SUBCONTRACTING and FLOW       DOWN CLAUSES: “What’s in           Your Contract?”                                Jeff H. Ec...
AGENDA   Flow Down Overview   Subcontracts v. Supplier Agreements   Case Study: ARRA’s Unique    Requirements   Compli...
1995 FAR Part 1 Rewrite:             “Core Guiding Principles”  FAR 1.102 Statement of Guiding Principles for the    Feder...
1995 FAR Part 1 Rewrite:          “Antibureaucracy Statement”  FAR 1.102 Statement of Guiding Principles for the    Federa...
Flow Downs  Clauses prescribed by the government that a  prime contractor* incorporates into subcontracts  and that proscr...
Flow Downs  • Two-step process for identifying Flow    Downs       – Part 1: The implementing clause       – Part 2: The c...
Flow Down Fundamentals  • Part One – The Implementing Clause  22.810 Solicitation provisions and contract clauses.  (a) Wh...
Flow Down Fundamentals  • Part Two – The Contract Clause  52.222-21 Prohibition of Segregated Facilities.  As prescribed i...
Flow Down Fundamentals  When does a Subcontractor assume responsibility as a  contractor for flowing down to its own lower...
Categories of Flow Downs  • Mandatory clauses – those that must be    flowed down  • Essential clauses – not mandatory but...
Mandatory Clauses  Prescribed by the FAR for different categories  of subcontracts depending upon whether:  •    The contr...
Mandatory Clauses  Generally, the clauses fall into one of two  categories:  1. Clauses implementing socio-economic     po...
Example  52.222-26 Equal Opportunity – Category 1 (socio-economic)  The contracting officer shall insert the clause at 52....
Example  52.215-12 Subcontractor Cost or Pricing Data– Category 2  (oversight)  SUBCONTRACTOR COST OR PRICING DATA —MODIFI...
Essential Clauses  Essential, while not mandatory, flow down  clauses contractors should include to protect their  busines...
Example  Termination for Convenience – FAR Subpart 49.5  • Permits the federal government to cancel a prime    contract at...
Example  Change Orders – FAR Subpart 43.2  • Contracting officers may issue change order, permitting    unilateral changes...
Supplemental Clauses  Broad Clauses – recommend incorporation  FAR 52.222-35 Equal Opportunity for Special Disabled Vetera...
Applicability of Flow Downs  • Generally, the FAR creates flow down    obligations based upon the relationships    among t...
Contractor Relationships                              Prime                              Contractor       The Federal     ...
Web of Relationships                              Prime                              Contractor                           ...
Determining the Relationship  • Subcontract or Supplier Agreement?  • Federal law and regulations distinguish    between a...
Distinctions between   Suppliers and Subcontractors  “[i]n the event of such termination, the Contractor shall  immediatel...
FAR Definitions  • FAR Part 2, which “defines words and terms that are    frequently used in the FAR,” does not contain a ...
Subcontract or Supplier                 Agreement? • Determine whether the procurement   involves a specialized or non-   ...
Specialized Goods or Services  • Specialized goods and services are    characteristic of a Subcontract:       – End produc...
Examples of Specialized                Purchases  • An order for armored trucks.  • An order for specialized bullet-proof ...
Non-Specialized Goods or Services  • Non-specialized goods or services are    characteristic of a Supplier Agreement:     ...
Examples  • An order for a fleet of trucks.  • An order for commercially available night-    vision goggles.  • An order f...
Difficulty in Appropriately            Flowing Down Clauses  • Ambiguity – it can be difficult to determine    when a clau...
Consequences of Failing to               Appropriately Flow Down  Noncompliance may:  • Become part of Contractor’s past p...
Importance of Appropriately                Flowing Down Clauses  • Protect your business  • Comply with federal requiremen...
Failure to Flow Down  The Christian Doctrine  G.L. Christian & Associates v. The United States, 160 Ct. Cl. 1   - Dependin...
ARRA Case Study    The American Recovery and Reinvestment Act (ARRA) is    an important resource; however, it comes with s...
To Whom Do ARRA Flow Downs               Apply?  • All suppliers and subcontractors of goods and    services used in whole...
Example  • Commercial company with a long-standing Supplier    Agreement for the purchase of chocolate chips     – The com...
Example continued  • What flow down requirements exist for the Company if    the Government decides to purchase chocolate ...
Broad Interpretation  This is a Subcontract  • The goods are used in the performance of a specific prime contract    that ...
