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					INTRODUCTION TO THE
 FEDERAL ACQUISITION
    REGULATIONS
              Kathy Lorenzi
           Associate Director
     Office of Contracts and Grants
   The University of Colorado Boulder
             303-492-2692
    Kathleen.lorenzi@colorado.edu
Greetings from Boulder




                   2
            WORKSHOP DESCRIPTION
Introduction to the Federal Acquisition Regulations (FAR)
   Negotiating contracts under the Federal Acquisition Regulations
   (FAR) can be challenging for even the most experienced Research
   Administrator. This workshop will introduce participants to the
   FAR's purpose and organization, and explain how it works.
Learning Outcomes
Participants will be able to:
    – Describe the structure of the FAR and demonstrate the
      relationship between prescriptions and clauses;
    – Identify contract types e.g. cost reimbursement, fixed-price,
      time and materials) and explain how and when they are used;
    – Understand the federal contracting process


                                                   3
            TODAY’S TOPICS

 What are the basics of Federal
  contracting?
 What is the purpose for the FAR?
 How is the FAR organized?
 What are the most important things in
  the FAR?
 What is the Federal contracting process?



                                 4
CONTRACTING BASICS




                5
    CONTRACT BASICS: DEFINITIONS
Federal Grant and Cooperative Agreement Act
           31 USC 6304 and 6305
   The purpose is to transfer money, property,
    services or anything of value to recipient in
    order to accomplish a public purpose.
   Considered to be Financial Assistance – not a
    procurement.



                                       6
    CONTRACT BASICS: DEFINITIONS
 Grant – project is implemented independently
  of the Sponsor and there is no anticipated
  involvement between the sponsor and recipient
  during performance of an activity
 Cooperative Agreement – Substantial
  Involvement is anticipated between Sponsor and
  Recipient during the performance of the Activity.




                                        7
   CONTRACT BASICS: DEFINITIONS
Contract
  The principal purpose is to acquire property or
   services for direct benefit or use of the Sponsor.
  The Sponsor determines that a procurement
   contract is appropriate.
  The Sponsor prepares the Scope of Work. The
   University responds with a proposal.
  By FAR definition, a contract is not a grant or
   cooperative agreement.


                                          8
     CONTRACT BASICS: DEFINITIONS
So, what is a contract…
A document that describes a relationship between two parties,
such as a buyer and seller, that is defined by an agreement that
makes a promise and creates an obligation. A written contract will
memorialize the agreements made between the parties about
their respective rights and responsibilities.

BEWARE, contracts are:
        More difficult to negotiate;
        More difficult to administer because they are governed
        by specific terms and conditions;
        Require specific standards of performance;
        Are subject to change; and
        Are LEGALLY BINDING.

                                                  9
  CONTRACT BASICS: DEFINITIONS
Essential Elements of a Contract:
   Offer: one party to another
   Acceptance: formal or informal
   Consideration: anything of value
   Competent Parties: 18 years old,
    authority, sound mind
   Lawful Purpose: activity must be legal


                                 10
CONTRACT BASICS: DEFINITIONS
Contracts may masquerade as:
    Memorandum of Understanding
    Teaming Agreements
    Agreements with funds – grants with terms and
     conditions, purchase orders, intergovernmental
     agreements
    Agreements without funds – material transfer
     agreements, nondisclosure agreements, data
     transfer agreements
Remember: The content of the Agreement will
determine if it is a contract, not the title.

                                          11
PURPOSE FOR THE FAR




                12
            PURPOSE FOR THE FAR
The Government is a sovereign entity
 It can only contract for items for which a need has been
  determined (defense, disaster relief, public good, etc.).
 It can only operate through its authorized officials (the
  Contracting Officer) determined by legislative
  authority.
 Contracting Officer authority is strictly defined.
 Acquisitions are funded with taxes collected from you
  and me; this creates a strong fiduciary responsibility of
  people in public acquisition and procurement and
  federal contractors/subcontractors.
 The FAR governs the Federal procurement process.

                                               13
           PURPOSE FOR THE FAR
What is the FAR?
  The FAR is a system of uniform policies and
   procedures governing the acquisition or
   contracting actions of all federal executive
   agencies.
  The underlying regulation for all federal contracts
  A tool for federal Contract Officers
  A “How To Contract with the Federal
   Government” manual for everyone


                                          14
             PURPOSE FOR THE FAR
Is the FAR the law?
  United States Code (U.S.C.)
  “The Codification by subject matter of the general and permanent laws
  of the United States”

  Code of Federal Regulations (C.F.R.)
  “The CFR is the codification of the general and permanent rules
  published in the Federal Register by the executive departments and
  agencies of the Federal Government. It is divided into 50 titles that
  represent broad areas subject to Federal regulation.”

  Title 48 C.F.R.
  Implements the FAR and the Agency acquisition regulations


                                                        15
         PURPOSE FOR THE FAR
The Contracts Officer selects the clauses
based upon:
 Purpose of the contract (e.g. R&D, Supplies,
  Services)
 Nature of the Contractor (e.g. for-profit,
  non-profit, educational institution, state)
 Method of financing (e.g. fixed-price, cost
  reimbursement, time and materials)

                                   16
             PURPOSE FOR THE FAR

3 Things to know about the FAR:
 The FAR is written for journeyman or contract administrators
  with less than 2 years experience.
 The FAR is written ambiguously on purpose so it is flexible.
 There is a 91% success rate by industry in alternative dispute
  resolution – 9 our of 10 times the Government will give you
  some relief.

                                Mark Lumer

                                Principal Assistant for Contracting (PARC), Retired
                                US Army Space & Missile Defense Systems




                                                               17
ORGANIZATION OF THE FAR




                   18
        ORGANIZATION OF THE FAR
How is the FAR organized?
 The FAR consists of 61 chapters.
 Chapter 1 represents the “Basic FAR”.
 Chapters 2 - 57 represent the specific Executive
  agency supplements to the basic FAR.
 Each chapter of the FAR is divided into Subchapters
  and Parts addressing a particular contracting topic
  (e.g. procurement, property, termination,
  inspection, audit).


                                          19
       ORGANIZATION OF THE FAR
Agency Supplements:

 Each Agency has the authority to issue a
  supplement, subject to review.

 Agency Supplemental Clauses either
   – Implement existing, basic FAR clauses, or
   – Supplement existing, basic FAR parts,
     subparts, sections or subsections.


