractor.
38
“Subcontract/or” Defined
Some more references…
– FAR 12.001, Commercial items; Definitions
– FAR 15.401, Contract Pricing; Definitions
– FAR 22.801, Equal Employment Opportunity;
Definitions
– FAR 52.204-10, Reporting Executive
Compensation and First-Tier Subcontract
Awards
39
Does This Make You Feel ….?
40
What Does It All Mean?
Technically, a “subcontractor” is any vendor
providing supplies or services that are
ultimately used in performance of a
Government prime contract.
41
Privity of Contract
Only a person that has a contracting relationship with
another person may claim rights to the relationship
This means Government subcontractors lack a direct
contractual relationship with the Government
– No direct access to BCAs/Court of Federal Claims
– No direct claim against Government
– In some cases, subcontractors cannot even talk
directly to the Government
42
5 Typical Exceptions To The Doctrine Of Privity
1. Government rights under Intellectual Property
clauses
2. Government audit rights
3. Rights granted by socioeconomic clauses
4. Suspension and debarment proceedings
5. Ethics and mandatory disclosures
43
Types of Subcontracts
Firm-Fixed-Price
Cost Reimbursement
Incentive Contracts
Indefinite Delivery Contracts
Time and Materials Contracts
44
Firm-Fixed-Price
FAR 16.202-1, Description
A firm-fixed-price contract provides for a price that is not subject to any
adjustment on the basis of the contractor’s cost experience in
performing the contract. This contract type places upon the contractor
maximum risk and full responsibility for all costs and resulting profit or
loss. It provides maximum incentive for the contractor to control costs
and perform effectively and imposes a minimum administrative burden
upon the contracting parties. The contracting officer may use a firm-
fixed-price contract in conjunction with an award-fee incentive (see
16.404) and performance or delivery incentives (see 16.402-2 and
16.402-3) when the award fee or incentive is based solely on factors
other than cost. The contract type remains firm-fixed-price when used
with these incentives.
45
Firm-Fixed-Price
When is a Firm-Fixed-Price contract appropriate?
The supplies or services have reasonably definite
functional or detailed specifications;
The contracting officer can establish fair and reasonable
prices;
Uncertainties can be identified and their costs
reasonably estimated; and
The contractor is willing to assume the risks involved
46
Firm-Fixed-Price
Advantages
“Certainty”
Typically fewer
administrative burdens
Disadvantages
Maximum risk
Full responsibility for cost
overruns
47
Cost Reimbursement
FAR 16.301-1, Description
Cost-reimbursement types of contracts provide for
payment of allowable incurred costs, to the extent
prescribed in the contract. These contracts
establish an estimate of total cost for the purpose
of obligating funds and establishing a ceiling that
the contractor may not exceed (except at its own
risk) without the approval of the contracting officer.
48
Cost Reimbursement
When is a cost reimbursement contract
appropriate?
Circumstances do not allow the agency to define its
requirements sufficiently to allow for a fixed-price type
contract; or
Uncertainties involved in contract performance do not
permit costs to be estimated with sufficient accuracy to
use any type of fixed-price contract.
49
Cost Reimbursement
Advantages
Typically less risk
Flexible, allows for
changes in specifications
Allows for increased
costs as necessary to
meet performance
requirements
Disadvantages
More administrative
burden
Limited certainty as to
final cost
50
Incentive Contracts
FAR 16.401(a), General
Incentive contracts…are appropriate when a firm-fixed-price contract is
not appropriate and the required supplies or services can be acquired
at lower costs and, in certain instances, with improved delivery or
technical performance, by relating the amount of profit or fee payable
under the contract to the contractor’s performance. Incentive contracts
are designed to obtain specific acquisition objectives by—
(1) Establishing reasonable and attainable targets that are clearly
communicated to the contractor; and
(2) Including appropriate incentive arrangements designed to—
(i) motivate contractor efforts that might not otherwise be emphasized;
and
(ii) discourage contractor inefficiency and waste.
51
Indefinite Delivery Contracts
FAR 16.501-1, Definitions
“Delivery-order contract” means a contract for supplies that does not procure or
specify a firm quantity of supplies (other than a minimum or maximum quantity)
and that provides for the issuance of orders for the delivery of supplies during
the period of the contract.