Broad Interpretation  • A broad definition of “Subcontract” would    defeat the stated objectives of ARRA:       – Promoti...
Functional Interpretation  • This is Supplier Agreement       – The chocolate chips were not purchased expressly         f...
Functional Interpretation  The functional approach to defining the  term “Subcontract” is supported by:  • Purpose and int...
ARRA  • Purpose: to provide speedy economic    recovery through preferred use of existing    competitive, firm, fixed-pric...
ARRA: Implementing FAR                   Clauses  FAR 4.1501 Procedures     ...     (b) To maximize transparency of Recove...
ARRA and the FFATA  • ARRA’s reporting requirements are the same as    those imposed by the Federal Funding    Accountabil...
Recent FAR Interim Regulations Support             a Functional interpretation of               “Subcontract Agreement”  •...
Compliance Tools  • Flow Chart – Process by which to    distinguish Supplier Agreements from    Subcontracts  • Flow Down ...
All Suppliers &                                                                          Subcontractors:                  ...
Addendum – Universal Flow Downs                                                                                           ...
Example: Universal Flow Downs 52.222-26 Equal Opportunity. As prescribed in 22.810(e), insert the following clause:       ...
Addendum – Supplemental Flow Downs  •   FAR 52.203-11 -   Certification and Disclosure Regarding Payments to Influence Cer...
Example: Supplemental Flow Downs  DFARS 252.247-7023 Transportation of Supplies by Sea  ...  (5) “Subcontractor” means a s...
Questions?                Jeff Eckland – (612) 236-0161                         Eckland & Blando LLP                      ...
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Z Subcontracting and Flow Down Clauses What's In Your Contract

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Z Subcontracting and Flow Down Clauses What's In Your Contract

  1. 1. SUBCONTRACTING and FLOW DOWN CLAUSES: “What’s in Your Contract?” Jeff H. Eckland Eckland & Blando LLP Suite 1020 Lumber Exchange Building 10 South Fifth Street Minneapolis, MN 55402Midwestern Values, D.C. Connections EcklandBlando.com
  2. 2. AGENDA  Flow Down Overview  Subcontracts v. Supplier Agreements  Case Study: ARRA’s Unique Requirements  ComplianceMidwestern Values, D.C. Connections EcklandBlando.com
  3. 3. 1995 FAR Part 1 Rewrite: “Core Guiding Principles” FAR 1.102 Statement of Guiding Principles for the Federal Acquisition System ... (d) The role of each member of the Acquisition Team is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer’s needs. ....Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  4. 4. 1995 FAR Part 1 Rewrite: “Antibureaucracy Statement” FAR 1.102 Statement of Guiding Principles for the Federal Acquisition System ... (d) In exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by [statute or case] law, Executive order or other regulation, that the strategy, practice, policy or procedure is . . . permissible . . . . ....Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  5. 5. Flow Downs Clauses prescribed by the government that a prime contractor* incorporates into subcontracts and that proscribe rights and responsibilities of the prime contractor and subcontractor Examples – FAR 52.215-12 – Requires contractors to obtain subcontractor’s cost or pricing data before awarding subcontract – FAR 52.222-36 – Requires contractors to take affirmative steps in employing individuals with disabilitiesMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  6. 6. Flow Downs • Two-step process for identifying Flow Downs – Part 1: The implementing clause – Part 2: The contract clause • Additional guidance may be found in the Code of Federal Regulations (CFR)Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  7. 7. Flow Down Fundamentals • Part One – The Implementing Clause 22.810 Solicitation provisions and contract clauses. (a) When a contract is contemplated that will include the clause at 52.222-26, Equal Opportunity, the contracting officer shall insert— (1) The clause at 52.222-21, Prohibition of Segregated Facilities, in the solicitation and contract.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  8. 8. Flow Down Fundamentals • Part Two – The Contract Clause 52.222-21 Prohibition of Segregated Facilities. As prescribed in 22.810(a)(1), insert the following clause: PROHIBITION OF SEGREGATED FACILITIES (FEB 1999) (a) “Segregated facilities,” as used in this clause, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, sex, or national origin because of written or oral policies or employee custom. The term does not include separate or single-user rest rooms or necessary dressing or sleeping areas provided to assure privacy between the sexes. (b) The Contractor agrees that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Contractor agrees that a breach of this clause is a violation of the Equal Opportunity clause in this contract. (c) The Contractor shall include this clause in every subcontract and purchase order that is subject to the Equal Opportunity clause of this contract. (End of clause)Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  9. 