Subcontract Management Flashcards

A prime contractor on a cost-plus-fixed-fee contract proposes to subcontract specialty IT work to its wholly owned subsidiary. What is the primary concern the contracting officer must address?

Answer: The inter-organizational transaction may involve unallowable costs or lack arm's-length pricing

Inter-organizational transfers between affiliates must be priced at cost or at established catalog prices under FAR 31.205-26 to prevent inflated costs charged to the government.

Which of the following is NOT a valid basis for withholding consent to subcontract under FAR 44.202-1?

Answer: The subcontractor is a small business that cannot provide performance bonds

Small business status and inability to provide bonds is not a valid basis for withholding consent; the government cannot penalize small businesses for bond limitations in subcontracting decisions.

Under the Miller Act, a payment bond on a federal construction contract over $150,000 protects which parties?

Answer: Subcontractors and suppliers who furnish labor or materials

The Miller Act payment bond protects subcontractors and materialmen who provide labor or materials to the project but lack a direct contract with the government.

What is the significance of a 'subcontract consent threshold' in a prime contract's special contract requirements?

Answer: It defines the dollar level above which the prime must obtain CO consent before awarding subcontracts

The subcontract consent threshold in the contract specifies the dollar amount above which the prime contractor must seek and receive the contracting officer's prior approval before awarding a subcontract.

A prime contractor wants to use a time-and-materials subcontract for a fixed-price prime contract. What must the prime contractor demonstrate to obtain consent?

Answer: That no other subcontract type is suitable and that appropriate surveillance will be performed

To use a T&M subcontract under a fixed-price prime, the contractor must justify why no other type is suitable and demonstrate adequate surveillance plans, consistent with FAR 16.601 requirements.

Under FAR 52.215-12, which subcontractors must submit certified cost or pricing data directly to the government (not just to the prime)?

Answer: Subcontractors at any tier when the CO determines it necessary and the subcontract exceeds the TINA threshold

FAR 52.215-12 allows the CO to require subcontractors at any tier to submit certified cost or pricing data directly to the government when subcontracts exceed the TINA threshold.

What is the purpose of a 'limitation of cost' clause (FAR 52.232-20) in a cost-reimbursement subcontract?

Answer: It requires the subcontractor to notify the prime when costs approach the funded ceiling

FAR 52.232-20 requires the subcontractor to notify the prime (and ultimately the government) when actual costs are expected to exceed the funded limit, enabling funding actions before work stops.