                                       20
     ORGANIZATION OF THE FAR
Subchapter A – General
               Parts 1 – 4
Subchapter B – Competition and Acquisition Planning
               Parts 5–12
Subchapter C – Contracting Methods and Contract Types
               Parts 13–18
Subchapter D – Socioeconomic Programs
               Parts 19–26
Subchapter E – General Contracting Requirements
               Parts 27–33
Subchapter F – Special Categories of Contracting
               Parts 34–41
Subchapter G – Contract Management
               Parts 42–51
Subchapter H – Clauses and Forms
               Parts 52, 53, Appendix and Index

                                                      21
          ORGANIZATION OF THE FAR

Numbering system for prescriptions:
   27.303-(a)
     27                .3                  03             -(a)
     Part              Subpart             Section        Subsection


Numbering system for Clauses:
   __ 52.227-11
     Chapter    52               .2             .27        -11
     Agency     Part             Subpart        Section    Subsection




                                                            22
       ORGANIZATION OF THE FAR

WHAT ARE THE PRESCRIPTIONS AND THE CLAUSES?
 Prescriptions = instructions regarding which
  clauses to include in which kind of
  contracts (Parts 1 – 51)
 Clauses = rules guiding the implementation
  of the contract (Part 52)



                                   23
           ORGANIZATION OF THE FAR
The Prescription:
49.502 Termination for Convenience of the Government.
    (b) Fixed-price contracts that exceed the simplified acquisition threshold—
       (1)(i) General use. The contracting officer shall insert the clause at 52.249-
              2, Termination for Convenience of the Government (Fixed-Price), in
              solicitations and contracts when a fixed-price contract is
              contemplated and the contract amount is expected to exceed the
              simplified acquisition threshold except in contracts for —
               (B) Research and development work with an educational or
                   nonprofit institution on a no-profit basis . . .

49.503 Termination for Convenience of the Government and default.
    (a) Cost-reimbursement contracts—
        (1) General use. Insert the clause at 52.249-6, Termination (Cost-
        Reimbursement), in solicitations and contracts when a cost-
        reimbursement contract is contemplated, except contracts for research
        and development with an educational or nonprofit institution on a no-
        fee basis.


                                                                24
        ORGANIZATION OF THE FAR
49.502 Termination for convenience of the
       Government.
d) Research and development contracts. The contracting
   officer shall insert the clause at 52.249-5, Termination
   for the Convenience of the Government (Educational
   and Other Nonprofit Institutions), in solicitations and
   contracts when either a fixed-price or cost-
   reimbursement contract is contemplated for research
   and development work with an educational or
   nonprofit institution on a nonprofit or no-fee basis.


                                           25
IMPORTANT THINGS IN THE FAR
   RELATED TO RESEARCH
     ADMINISTRATION




                     26
    IMPORTANT THINGS IN THE FAR
Subchapter A - General
  Part 1 – Federal Acquisition Regulation System
  Part 2 – Definitions of Words and Terms
  Part 3 – Improper Business Practices and
           Personal Conflicts of Interest
  Part 4 – Administrative Matters




                                      27
       IMPORTANT THINGS IN THE FAR
Subpart 1.102 Statement of guiding principles for
              the Federal Acquisition System
(a) The vision for the Federal Acquisition System is to
    deliver on a timely basis the best value product or
    service to the customer, while maintaining the public’s
    trust and fulfilling public policy objectives. Participants
    in the acquisition process should work together as a
    team and should be empowered to make decisions
    within their area of responsibility.
• Note: The Government preference for supplier selection
  is competition.

                                                 28
      IMPORTANT THINGS IN THE FAR
Subpart 1.102 Statement of guiding principles for the
              Federal Acquisition System
(b) The Federal Acquisition System will—
   (1) Satisfy the customer in terms of cost, quality, and timeliness of the
       delivered product or service by, for example—
        (i) Maximizing the use of commercial products and services;
        (ii) Using contractors who have a track record of successful past
              performance or who demonstrate a current superior ability to
              perform; and
        (iii) Promoting competition;
   (2) Minimize administrative operating costs;
   (3) Conduct business with integrity, fairness, and openness; and
   (4) Fulfill public policy objectives.


                                                         29
         IMPORTANT THINGS IN THE FAR
 Subpart 1.102 Statement of guiding principles for the Federal
                     Acquisition System
(c) The Acquisition Team consists of all participants in Government
     acquisition including not only representatives of the technical, supply, and
     procurement communities but also the customers they serve, and the
     contractors who provide the products and services.
(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. 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 law
     (statute or case law), Executive order or other regulation, that the
     strategy, practice, policy or procedure is a permissible exercise of
     authority.

                                                             30
       IMPORTANT THINGS IN THE FAR
Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS AND CONDUCT
3.1002 Policy.
(a) Government contractors must conduct themselves with the highest
    degree of integrity and honesty.
(b) Contractors should have a written code of business ethics and conduct. To
    promote compliance with such code of business ethics and conduct,
    contractors should have an employee business ethics and compliance
    training program and an internal control system that—
     (1) Are suitable to the size of the company and extent of its involvement
          in Government contracting;
     (2) Facilitate timely discovery and disclosure of improper conduct in
          connection with Government contracts; and
     (3) Ensure corrective measures are promptly instituted and carried out.



                                                            31
     IMPORTANT THINGS IN THE FAR
Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS
             AND CONDUCT
3.1004 Contract clauses.
  (a) Insert the clause at FAR 52.203-13, Contractor
       Code of Business Ethics and Conduct, in
       solicitations and contracts if the value of the
       contract is expected to exceed $5,000,000 and
       the performance period is 120 days or more.
                  (Cumulative Value)


                                           32
        IMPORTANT THINGS IN THE FAR
Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS AND
             CONDUCT

(b) Code of business ethics and conduct.
  (1) Within 30 days after contract award, unless the Contracting Officer
      establishes a longer time period, the Contractor shall—
      (i) Have a written code of business ethics and conduct; and
      (ii) Make a copy of the code available to each employee engaged in
           performance of the contract.

  (2) The Contractor shall—
      (i) Exercise due diligence to prevent and detect criminal conduct; and
      (ii) Otherwise promote an organizational culture that encourages
           ethical conduct and a commitment to compliance with the law.


                                                          33
    IMPORTANT THINGS IN THE FAR
SUBCHAPTER B – COMPETITION AND ACQUISITION
                   PLANNING
  Part 5 – Publicizing Contract Actions
  Part 6 – Competition Requirements
  Part 7 – Acquisition Planning
  Part 8 – Required Sources of Supplies and Services
  Part 9 – Contractor Qualifications
  Part 10 – Market Research
  Part 11 – Describing Agency Needs
  Part 12 – Acquisition of Commercial Items

                                         34
      IMPORTANT THINGS IN THE FAR
Subpart 6.1 – Full and Open Competition
6.101 Policy.
   (a) 10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain limited
   exceptions (see Subpart 6.2 and 6.3), that contracting officers
   shall promote and provide for full and open competition in
   soliciting offers and awarding Government contracts.
   (b) Contracting officers shall provide for full and open
   competition through use of the competitive procedure(s)
   contained in this subpart that are best suited to the
   circumstances of the contract action and consistent with the
   need to fulfill the Government’s requirements efficiently
   (10 U.S.C. 2304 and 41 U.S.C. 253).