9. Flow Down Fundamentals When does a Subcontractor assume responsibility as a contractor for flowing down to its own lower-tier subs? • In some FAR clauses, the definition of contractor is written to include subcontractor 52.222-41 Service Contract Act of 1965. ... (a) Definitions. As used in this clause— “Contractor,” when this clause is used in any subcontract, shall be deemed to refer to the subcontractor, except in the term “Government Prime Contractor.” ... (l) Subcontracts. The Contractor agrees to insert this clause in all subcontracts subject to the Act. ....Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  10. 10. Categories of Flow Downs • Mandatory clauses – those that must be flowed down • Essential clauses – not mandatory but must be included for business purposes • Optional clauses – included at the discretion of the contractorMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  11. 11. Mandatory Clauses Prescribed by the FAR for different categories of subcontracts depending upon whether: • The contract involves a Small Business; • The contract exceeds a certain $ amount; • The contract is for the acquisition of commercial materials; or • The contract meets other FAR prerequisites.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  12. 12. Mandatory Clauses Generally, the clauses fall into one of two categories: 1. Clauses implementing socio-economic policies of the federal government (socio- economic); or 2. Clauses intended to provide oversight of the use of federal funds (oversight).Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  13. 13. Example 52.222-26 Equal Opportunity – Category 1 (socio-economic) The contracting officer shall insert the clause at 52.222-26, Equal Opportunity, in solicitations and contracts unless the contract is exempt from all of the requirements of E.O. 11246 (see FAR 22.807(a)). … (10) The Contractor shall include the terms and conditions of this clause in every subcontract or purchase order that is not exempted by the rules, regulations, or orders of the Secretary of Labor issued under Executive Order 11246, as amended, so that these terms and conditions will be binding upon each subcontractor or vendor.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  14. 14. Example 52.215-12 Subcontractor Cost or Pricing Data– Category 2 (oversight) SUBCONTRACTOR COST OR PRICING DATA —MODIFICATIONS (OCT 1997) ... (d) The Contractor shall insert the substance of this clause, including this paragraph (d), in each subcontract that exceeds the threshold for submission of cost or pricing data at FAR 15.403- 4 on the date of agreement on price or the date of award, whichever is later.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  15. 15. Essential Clauses Essential, while not mandatory, flow down clauses contractors should include to protect their business interests. Failure to include these clauses in a subcontract puts the contractor at extreme risk.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  16. 16. Example Termination for Convenience – FAR Subpart 49.5 • Permits the federal government to cancel a prime contract at any time • Failure of the prime contractor to include a similar clause in subcontracts can result in significant adverse consequences – Obligations remain under its subcontract but the prime contract has been terminatedMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  17. 17. Example Change Orders – FAR Subpart 43.2 • Contracting officers may issue change order, permitting unilateral changes to the prime contract at any time. • Failure of the prime contractor to include a similar clause in its subcontracts can result in significant adverse consequences. – Obligations remain under its subcontract but the prime contractor’s needs have changed.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  18. 18. Supplemental Clauses Broad Clauses – recommend incorporation FAR 52.222-35 Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans. ... (f) Noncompliance. If the Contractor does not comply with the requirements of this clause, the Government may take appropriate actions under the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Act. (g) Subcontracts. The Contractor shall insert the terms of this clause in all subcontracts or purchase orders of $100,000 or more unless exempted by rules, regulations, or orders of the Secretary of Labor. The Contractor shall act as specified by the Deputy Assistant Secretary of Labor to enforce the terms, including action for noncompliance.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  19. 19. Applicability of Flow Downs • Generally, the FAR creates flow down obligations based upon the relationships among the parties: “The Contractor shall include the terms and conditions of this clause in every subcontract or purchase order that is not exempted by the rules, regulations, or orders of the Secretary of Labor issued under Executive Order 11246, as amended, so that these terms and conditions will be binding upon each subcontractor or vendor.” FAR 52.222-26 Equal OpportunityMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  20. 20. Contractor Relationships Prime Contractor The Federal Supplier of Government specially contracted items Supplier of raw MaterialsMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  21. 21. Web of Relationships Prime Contractor SUBCONTRACT The Federal Supplier of Government specially contracted items SUPPLIER Supplier AGREEMENT of raw MaterialsMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  22. 