“Task-order contract” means a contract for services that does not procure or
specify a firm quantity of services (other than a minimum or maximum quantity)
and that provides for the issuance of orders for the performance of tasks during
the period of the contract.
FAR 16.501-2(a), General
There are three types of indefinite-delivery contracts: definite-quantity
contracts, requirements contracts, and indefinite-quantity contracts [also known
as “Indefinite Delivery, Indefinite Quantity” or “IDIQ”]. The appropriate type of
indefinite-delivery contract may be used to acquire supplies and/or services
when the exact times and/or exact quantities of future deliveries are not known
at the time of contract award.
52
Time and Materials Contracts
FAR 16.601, Time and Materials Contracts
A time-and-materials contract provides for acquiring supplies or
services on the basis of—
(1) Direct labor hours at specified fixed hourly rates that include wages,
overhead, general and administrative expenses, and profit; and
(2) Actual cost for materials (except as provided for in 31.205-26(e) and
(f)).
A time-and-materials contract may be used only when it is not possible
at the time of placing the contract to estimate accurately the extent or
duration of the work or to anticipate costs with any reasonable degree
of confidence.
53
The Christian Doctrine
G.L. Christian and Associates v. U.S., 312
F.2d 418 (Ct. Cl. 1963)
Parties to a contract are deemed to have
agreed to a contract term required by law to
be included in the contract.
54
Representations and Certifications
FAR Subpart 4.12
Prospective contractors are required to complete electronic
annual representations and certifications at SAM accessed
via https://www.acquisition.gov as a part of required
registration
Prime contractors may require subcontractors to
complete representations and certifications
Representations and certifications are critical and they
must be accurate
55
Representations and Certifications –
FAR 52.204-8
52.204-8 Annual Representations and Certifications. (a)(1) The North American Industry Classification System (NAICS) code for this acquisition is
__________________ [insert NAICS code].
(2) The small business size standard is _____________ [insert size standard].
(3) The small business size standard for a concern which submits an offer in its own name, other than
on a construction or service contract, but which proposes to furnish a product which it did not itself
manufacture, is 500 employees.
(b)(1) If the provision at 52.204-7, System for Award Management, is included in this solicitation,
paragraph (d) of this provision applies.
(2) If the provision at 52.204-7 is not included in this solicitation, and the offeror is currently registered
in the System for Award Management (SAM), and has completed the Representations and
Certifications section of SAM electronically, the offeror may choose to use paragraph (d) of this
provision instead of completing the corresponding individual representations and certifications in the
solicitation. The offeror shall indicate which option applies by checking one of the following boxes:
□ (i) Paragraph (d) applies.
□ (ii) Paragraph (d) does not apply and the offeror has completed the individual representations and
certifications in the solicitation.
56
Representations and Certifications –
FAR 52.204-8 (cont.) (c)(1) The following representations or certifications in SAM are applicable to this solicitation as indicated:
(i) 52.203-2, Certificate of Independent Price Determination. This provision applies to solicitations when a firm-fixed-
price contract or fixed-price contract with economic price adjustment is contemplated, unless—
(A) The acquisition is to be made under the simplified acquisition procedures in Part 13;
(B) The solicitation is a request for technical proposals under two-step sealed bidding procedures; or
(C) The solicitation is for utility services for which rates are set by law or regulation.
(ii) 52.203-11, Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions. This
provision applies to solicitations expected to exceed $150,000.
(iii) 52.203-18, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or
Statements-Representation. This provision applies to all solicitations.
(iv) 52.204-3, Taxpayer Identification. This provision applies to solicitations that do not include the provision at 52.204-
7, System for Award Management.
(v) 52.204-5, Women-Owned Business (Other Than Small Business). This provision applies to solicitations that—
(A) Are not set aside for small business concerns;
(B) Exceed the simplified acquisition threshold; and
(C) Are for contracts that will be performed in the United States or its outlying areas.
(vi) 52.209-2, Prohibition on Contracting with Inverted Domestic Corporations—Representation.