                                                     35
     IMPORTANT THINGS IN THE FAR
6.102 Use of competitive procedures.
  The competitive procedures available for use in fulfilling the
  requirement for full and open competition are as follows:
   (a) Sealed bids. (See 6.401(a).)
   (b) Competitive proposals. (See 6.401(b).) If sealed bids are not
       appropriate under paragraph (a) of this section, contracting
       officers shall request competitive proposals or use the other
       competitive procedures under paragraph (c) or (d) of this
       section.
   (c) Combination of competitive procedures. If sealed bids are
        not appropriate, contracting officers may use any
        combination of competitive procedures (e.g., two-step
        sealed bidding).

                                                   36
          IMPORTANT THINGS IN THE FAR
(d)   Other competitive procedures.
      (1) Selection of sources for architect-engineer contracts in accordance with the
           provisions of 40 U.S.C. 1102 et seq. is a competitive procedure (see Subpart 36.6 for
           procedures).
      (2) Competitive selection of basic and applied research and that part of development
           not related to the development of a specific system or hardware procurement is a
           competitive procedure if award results from—
           (i) A broad agency announcement that is general in nature identifying areas of
                research interest, including criteria for selecting proposals, and soliciting the
                participation of all offerors capable of satisfying the Government’s needs; and
           (ii) A peer or scientific review.
      (3) Use of multiple award schedules issued under the procedures established by the
           Administrator of General Services consistent with the requirement of
           41 U.S.C. 259(b)(3)(A) for the multiple award schedule program of the General
           Services Administration is a competitive procedure.




                                                                          37
      IMPORTANT THINGS IN THE FAR
Subpart 12.2 – Special Requirements for the Acquisition of
               Commercial Items

12.203 Procedures for solicitation, evaluation, and award.
    Contracting officers shall use the policies unique to the
acquisition of commercial items prescribed in this part in
conjunction with the policies and procedures for solicitation,
evaluation and award prescribed in Part 13, Simplified Acquisition
Procedures; Part 14, Sealed Bidding; or Part 15, Contracting by
Negotiation, as appropriate for the particular acquisition.




                                                   38
        IMPORTANT THINGS IN THE FAR
Subpart 12.3—Solicitation Provisions and Contract Clauses for the Acquisition of
             Commercial Items

(a) In accordance with Section 8002 of Public Law 103-355 (41 U.S.C. 264, note),
    contracts for the acquisition of commercial items shall, to the maximum
    extent practicable, include only those clauses—
     (1) Required to implement provisions of law or executive orders applicable
         to the acquisition of commercial items; or
     (2) Determined to be consistent with customary commercial practice.
(b) Insert the following provisions in solicitations for the acquisition of
    commercial items, and clauses in solicitations and contracts for the
    acquisition of commercial items . . .
   3) The clause at 52.212-4, Contract Terms and Conditions—Commercial Items.
      This clause includes terms and conditions which are, to the maximum
      extent practicable, consistent with customary commercial practices and is
      incorporated in the solicitation and contract by reference (see Block 27,
      SF 1449).


                                                                   39
   IMPORTANT THINGS IN THE FAR
SUBCHAPTER C – CONTRACTING METHODS AND
               CONTRACT TYPES
 Part 13 – Simplified Acquisition Procedures
 Part 14 – Sealed Bidding
 Part 15 – Contracting By Negotiation
 Part 16 – Types of Contracts
 Part 17 – Special Contracting Methods
 Part 18 – Emergency Acquisitions



                                      40
      IMPORTANT THINGS IN THE FAR
Contract Types and Financing Alternatives; How to
chose?
   Competition
   Price Analysis / Cost Analysis
   Type and Complexity of the Requirement
   Urgency of the Requirement
   Period of Performance or Length of Production Run
   Contractor’s technical capability and financial responsibility.
   Adequacy of the contractor’s accounting system
   Concurrent Contracts
   Extent and Nature of Proposed Subcontracting
   Acquisition History


                                                      41
        IMPORTANT THINGS IN THE FAR
Subpart 15.002 Types of negotiated acquisition
  (a) Sole source acquisitions. When contracting in a sole source
       environment, the request for proposals (RFP) should be tailored to
       remove unnecessary information and requirements; e.g., evaluation
       criteria and voluminous proposal preparation instructions.
  (b) Competitive acquisitions. When contracting in a competitive
      environment, the procedures of this part are intended to minimize the
      complexity of the solicitation, the evaluation, and the source selection
      decision, while maintaining a process designed to foster an impartial
      and comprehensive evaluation of offerors’ proposals, leading to
      selection of the proposal representing the best value to the
      Government (see 2.101).



                                                          42
       IMPORTANT THINGS IN THE FAR
Subpart 15.101 Best value continuum
An agency can obtain best value in negotiated
acquisitions by using any one or a combination of source
selection approaches. In different types of acquisitions,
the relative importance of cost or price may vary.
• where the requirement is clearly definable and the
  risk…is minimal, cost or price may play a dominant role
  in source selection.
• The less definitive the requirement, the more
  development work required, or the greater the
  performance risk, the more technical or past
  performance considerations may play a dominant role
  in source selection.

                                           43
     IMPORTANT THINGS IN THE FAR
Subpart 15.4—Contract Pricing
15.400 Scope of subpart.
  This subpart prescribes the cost and price
  negotiation policies and procedures for
  pricing negotiated prime contracts (including
  subcontracts) and contract modifications,
  including modifications to contracts awarded
  by sealed bidding.

                                    44
      IMPORTANT THINGS IN THE FAR
15.400 Contracting officers shall—
(a) Purchase supplies and services from responsible
    sources at fair and reasonable prices.
(b) Price each contract separately and independently
15.403-4 (a)(1) The contracting officer shall
obtain certified cost or pricing data only if the
contracting officer concludes that none of the
exceptions in 15.403-1(b) applies.
(adequate competition, prices set by law or regulation,
purchasing a commercial item, waiver)

                                           45
       IMPORTANT THINGS IN THE FAR
15.404-1 Proposal analysis techniques.
(a) General. The objective of proposal analysis is to ensure
that the final agreed-to price is fair and reasonable.

    (1) The contracting officer is responsible for evaluating the
        reasonableness of the offered prices. The analytical
        techniques and procedures described in this
        subsection may be used, singly or in combination with
        others, to ensure that the final price is fair and
        reasonable. The complexity and circumstances of each
        acquisition should determine the level of detail of the
        analysis required.

                                                 46
     IMPORTANT THINGS IN THE FAR
(2) Price analysis shall be used when certified
    cost or pricing data are not required (see
    paragraph (b) of this subsection and 15.404-
    3).
(3) Cost analysis shall be used to evaluate the
    reasonableness of individual cost elements
    when certified cost or pricing data are
    required. Price analysis should be used to
    verify that the overall price offered is fair and
    reasonable.