22. Determining the Relationship • Subcontract or Supplier Agreement? • Federal law and regulations distinguish between a subcontractor and a material supplierMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  23. 23. Distinctions between Suppliers and Subcontractors “[i]n the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work.” FAR 52.212-4 Contract Terms and Conditions While the FAR does distinguish the term subcontractor from supplier, the FAR’s multiple definitions of subcontractor often are inconsistent with one another. Consequently, it is always necessary to read the FAR provision closely.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  24. 24. FAR Definitions • FAR Part 2, which “defines words and terms that are frequently used in the FAR,” does not contain a general definition of subcontractor or supplier. • FAR Part 44,“Subcontracting Policies and Procedures” A subcontract is 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.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  25. 25. Subcontract or Supplier Agreement? • Determine whether the procurement involves a specialized or non- specialized good or service – i.e., a good or service procured “for performance of a prime contract” as opposed to a good or service procured regularly, or available in the commercial market.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  26. 26. Specialized Goods or Services • Specialized goods and services are characteristic of a Subcontract: – End product specified in the government contract; – Custom-made product or service pursuant to statement of work; – Product procured solely for government contract; – Contractor is generally advised or required to know the identity of the final government customer; – Provides an end product purchased in a “non-competitive” environment; – Contract negotiated/awarded exclusively to fulfill government contract (but for the contract, the purchase would not have been made).Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  27. 27. Examples of Specialized Purchases • An order for armored trucks. • An order for specialized bullet-proof vests. • An order for customized software.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  28. 28. Non-Specialized Goods or Services • Non-specialized goods or services are characteristic of a Supplier Agreement: – Goods or services are produced within normal business operations; – Goods or services are provided to multiple purchasers without modification; – Goods or services are sold in a competitive environment; – Contractor is generally uninformed and has no reason to know identity of final government customer; – Contract for goods or services negotiated/awarded independently of FAR requirements for government contracts.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  29. 29. Examples • An order for a fleet of trucks. • An order for commercially available night- vision goggles. • An order for off-the-shelf Windows 7 software.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  30. 30. Difficulty in Appropriately Flowing Down Clauses • Ambiguity – it can be difficult to determine when a clause must be flowed down – For example, some flow downs are limited to subcontracts, yet the FAR contains numerous, conflicting definitions of subcontract, as noted aboveMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  31. 31. Consequences of Failing to Appropriately Flow Down Noncompliance may: • Become part of Contractor’s past performance record under FAR Subpart 42.15; • Result in the government withholding payments for the period of noncompliance; • Result in a breach of the terms of the prime contract.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  32. 32. Importance of Appropriately Flowing Down Clauses • Protect your business • Comply with federal requirements • Retain Opportunity to Participate in Government ContractsMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  33. 33. Failure to Flow Down The Christian Doctrine G.L. Christian & Associates v. The United States, 160 Ct. Cl. 1 - Depending upon the nature of the clause, the Government may be able to read it into the contract despite the fact that it is not included in the terms of the contract. - Because a Termination for Convenience Clause may be read into a prime contract via the Christian Doctrine, a prime contractor’s failure to flow down this clause even if not included in the prime contract can result in substantial losses.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  34. 34. ARRA Case Study The American Recovery and Reinvestment Act (ARRA) is an important resource; however, it comes with strings attached. The obligations attached to ARRA funding can be daunting to a prime contractor but they need not be. Distinguishing between a prime’s suppliers and subcontractors is key to the success of a prime contractor operating under ARRA funded projects.Midwestern Values, D.C. Connections EcklandBlando.com