(vii) 52.209-5, Certification Regarding Responsibility Matters. This provision applies to solicitations where the contract
value is expected to exceed the simplified acquisition threshold.
(viii) 52.209-11, Representation by Corporations Regarding Delinquent Tax Liability or a Felony Conviction under any
Federal Law. This provision applies to all solicitations.
(ix) 52.214-14, Place of Performance—Sealed Bidding. This provision applies to invitations for bids except those in
which the place of performance is specified by the Government.
57
Representations and Certifications –
FAR 52.204-8 (cont.) (x) 52.215-6, Place of Performance. This provision applies to solicitations unless the place of performance is specified
by the Government.
(xi) 52.219-1, Small Business Program Representations (Basic & Alternate I). This provision applies to solicitations
when the contract will be performed in the United States or its outlying areas.
(A) The basic provision applies when the solicitations are issued by other than DoD, NASA, and the Coast Guard.
(B) The provision with its Alternate I applies to solicitations issued by DoD, NASA, or the Coast Guard.
(xii) 52.219-2, Equal Low Bids. This provision applies to solicitations when contracting by sealed bidding and the
contract will be performed in the United States or its outlying areas.
(xiii) 52.222-22, Previous Contracts and Compliance Reports. This provision applies to solicitations that include the
clause at 52.222-26, Equal Opportunity.
(xiv) 52.222-25, Affirmative Action Compliance. This provision applies to solicitations, other than those for construction,
when the solicitation includes the clause at 52.222-26, Equal Opportunity.
(xv) 52.222-38, Compliance with Veterans’ Employment Reporting Requirements. This provision applies to solicitations
when it is anticipated the contract award will exceed the simplified acquisition threshold and the contract is not for
acquisition of commercial items.
(xvi) 52.223-1, Biobased Product Certification. This provision applies to solicitations that require the delivery or specify
the use of USDA–designated items; or include the clause at 52.223-2, Affirmative Procurement of Biobased Products
Under Service and Construction Contracts.
(xvii) 52.223-4, Recovered Material Certification. This provision applies to solicitations that are for, or specify the use of,
EPA–designated items.
(xviii) 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reduction Goals–Representation. This provision
applies to solicitation that include the clause at 52.204-7.
(xix) 52.225-2, Buy American Certificate. This provision applies to solicitations containing the clause at 52.225-1.
58
Representations and Certifications –
FAR 52.204-8 (cont.) (xx) 52.225-4, Buy American—Free Trade Agreements—Israeli Trade Act Certificate. (Basic, Alternates I, II, and III.)
This provision applies to solicitations containing the clause at 52.225-3.
(A) If the acquisition value is less than $25,000, the basic provision applies.
(B) If the acquisition value is $25,000 or more but is less than $50,000, the provision with its Alternate I applies.
(C) If the acquisition value is $50,000 or more but is less than $80,317, the provision with its Alternate II applies.
(D) If the acquisition value is $80,317 or more but is less than $100,000, the provision with its Alternate III applies.
(xxi) 52.225-6, Trade Agreements Certificate. This provision applies to solicitations containing the clause at 52.225-5.
(xxii) 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan—Certification. This provision
applies to all solicitations.
(xxiii) 52.225-25, Prohibition on Contracting with Entities Engaging in Certain Activities or Transactions Relating to Iran-
Representation and Certifications. This provision applies to all solicitations.
(xxiv) 52.226-2, Historically Black College or University and Minority Institution Representation. This provision applies to
solicitations for research, studies, supplies, or services of the type normally acquired from higher educational
institutions.
(2) The following representations or certifications are applicable as indicated by the Contracting Officer:
[Contracting Officer check as appropriate.]
__ (i) 52.204-17, Ownership or Control of Offeror.
__ (ii) 52.204-20, Predecessor of Offeror.
__ (iii) 52.222-18, Certification Regarding Knowledge of Child Labor for Listed End Products.
__ (iv) 52.222-48, Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance,
Calibration, or Repair of Certain Equipment- Certification.
__ (v) 52.222-52, Exemption from Application of the Service Contract Labor Standards to Contracts for Certain
Services-Certification.