                                         47
  IMPORTANT THINGS IN THE FAR
  The Government may use various price analysis
  techniques and procedures to ensure a fair and
                reasonable price:
(i) Comparison of proposed prices received in response
      to the solicitation
(ii) Comparison of the proposed prices to historical prices
      paid, whether by the Government or other than the
      Government, for the same or similar items
(iii) Use of parametric estimating methods/application of
      rough yardsticks (such as dollars per pound or per
      horsepower, or other units) to highlight significant
      inconsistencies that warrant additional pricing
      inquiry.


                                            48
    IMPORTANT THINGS IN THE FAR
(iv) Comparison with competitive published price lists,
       published market prices of commodities, similar
       indexes, and discount or rebate arrangements.
(v) Comparison of proposed prices with independent
     Government cost estimates.
(vi) Comparison of proposed prices with prices obtained
      through market research for the same or similar items.
(vii) Analysis of data other than certified cost or pricing
       data (as defined at 2.101) provided by the offeror.




                                              49
   IMPORTANT THINGS IN THE FAR
Cost analysis is the review and evaluation of any
separate cost elements and profit or fee in an
offeror’s or contractor’s proposal, as needed to
determine a fair and reasonable price or to
determine cost realism, and the application of
judgment to determine how well the proposed
costs represent what the cost of the contract
should be, assuming reasonable economy and
efficiency.


                                     50
     IMPORTANT THINGS IN THE FAR
The Government may use various cost analysis
techniques and procedures to ensure a fair and
reasonable price, given the circumstances of the
acquisition.
    (i) Verification of cost data or pricing data and
          evaluation of cost elements (necessity,
          reasonableness)
    (ii) Evaluating the effect of the offeror’s current
         practices on future costs (efficiencies,
         economies)


                                          51
     IMPORTANT THINGS IN THE FAR
(iii) Comparison of costs proposed by the offeror for
      individual cost elements with—
       (A) Actual costs previously incurred by the same
           offeror;
       (B) Previous cost estimates from the offeror or from
           other offerors for the same or similar items;
       (C) Other cost estimates received in response to the
           Government’s request;
       (D) Independent Government cost estimates by
           technical personnel; and
       (E) Forecasts of planned expenditures.

                                            52
          IMPORTANT THINGS IN THE FAR
(e) Technical analysis.
  (1) The contracting officer should request that personnel having specialized
      knowledge, skills, experience, or capability in engineering, science, or
      management perform a technical analysis of the proposed types and quantities
      of materials, labor, processes, special tooling, equipment or real property, the
      reasonableness of scrap and spoilage, and other associated factors set forth in
      the proposal(s) in order to determine the need for and reasonableness of the
      proposed resources, assuming reasonable economy and efficiency.
  (2) At a minimum, the technical analysis should examine the types and quantities
      of material proposed and the need for the types and quantities of labor hours
      and the labor mix. Any other data that may be pertinent to an assessment of
      the offeror’s ability to accomplish the technical requirements or to the cost or
      price analysis of the service or product being proposed should also be included
      in the analysis.
  (3) The contracting officer should request technical assistance in evaluating pricing
      related to items that are “similar to” items being purchased, or commercial
      items that are “of a type” or requiring minor modifications, to ascertain the
      magnitude of changes required and to assist in pricing the required changes.




                                                                   53
       IMPORTANT THINGS IN THE FAR
Subpart 16.2 Fixed-Price
  Acquisition of supplies or services is on the basis of
    reasonably definite functional or detailed
    specifications.
  When costs can be estimated reasonably accurately
   – normal for supplies and services and for use in FAR
   12 commercial purchases.
  Imposes on the contractor maximum incentive to
   control costs, but with minimum administrative
   burden.


                                             54
      IMPORTANT THINGS IN THE FAR
Why might you want one?
     Freedom to rebudget (no A-21)
     Limited financial reporting
     Keep it if you don’t spend it
     Period of Performance not tied to allowable cost

Why might you not want one?
   Payments is tied to deliverables (e.g., full payment
    upon receipt of final report-cash flow/nonpayment
    problems)
   Must perform regardless of cost of performance
   Universities are not good at managing contract changes

                                               55
      IMPORTANT THINGS IN THE FAR
Subpart 16.3 Cost-Reimbursement
 Used for procurement of non-commercial items which
  cannot be based on reasonably definite functional or
  detailed specifications (i.e., R&D, due to higher
  performance risks).
 There is no incentive for contractor to control costs, thus
  Government imposes tighter controls.
 Cost must be determined to be allowable, allocable and
  reasonable under the appropriate cost principles.
 This is the typical contract type for universities and
  nonprofits

                                               56
      IMPORTANT THINGS IN THE FAR
Why might you want one?
   Best/reasonable efforts basis: when you run out of funds,
    you stop working
   FAR clauses are more favorable (Ex: Termination)

Why might you not want one?
     Tighter rebudgeting controls
     More frequent financial reports
     Closer scrutiny (e.g. audits)
     More administrative oversight required
     Challenge to determine if directed changes are in scope or
      out of scope (when can/should you ask for more money)


                                              57
     IMPORTANT THINGS IN THE FAR
Cost Plus Fixed Fee
 A cost reimbursable contract with a fixed negotiated
  fee is based on an initial estimate of costs.
 The fee does not vary with cost incurred – once the
  cost estimate is achieved, no more fee is allowable
  unless new tasks are added to the contract.
 Cost Plus Percentage of Cost contracts are prohibited
  by law.
 Danger Will Robinson! Fee cannot exceed 15% for
  R&D and 10% for “other”.


                                         58
      IMPORTANT THINGS IN THE FAR
Subpart 16.6 Time & Material / Labor-
 Reimbursement of hours worked, not costs incurred
 Fixed hourly rate incorporating salary, fringe benefits, F&A,
  and fee
 Rates invoiced must match proposed rates.
 Audit - Personnel effort reporting cannot meet audit
  requirements.
 If University is a subcontractor, then have the prime
   propose the University as part of the “M” not “T”.


                                                59
     IMPORTANT THINGS IN THE FAR
Subpart 16.6 Time & Material / Labor-Hour
 What to do about them
   – Propose with disclaimer.
   – Don’t accept this contract type, unless
     accounting system can comply.
   – Argue on basis of cost accounting standards
     and A-21 guidelines.
   – Negotiate a buffer.



                                       60
      IMPORTANT THINGS IN THE FAR
SUBCHAPTER D – SOCIOECONOMIC PROGRAMS
 Part 19 – Small Business Programs
 Part 20 – Reserved
 Part 21 – Reserved
 Part 22 – Applications of Labor Laws to Government
            Acquisitions
 Part 23 Environment, Energy and Water Efficiency,
          Renewable Energy Technologies, Occupational
          Safety, and Drug-Free Workplace
 Part 24 – Protection of Privacy and Freedom of Information
 Part 25 – Foreign Acquisitions
 Part 26 – Other Socioeconomic Programs


                                             61
    IMPORTANT THINGS IN THE FAR
Subpart 19.7 Subcontracting Plans
 What are they?
 Established goals for including a minimum
  percentage of small business concerns,
  small disadvantaged business concerns, and
  women-owned small business concerns in
  any subcontracting activity under a specific
  contract. The Subcontracting Plan is
  incorporated into the contract.