  35. 35. To Whom Do ARRA Flow Downs Apply? • All suppliers and subcontractors of goods and services used in whole or in part for ARRA funded projects OR • Those subcontractors that provide goods and services funded directly by ARRAMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  36. 36. Example • Commercial company with a long-standing Supplier Agreement for the purchase of chocolate chips – The company produces chocolate chip cookies • Chocolate chip Supplier – Sells chocolate chips in the commercial market to multiple customers – Sells chocolate chips at prices negotiated in a competitive environment – Contracts are negotiated independently of FAR requirementsMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  37. 37. Example continued • What flow down requirements exist for the Company if the Government decides to purchase chocolate chip cookies from the Company under an ARRA funded prime contract and the Government’s cookies are baked with the chocolate chips supplied under the existing Supplier Agreement? – Broad Interpretation of “Subcontract” • Flow Downs apply to Supplier Agreement – Functional Interpretation of “Subcontract” • Flow Downs do not apply to Supplier AgreementMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  38. 38. Broad Interpretation This is a Subcontract • The goods are used in the performance of a specific prime contract that is funded by ARRA • Any amount of sales to the Government – e.g., 0.1% of the total amount of chocolate chips supplied to the Company are allocated to the Government’s cookies, subjects the “subcontractor” to additional ARRA flow downs reserved for subcontracts Thus, the Prime Contractor must re-negotiate the Agreement to include the necessary flow down clauses • The value and duration of the contract will dictate which additional clauses reserved for subcontracts must be includedMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  39. 39. Broad Interpretation • A broad definition of “Subcontract” would defeat the stated objectives of ARRA: – Promotion of cost control – Minimization of burdens – Enhanced efficiency – Speedy recoveryMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  40. 40. Functional Interpretation • This is Supplier Agreement – The chocolate chips were not purchased expressly for the performance of the government contract – The chocolate chips are supplied to multiple contractors – The goods are non-specialized and were procured in a competitive environment • No additional flow downs reserved for subcontracts are necessaryMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  41. 41. Functional Interpretation The functional approach to defining the term “Subcontract” is supported by: • Purpose and intent of ARRA • Implementing FAR clauses • FFATA (Federal Funding Accountability and Transparency Act of 2006)Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  42. 42. ARRA • Purpose: to provide speedy economic recovery through preferred use of existing competitive, firm, fixed-price contracts • OMB implementing guidance: – Optimize transparency – Impose a minimum burden on contracting parties – Control costs and perform efficientlyMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  43. 43. ARRA: Implementing FAR Clauses FAR 4.1501 Procedures ... (b) To maximize transparency of Recovery Act funds that must be reported by the contractor, the contracting officer shall structure contract awards to allow for separately tracking Recovery Act funds. For example, the contracting officer may consider awarding dedicated separate contracts when using Recovery Act funds or establishing contract line item number (CLIN) structures to mitigate commingling of Recovery funds with other funds. ....Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  44. 44. ARRA and the FFATA • ARRA’s reporting requirements are the same as those imposed by the Federal Funding Accountability and Transparency Act (FFATA) See FAR 4.1500 • The FAR’s implementation of FFATA defines Subcontractor as: any contract as defined in FAR Subpart 2.1 entered into by the Contractor to furnish supplies or services for performance of this contract. It includes, but is not limited to, purchase orders and changes and modifications to purchase orders, but does not include contracts that provide supplies or services benefiting two or more contracts.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  45. 45. Recent FAR Interim Regulations Support a Functional interpretation of “Subcontract Agreement” • First-Tier Subcontract means a subcontract awarded directly by a Contractor to furnish supplies or services (including construction) for performance of a prime contract, but excludes supplier agreements with vendors, such as long-term arrangements for materials or supplies that would normally be applied to a Contractors general and administrative expenses or indirect cost. FAR 52.204-10 (July 8, 2010) • First-Tier Subcontract means a contract awarded directly by a Federal Government prime contractor whose contract is funded by the Recovery Act, to furnish supplies or services (including construction) for performance of a prime contract, but excludes supplier agreements with vendors, such as long-term arrangements for materials or supplies that would normally be applied to a contractors general and administrative expenses or indirect cost. FAR 52.204-11 (July 2, 2010)Midwestern Values, D.C. Connections EcklandBlando.com
  46. 46. Compliance Tools • Flow Chart – Process by which to distinguish Supplier Agreements from Subcontracts • Flow Down Table – Generally categorizes clauses pursuant to their application in supplier agreements and subcontractsMidwestern Values, D.C. Connections EcklandBlando.com