59
Representations and Certifications –
FAR 52.204-8 (cont.) __ (vi) 52.223-9, with its Alternate I, Estimate of Percentage of Recovered Material Content for EPA–Designated
Products (Alternate I only).
__ (vii) 52.227-6, Royalty Information.
__ (A) Basic.
__(B) Alternate I.
__ (viii) 52.227-15, Representation of Limited Rights Data and Restricted Computer Software.
(d) The offeror has completed the annual representations and certifications electronically via the SAM website
accessed through https://www.acquisition.gov. After reviewing the SAM database information, the offeror
verifies by submission of the offer that the representations and certifications currently posted electronically
that apply to this solicitation as indicated in paragraph (c) of this provision have been entered or updated
within the last 12 months, are current, accurate, complete, and applicable to this solicitation (including the
business size standard applicable to the NAICS code referenced for this solicitation), as of the date of this
offer and are incorporated in this offer by reference (see FAR 4.1201); except for the changes identified below
[offeror to insert changes, identifying change by clause number, title, date]. These amended representation(s)
and/or certification(s) are also incorporated in this offer and are current, accurate, and complete as of the date
of this offer.
FAR Clause # Title Date Change
____________ _________ _____ _______
Any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the
representations and certifications posted on SAM.
60
Representations and Certifications –
Consequences for False Statements
15 U.S.C. 645(d)(1)-(2) (1) Whoever misrepresents the status of any concern or person as a “small business concern”, a “qualified HUBZone
small business concern”, a “small business concern owned and controlled by socially and economically disadvantaged
individuals”, or a “small business concern owned and controlled by women”, in order to obtain for oneself or another
any--
(A) prime contract to be awarded pursuant to section 638, 644, or 657a of this title;
(B) subcontract to be awarded pursuant to section 637(a) of this title;
(C) subcontract that is to be included as part or all of a goal contained in a subcontracting plan required
pursuant to section 637(d) of this title; or
(D) prime or subcontract to be awarded as a result, or in furtherance, of any other provision of Federal law that
specifically references section 637(d) of this title for a definition of program eligibility, shall be subject to the
penalties and remedies described in paragraph (2).
(2) Any person who violates paragraph (1) shall--
(A) be punished by a fine of not more than $500,000 or by imprisonment for not more than 10 years, or both;
(B) be subject to the administrative remedies prescribed by the Program Fraud Civil Remedies Act of 1986 (31 U.S.C.
3801-3812);
(C) be subject to suspension and debarment as specified in subpart 9.4 of title 48, Code of Federal Regulations (or any
successor regulation); and
(D) be ineligible for participation in any program or activity conducted under the authority of this chapter or the Small
Business Investment Act of 1958 (15 U.S.C. 661 et seq.) for a period not to exceed 3 years.
61
Representations and Certifications –
Consequences for False Statements
18 U.S.C. 1001(a)
(a) Except as otherwise provided in this section, whoever, in any matter within the
jurisdiction of the executive, legislative, or judicial branch of the Government of the United
States, knowingly and willfully--
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any
materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years or, if the offense involves
international or domestic terrorism (as defined in section 2331), imprisoned not more than
8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or
117, or section 1591, then the term of imprisonment imposed under this section shall be
not more than 8 years.
62
Representations and Certifications –
Consequences for False Statements
False Claims Act (31 U.S.C. 3729-3733)
any person who--
(A) knowingly presents, or causes to be presented, a false or fraudulent claim
for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim;
…
is liable to the United States Government for a civil penalty of not less than
$5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties
Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-4101),
plus 3 times the amount of damages which the Government sustains
because of the act of that person.
63
Subcontract Negotiation Techniques
Keep written records of everything
Understand who has the leverage
Understand “Mandatory” vs. “Necessary” flowdowns
Protect your intellectual property
Be prepared to walk away
Ensure that the negotiator doesn’t have final “approval” authority (avoid spontaneous decisions)
Only argue when it makes sense
64
Cara A. Wulf
McCarter & English, LLP
265 Franklin St.
Boston, MA 02110
(617) 449-6583
65