                                    62
      IMPORTANT THINGS IN THE FAR
 Required at the request of the Contracting Officer, if contract
  and modifications exceed $650,000.
 Process to create an individual plan:
    Obtain detailed budget,
    Work with PI to determine possible vendors for
     subcontracting,
    Establish estimates by percentages for large, small, small
     disadvantaged, and woman owned businesses.
 Master institutional plan is another option
 Reports must be filed on an annual basis
 Material breach

                                                63
          IMPORTANT THINGS IN THE FAR
Subpart 23.5: 23.504 Policy (Drug Free Workplace)
No offeror other than an individual shall be considered a responsible source
(see 9.104-1(g) and 19.602-1(a)(2)(i)) for a contract that exceeds the
simplified acquisition threshold, unless it agrees that it will provide a drug-
free workplace by—
   (1) Publishing a statement notifying its employees that the unlawful
      manufacture, distribution, dispensing, possession, or use of a
      controlled substance is prohibited in the contractor’s workplace, and
      specifying the actions that will be taken against employees for
      violations of such prohibition;
   (2) Establishing an ongoing drug-free awareness program . . .
   (3) Providing all employees engaged in performance of the contract with
      a copy of the statement required by paragraph (a)(1) of this section;
   (4) Notifying all employees in writing in the statement required by
      paragraph (a)(1) of this section, that as a condition of employment on
      a covered contract, the employee will . . .
   (5) Notifying the contracting officer in writing within 10 days after
      receiving notice under subdivision (a)(4)(ii) of this section, from an
      employee or otherwise receiving actual notice of such conviction.
                                                             64
         IMPORTANT THINGS IN THE FAR
   (6) Within 30 days after receiving notice under paragraph (a)(4) of this
      section of a conviction, taking one of the following actions with
      respect to any employee who is convicted of a drug abuse violation
      occurring in the workplace . . .
   (7) Making a good faith effort to maintain a drug-free workplace through
      implementation of paragraphs (a)(1) through (a)(6) of this section.

(b) No individual shall be awarded a contract of any dollar value unless that
    individual agrees not to engage in the unlawful manufacture, distribution,
    dispensing, possession, or use of a controlled substance while performing
    the contract.
(c) For a contract of 30 days or more performance duration, the contractor
    shall comply with the provisions of paragraph (a) of this section within
    30 days after contract award, unless the contracting officer agrees in
    writing that circumstances warrant a longer period of time to comply.



                                                           65
        IMPORTANT THINGS IN THE FAR
Subpart 24.2 Freedom of Information Act
 24.201 Authority.
 The Freedom of Information Act provides that information is to be made
 available to the public either by—
     (a) Publication in the Federal Register;
     (b) Providing an opportunity to read and copy records at convenient
         locations; or
     (c) Upon request, providing a copy of a reasonably described record.

 24.202 Prohibitions.
     (a) A proposal in the possession or control of the Government,
         submitted in response to a competitive solicitation, shall not be
         made available to any person under the Freedom of Information
         Act.



                                                          66
      IMPORTANT THINGS IN THE FAR
24.203 Policy.
  (a) The Act specifies, among other things, how agencies shall
       make their records available upon public request, imposes
       strict time standards for agency responses, and exempts
       certain records from public disclosure.
  (b) Contracting officers may receive requests for records that may
       be exempted from mandatory public disclosure. The
       exemptions most often applicable are those relating to
       classified information, to trade secrets and confidential
       commercial or financial information, to interagency or intra-
       agency memoranda, or to personal and medical information
       pertaining to an individual.


                                                   67
    IMPORTANT THINGS IN THE FAR
SUBCHAPTER E – GENERAL CONTRACTING
               REQUIREMENTS
 Part 27 – Patents, Data, and Copyright
 Part 28 – Bonds and Insurance
 Part 29 – Taxes
 Part 30 – Cost Accounting Standards Administration
 Part 31 – Contract Cost Principles and Procedures
 Part 32 – Contract Financing
 Part 33 – Protests, Disputes, and Appeals



                                       68
         IMPORTANT THINGS IN THE FAR
      Public Law 96-517, Patent and Trademark Act
           Amendments of 1980 (Bayh – Dole)
• United States Code; Title 35, Patents, Part 2, Chapter 18, PATENT RIGHTS
  IN INVENTIONS MADE WITH FEDERAL ASSISTANCE

• Code of Federal Regulations: Title 37, Part 401 – RIGHTS TO INVENTIONS
  MADE BY NONPROFIT ORGANIZATIONS AND SMALL BUSINESS (“Standard IP
  Clause” in 37 CFR 401.14)


• Presidential memorandum on Government Patent Policy to the Heads of
  Executive Departments and Agencies, 18 February 1983

• Executive Order 12591, Facilitating Access to Science and Technology, 10
  April 1987


                                                         69
     IMPORTANT THINGS IN THE FAR
Subpart 27.3 Intellectual Property
52.227-11 Patents Rights -- Ownership by the
Contractor is intended for contracts with non-profit
entities and small businesses.

52.227-13 Patent Rights -- Ownership by the
Government is for when Government requires
greater rights - almost never used with non-profits,
except in very exceptional circumstances.


                                         70
     IMPORTANT THINGS IN THE FAR
52.227-11 – Patents (Short Form),
  The contractor retains rights to inventions but has
  obligations to the Government, including:
    Unrestricted, non-exclusive, royalty-free license,
    Disclosure and notification deadlines,
    Due diligence in disclosure and otherwise complying
     with the law (Bayh-Dole) and pursuing
     commercialization as appropriate for the nature of the
     invention,
    March-in rights for Government if the Institution does
     not meet requirements for retaining rights.


                                              71
      IMPORTANT THINGS IN THE FAR
Subpart 27.4 Data Rights
52.227-14 Rights in Data – General (Alt IV) is the preferable clause
           for universities.
    The provision allows for the assertion of limited or restricted
     rights of data developed with private funds.
    The Contractor retains rights to data and copyrights first
     generated, but has obligations to Government, including:
       Royalty-free, non-exclusive license,
       Unlimited rights, unless specified otherwise.
    Note: Without Alt IV, the institution may assert copyrights
     only to papers published in technical journals; with Alt IV
     the institution may assert copyright on all data and
     software.


                                                    72
   IMPORTANT THINGS IN THE FAR

52.227-17 is for Special Works (e.g., work-
for-hire); the Government owns and
controls the data.

52.227-18 is for Existing Works; the
Government asserts rights to use existing
works.



                                  73
    IMPORTANT THINGS IN THE FAR
Cost Principles
FAR Part 31 Contract Cost Principles and
            Procedures:
   FAR 31.2 Contracts with Commercial Organizations
   FAR 31.3 Contracts with Educational Institutions
FAR 31.303 – Determines that the allowability of
cost for universities will be determined by OMB
Circular A-21.
    Note: Per OMB A-21, Agencies are not expected
to place additional restrictions on individual items
of cost.