  47. 47. All Suppliers & Subcontractors: U.S. Government Provisions -Universal Flow Downs Nonspecialized Specialized Nonspecialized or Suppliers/Vendors Specialized good Subcontractors or Service? Construction only: Add Addl Construction Add Addl U.S. Government Provisions to contract Provisions ARRA - Construction Flow Construction only: FUNDING? Downs Add Addl Construction - Subcontractor Flow Downs Provisions to contract; add No Davis-Bacon Act to Contract only if work performed on construction site Construction only: Yes Add Addl Construction Add Addl U.S. - Construction Flow Downs Provisions to contract; add Government Provisions STOP ARRA version of Davis- to contract No Bacon Act to Contract - Recovery Act - Construction Flow Downs STOP ARRA funded portions STOP segregable? Construction only: Yes Add Addl U.S. Add Addl Construction Provisions to contract; add Government Provisions ARRA version of Davis- to segregable portion Bacon Act to segregable portion - Recovery Act - Construction Flow DownsMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  48. 48. Addendum – Universal Flow Downs FAR Requirements Construction ARRA Suppliers and Suppliers Subcontractors Construction Suppliers Subcontractors Vendors ARRA SubcontractorsFAR 52.222-21, Prohibition of SegregatedFacilities X* X X X X XFAR 52.222-26, Equal Opportunity X X X X X XFAR 52.222-35, Equal Opportunity for SpecialDisabled Veterans, Veterans of the Vietnam Era,and Other Eligible Veterans X X X X X XFAR 52.222-36, Affirmative Action for Workerswith Disabilities X X X X X XFAR 52.222-37, Employment Reports on SpecialDisabled Veterans, Veterans of the Vietnam Era,and other Eligible Veterans X X X X X XFAR 52.222-39, Notification of Employee RightsConcerning Payment of Union Dues or Fees X X X X X XFAR 52.247-64, Preference for Privately OwnedU.S. Flag Commercial Vessels X X X X X XMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  49. 49. Example: Universal Flow Downs 52.222-26 Equal Opportunity. As prescribed in 22.810(e), insert the following clause: Equal Opportunity (Mar 2007) ... (2) The Contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. This shall include, but not be limited to— (i) Employment; (ii) Upgrading; (iii) Demotion; (iv) Transfer; (v) Recruitment or recruitment advertising; (vi) Layoff or termination; (vii) Rates of pay or other forms of compensation; and (viii) Selection for training, including apprenticeship. (10) The Contractor shall include the terms and conditions of this clause in every subcontract or purchase order that is not exempted by the rules, regulations, or orders of the Secretary of Labor issued under Executive Order 11246 . . . .Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  50. 50. Addendum – Supplemental Flow Downs • FAR 52.203-11 - Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions • FAR 52.203-12 - Limitation on Payments to Influence Certain Federal Transactions • FAR 52.203-13 - Contractor Code of Business Ethics and Conduct • FAR 52.203-14 - Display of Hotline Poster(s) • FAR 52.212-5 - Contract Terms and Conditions Required to Implement Statutes or Executive Orders - Commercial Items • FAR 52.219-8 - Utilization of Small Business Concerns • FAR 52.222-6 - Davis-Bacon Act. • FAR 52.222-27 - Affirmative Action Compliance Requirements for Construction • FAR 52.222-29 - Notification of Visa Denial • FAR 52.222-41 - Service Contract Act of 1965 • FAR 52.222-50 - Combating Trafficking in Persons • FAR 52.222-51 - Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment--Requirements • FAR 52.222-53 - Exemption from Application of the Service Contract Act to Contracts for Certain Services--Requirements (Feb 2009) (41 U.S.C. 351, et seq.) • FAR 52.222-54 - Employment Eligibility Verification • FAR 52.225-8 - Duty Free Entry • DFARS 252.247-7023 - Transportation of Supplies by Sea • DFARS 252.247-7024 - Notification of Transportation of Supplies by SeaMidwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  51. 51. Example: Supplemental Flow Downs DFARS 252.247-7023 Transportation of Supplies by Sea ... (5) “Subcontractor” means a supplier, materialman, distributor, or vendor at any level below the prime contractor whose contractual obligation to perform results from, or is conditioned upon, award of the prime contract and who is performing any part of the work or other requirement of the prime contract. ... (h) In the award of subcontracts for the types of supplies described in paragraph (b)(2) of this clause, the Contractor shall flow down the requirements of this clause as follows: (1) The Contractor shall insert the substance of this clause, including this paragraph (h), in subcontracts that exceed the simplified acquisition threshold in Part 2 of the Federal Acquisition Regulation. (2) The Contractor shall insert the substance of paragraphs (a) through (e) of this clause, and this paragraph (h), in subcontracts that are at or below the simplified acquisition threshold in Part 2 of the Federal Acquisition Regulation.Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com
  52. 52. Questions? Jeff Eckland – (612) 236-0161 Eckland & Blando LLP Suite 1020 Lumber Exchange Building 10 South Fifth Street Minneapolis, MN 55402Midwestern Values, D.C. Connections EcklandBlando.com EcklandBlando.com

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