                                            74
    IMPORTANT THINGS IN THE FAR
Cost Principles in Part 31 are found in 48 CFR 99,
Cost Accounting Standards Board, OFPP and
OMB.
 48 CFR 9903 – Contract Coverage
 48 CFR 9905 – Cost Accounting Standards,
  Educational Institutions
Overhead Rates are to be verified with the
subcontractor’s primary audit agency (DCAA,
DHHS), but you will probably have to go through
your ACO due to confidentiality considerations
and competitive sensitive information.

                                      75
    IMPORTANT THINGS IN THE FAR
SUBCHAPTER F – SPECIAL CATEGORIES OF
               CONTRACTING
  Part 34 – Major System Acquisition
  Part 35 – Research and Development Contracting
  Part 36 – Construction and Architect-Engineer Contracts
  Part 37 – Service Contracting
  Part 38 – Federal Supply Schedule Contracting
  Part 39 – Acquisition of Information Technology
  Part 40 – Reserved
  Part 41 – Acquisition of Utility Services



                                           76
     IMPORTANT THINGS IN THE FAR
              FUNDAMENTAL RESEARCH
             Broad Agency Announcement
                  DARPA-BAA-09-66
As of the date of publication of this BAA, DARPA expects
that program goals for this BAA may be met by proposers
intending to perform 'fundamental research,' i.e., basic
and applied research in science and engineering, the
results of which ordinarily are published and shared
broadly within the scientific community, as distinguished
from proprietary research and from industrial development,
design, production, and product utilization the results of
which ordinarily are restricted for proprietary or national
security reasons.


                                            77
      IMPORTANT THINGS IN THE FAR
35.001 Definitions
Applied research” means the effort that
  (a) normally follows basic research, but may not be
      severable from the related basic research;
  (b) attempts to determine and exploit the potential of
      scientific discoveries or improvements in technology,
      materials, processes, methods, devices, or techniques;
      and
  (c) attempts to advance the state of the art. When being
      used by contractors in cost principle applications, this
      term does not include efforts whose principal aim is
      the design, development, or testing of specific items
      or services to be considered for sale; these efforts are
      within the definition of “development,” given below.


                                                78
     IMPORTANT THINGS IN THE FAR
Definitions
“Development,” as used in this part, means the
systematic use of scientific and technical knowledge in
the design, development, testing, or evaluation of a
potential new product or service (or of an improvement
in an existing product or service) to meet specific
performance requirements or objectives. It includes the
functions of design engineering, prototyping, and
engineering testing; it excludes subcontracted technical
effort that is for the sole purpose of developing an
additional source for an existing product.


                                           79
    IMPORTANT THINGS IN THE FAR
35.002 General
 The primary purpose of contracted R&D is to
  advance scientific and technical knowledge and
  apply that knowledge to the extent necessary to
  achieve agency and national goals.
 Unlike Contracts for supplies and services, most R&D
  contracts are directed toward objectives for which
  the work or methods cannot be precisely described
  in advance.
 R&D contracting focuses on the Statement of Work.


                                        80
     IMPORTANT THINGS IN THE FAR
SUBCHAPTER G – CONTRACT MANAGEMENT
  Part 42 – Contract Administration and Audit Services
  Part 43 – Contract Modifications
  Part 44 – Subcontracting Policies and Procedures
  Part 45 – Government Property
  Part 46 – Quality Assurance
  Part 47 – Transportation
  Part 48 – Value Engineering
  Part 49 – Termination of Contracts
  Part 50 – Extraordinary Contractual Actions and the Safety
            Act
  Part 51 – Use of Government Sources by Contractors

                                            81
          IMPORTANT THINGS IN THE FAR
                       Requirements for Subcontracts
Subcontracts are developed to reflect the needs of the project and the University’s
requirements under the prime contract. These needs include:
    •     Requirements of the Prime Contract,
    •     Type of effort and amount of risk (technical and costs),
    •     Subcontractor capability (small business, large business),
    •     Size and complexity of the project,
    •     Past performance,
    •     General business considerations.
Subcontracts are not required to be the same form, format or type as the prime
contract.
Note: Subcontracts are subject to state law because of privity of contract between the
Prime and the Government.




                                                                  82
       IMPORTANT THINGS IN THE FAR
Many Institutions use a checklist for each subcontract due to
documentation requirements in FAR for Subcontracts:
   • Source Selection
   • Due Diligence – Responsible Contractor
   • Statement of Work
   • Request for Proposal
   • Subcontractor Proposal
   • Technical Analysis
   • Cost/Price Analysis – Negotiation memo
   • Organizational Conflict of Interest – Reps and Certs
   • Advance Notice Requirements
   • Certification of Cost or Pricing Data if required

                                               83
     IMPORTANT THINGS IN THE FAR
Prior Notification & Consent
  Required by FAR 52.244-2
       • 44.201-1: Consent
       • 44.201-2: Notification
  Requirement determined by:
       • Approved/Disapproved purchasing system (CPSR)
       • Contracting Officer stating in contract that a subcontract
         requires special attention
       • Type/Amount of subcontract to be issued
       • Request Alt I
  If consent is required, you must notify the Government reasonably in
  advance, and provide the documentation specified in (f)(1).



                                                       84
      IMPORTANT THINGS IN THE FAR
Contract Clause Flow-down Requirements for Subcontracts
 Some FAR clauses state that they must be flowed-down in a
  specific way:
    “The Contractor agrees to incorporate the substance of this
      clause, including this paragraph (c), in all subcontracts under
      this contract which exceed the simplified acquisition
      threshold.”
    “…will include the language of this certification in all
      subcontract awards at any tier and require that all recipients
      of subcontract awards in excess of $100,000 shall certify and
      disclose accordingly.”
 Specific Flow-down clause are mandatory if required by statute,
  Executive Order, or procurement regulation.



                                                    85
     IMPORTANT THINGS IN THE FAR
Common mandatory flowdown clauses:
    52.215-2 “Audit and Records-Negotiation”
    52.227-11 “Patent Rights-Retention by the Contractor”
    52.230-3 “Cost Accounting Standards”
    52.245- 1 “Government Property”
    Various ethical and socio-economic requirements:
       Equal Employment Opportunity
       Anti-kickback
       Gratuities
    Representations and Certifications
    Special Provisions


                                             86
       IMPORTANT THINGS IN THE FAR
Non-mandatory clauses that are necessary to add to Subcontract to
ensure that the Prime Contractor can adequately meet its
contractual obligations (business issues) examples:
      52.249-1 thru 6 “Termination for Convenience”
      52.242.15 “Stop Work”
      52.243-2 “Changes”
      52.216-7 “Allowable Cost and Payment”
      52.232-20 “Limitation of Cost”
      52.232-22 “Limitation of Funds”
      52.246-9 “Inspection of R&D
      52.204-2 “Security Requirements”
      52.233-1 “Disputes”***
      Special Provisions


                                                       87
      IMPORTANT THINGS IN THE FAR
The Christian Doctrine
 provides that if a statute or a regulation with the “force and effect
  of law” mandates the inclusion of the related clause in a
  Government contract, the contract will be interpreted as if the
  contract contains the clause, even if it was intentionally
  negotiated out of the contract.
 Not every regulation is “read” into the contract, only if the
  regulation is issued pursuant to a statute that reasonably
  contemplates the regulation.
 For example, Termination for Convenience is a “deeply ingrained
  strand of public procurement policy.”



                                                     88
      IMPORTANT THINGS IN THE FAR
Why is the Christian Doctrine important?
 First, your negotiated Government contract may contain
  clauses in the contract by operation of this Doctrine
  (mandatory and non-mandatory) that are not actually
  listed in the contract.

 Second, this Doctrine does not extend to Subcontracts.
  If a clause is omitted from the prime, it will be read in to
  the prime, but not the subcontract.




                                                89
    IMPORTANT THINGS IN THE FAR

Substitution of Nomenclature
• Flow-down clauses must accurately reflect
  the relationship between the parties.
• Flow-Down clauses can be effected by using
  an introductory paragraph to the flow down
  clauses.



                                 90
                   IMPORTANT THINGS IN THE FAR
Substitution of Nomenclature Example
This Appendix contains 1) full text clauses from the Prime Award, and 2) Federal Acquisition Regulation clauses
(including Agency FARs) incorporated by reference from the Prime Contract with the same force and effect as if
they were given in full text, that shall apply to the Subcontractor. For the purposes of appropriately reflecting the
subcontracting relationship between the University and Subcontractor, the following substitution of nomenclature
shall apply to the Prime Award terms incorporated into this Subcontract in the Articles and by this Appendix unless
the context requires otherwise:

     Contractor, shall mean the Subcontractor
     Contract shall mean this Subcontract,
     Subcontractor shall mean Lower Tier Subcontractor,
     Government or Contracting Officer shall include or be replaced by University and University’s authorized
     representative.

With respect to the Patent Rights and Data Rights clauses noted herein, the substitution of nomenclature will apply
except Government and Contracting Officer shall mean only Government and Contracting Officer and not
University or University’s Representative.

With respect to the Patent Rights and Data Rights clauses, University requests and Subcontractor hereby provides
to University a royalty free, world-wide, non-transferable, nonexclusive, irrevocable license to use, reproduce, copy,
create derivative works, display, and perform publicly the intellectual property developed pursuant to this
Subcontract for 1) internal research and/or academic purposes (e.g. non-commercial use), and 2) to meet the
University’s requirements to the Government and Prime Contract.

       Any questions regarding the proper interpretation of a specific clause incorporated herein should be referred
to the contracts and grants administrator at University.
                                                                                          91
     IMPORTANT THINGS IN THE FAR
Representations and Certifications
 Make sure you require that the subcontractor
  completes the same set of Representations and
  Certifications that were required of your institution
  in the prime award.
 False statements on Representations and
  Certifications can have civil and criminal penalties.
 Certification requirements flow up – the
  subcontractor should certify before the prime.


                                          92
       IMPORTANT THINGS IN THE FAR
FAR 45.101, Definitions
 “Equipment” means a tangible item that is functionally complete for its
  intended purpose, durable, nonexpendable, and needed for the
  performance of a contract. Equipment is not intended for sale, and does
  not ordinarily lose its identity or become a component part of another
  article when put into use. Equipment does not include material, real
  property, special test equipment or special tooling.
 “Material” means property that may be consumed or expended during the
  performance of a contract, component parts of a higher assembly, or items
  that lose their individual identity through incorporation into an end-item.
  Material does not include equipment, special tooling, special test
  equipment or real property.

 “Property” means all tangible property, both real and personal.



                                                          93
        IMPORTANT THINGS IN THE FAR
52.245-1 Government Property (Aug 2010)
Alternate II (June 2007). As prescribed in 45.107(a)(3), substitute the
following for paragraph (e)(3) of the basic clause:
(e)(3) Title to property (and other tangible personal property) purchased
with funds available for research and having an acquisition cost of less than
$5,000 shall vest in the Contractor upon acquisition or as soon thereafter
as feasible; provided that the Contractor obtained the Contracting Officer’s
approval before each acquisition.
Title to property purchased with funds available for research and having an
acquisition cost of $5,000 or more shall vest as set forth in this
contract.….The Contractor shall furnish the Contracting Officer a list of all
property to which title is vested in the Contractor under this paragraph
within 10 days following the end of the calendar quarter during which it
was received.


                                                           94
          IMPORTANT THINGS IN THE FAR
(e)(3) Title under Cost-Reimbursement or Time-and-Material Contracts or Cost-
Reimbursable contract line items under Fixed-Price contracts. (original)
  (i) Title to all property purchased by the Contractor for which the Contractor is
       entitled to be reimbursed as a direct item of cost under this contract shall pass
       to and vest in the Government upon the vendor’s delivery of such property.
  (ii) Title to all other property, the cost of which is reimbursable to the Contractor,
       shall pass to and vest in the Government upon—
       (A) Issuance of the property for use in contract performance;
       (B) Commencement of processing of the property for use in contract
            performance; or
       (C) Reimbursement of the cost of the property by the Government, whichever
            occurs first.
  (iii) All Government-furnished property and all property acquired by the Contractor,
        title to which vests in the Government under this paragraph (e)(3)(iii)
        (collectively referred to as “Government property”), are subject to the
        provisions of this clause.


                                                                  95
  IMPORTANT THINGS IN THE FAR
SUBCHAPTER H – CLAUSES AND FORMS

  Part 52 – Solicitation Provisions and Contract
            Clauses
  Part 53 – Forms
  Appendix
  Index




                                      96
FEDERAL CONTRACTING PROCESS




                     97
    FEDERAL CONTRACTING PROCESS
•   Solicitation and Amendments (RFP)
•   Pre-Bid Conference
•   Prime Proposal
•   Subcontract Proposal - (Technical, Cost and
    Management Proposals)
•   Submission or Exceptions Letter
•   Proposal Review Verification/Negotiation
•   Best and Final Offer
•   More Negotiation???
•   Acceptance

                                     98
   FEDERAL CONTRACTING PROCESS
REQUEST FOR PROPOSAL (RFP)
 Specific instructions for technical and cost
  proposals
 Includes a sample contract or “schedule” with
  expected terms and conditions
 Institutional endorsement of the proposal is
  considered an official offer, which may not be able
  to be changed once the proposal is submitted.
 Some RFP’s may be converted into a contract with
  only the buyers signature (SF-33).


                                        99
  52.215-8 Order of Precedence—Uniform
             Contract Format
Part I
  Section A: Cover (Signature) Page
  Section B: Supplies/Services & Prices/Costs
  Section C: Descriptions, Specifications, Scope of
              Work
  Section D: Packaging and Marking
  Section E: Inspection and Acceptance
  Section F: Deliveries or Performance
  Section G: Contract Administration Data
  Section H: Special Contract Requirements

                                        100
52.215-8 Order of Precedence—Uniform
           Contract Format
 Part II
   Section I: Contract Clauses
 Part III
   Section J: List of Attachments
 PART IV
   Section K: Representations/Certifications
   Section L: Instructions, Attachments
   Section M: Evaluation Factors for Award



                                    101
 FEDERAL CONTRACTING PROCESS

The Submittal or Exceptions Letter:
    The exceptions letter documents the
    University’s concerns with the proposed
    terms and conditions.
    If these issues are not specified when
    submitting the proposal, then they may
    not be eligible for negotiation after the
    award is made.



                                      102
  FEDERAL CONTRACTING PROCESS
WHICH CLAUSES ARE ACCEPTABLE?
 Read the clause - can you live with it?
 Read the prescription - does it apply?
    Contract type (FP, CR, T&M)
    Contract purpose (R&D, Supply, Service)
    Recipient type (for-profit, non-profit,
      educational)
 Is there a trigger, or does it apply no matter
  what?
 Is it Required or Optional (see ONR matrix)


                                        103
STANDARD CLAUSES




                   104
 52.215-02 Audit and Records - Negotiation
Purpose:
Establishes Government’s right to access and to audit
contractor records; outlines contractor’s requirements for
retention of records.
Issue:
Which audit requirements apply? How long are we
required to keep the records?
       (3 years after final payment, or settlement . . . )
Action:
Request Alternate II, which incorporates OMB A-133.


                                                105
 52.215-08 Order of Precedence - Uniform
            Contract Format
Purpose:
Establishes the order of precedence for various
sections of the contract when the Uniform
Contract Format applies.
Issue:
The clause will help determine precedence of
conflicting clauses.
Action:
Ensure that the order is fair and appropriate.

                                      106
  52.215-8 Order of Precedence—Uniform
             Contract Format
As prescribed in 15.209(h), insert the following clause:
    Order of Precedence—uniform Contract Format
                       (Oct 1997)
Any inconsistency in this solicitation or contract shall be
resolved by giving precedence in the following order:
   (a) The Schedule (excluding the specifications)
   (b) Representations and other instructions.
   (c) Contract clauses.
   (d) Other documents, exhibits, and attachments.
   (e) The specifications.


                                             107
  52.216-07 Allowable Costs and Payment
Purpose:
Establishes which cost principles will apply and
outlines the terms of payment.
Issue:
Defaults to commercial cost principles (31.2).
Action:
Request that reference to 31.2 in first paragraph be
changed to 31.3 (which incorporates A-21).



                                         108
                   52.216-08 Fixed-Fee
Purpose:
To establish that a “fee/profit” will be an allowable item of
expense.
Issue:
Although this clause only applies in the event you are charging a
fee, the agency may be treating this particular contract as if it were
being issued to a commercial concern, which means there may be
other commercially oriented clauses.
Action:
Remove if you are not asking for a fee. Look for other
inappropriate commercial-oriented clauses.




                                                      109
      52.216-11 Cost Contract - No Fee
Purpose:
To establish a cost-based contract with no fee;
establishes a reserve or holdback to protect the
Government’s interests.
Issue:
The type of contract determines other contract
requirements; reserve can be reduced (non-profits) or
removed (educational R&D).
Action:
Try to get the reserve (holdback) removed (Alternate
1). Otherwise, try to get reserve reduced to $10,000.


                                            110
52.216-15 Predetermined Indirect Cost Rates
Purpose:
To establish your negotiated rate agreement as
the appropriate overhead rates to use.
Issues:
The clause does not track with 2 CFR 220 in
terminology
Action:
Make sure you know how to manage changes to
your rate agreement.


                                    111
52.219-09 Small Business Subcontracting Plan
Purpose:
To establish the requirement for a Contractor to submit a
Subcontracting Plan.
Issue:
Requires preparation and submission prior to award if
requested; requires reporting. Plan is incorporated into
contract; violation is a material breach.
Action:
Coordinate with your purchasing department. If the
project budget does not meet the threshold, ask to
remove the clause.


                                            112
    52.227-1 Authorization and Consent
Purpose:
The basic clause provides for Contractor to utilize any patented
invention to accomplish the contract - subject to any patent
indemnity clause also included in contract. Alternate I is
available for R&D contracts, and precludes use of patent
indemnity clause.
Issue:
Government indemnifies contractor for patent infringement in
contractor’s performance of contract.
Action:
Make sure to get Alternate I added and to request removal of
Patent Indemnity clause, if included.


                                                  113
52.227-11 Patent Rights – Ownership by the
               Contractor
Purpose:
Establishes patent terms, which implement Bayh-
Dole for federal contractors.
Issue:
Allows some federal contractors to elect ownership
of patents developed under the contract.
Action:
Ensure that your institution follows disclosure
requirements, if it intends to take title to inventions
developed under contract

                                            114
   52.230-05 Cost Accounting Standards –
          Educational Institutions
Purpose:
To establish which Cost Accounting Standards will apply to
contracts with educational institutions (see A-21).
Issue:
Make sure this CAS clause is only CAS included, or you may
find yourself subject to additional standards.
Action:
CAS applies to negotiated contracts over $650K. Since these
standards are already incorporated into the contract via 31.3
(A-21), don’t worry about getting this clause in, unless you
see other CAS clauses already in contract.


                                             115
          52.232-20 Limitation of Costs
Purpose:
Requires notification of the Government when contractor
expenditures reach a specified threshold or when
expenditures will be substantially more or less than total
estimated cost.
Issue:
 Puts government on notice that contractor is coming to end
of contract. Government must respond or Contractor is no
longer responsible to continue work.
Action:
Provide notification.


                                             116
         52.232-22 Limitation of Funds
Purpose:
Requires notification of the Government when
contractor expenditures reach a specified threshold or
are expected to exceed total obligated funds.
Issue:
Puts Government on notice that Contractor is coming
to end of obligated funding and establishes a 60 day
deadline for supplemental or extension requests.
Action:
Provide notification.


                                         117
             52.244-2 Subcontracts
Purpose:
Establishes prior approval requirements for issuance of
subcontracts and contractor documentation.
Issue:
Prior approval may be required (even if subcontract was
in budget) if you do not have an approved purchasing
system.
Action:
Document! Note that previous versions of this clause, if
applicable to your contract, may have imposed more
stringent prior approval requirements.


                                          118
         52.245-1 Government Property
Purpose:
Defines property; establishes title and management standards.
Issue:
Alternate II allows educational institutions to retain title to
property if under $5,000, provided prior approval was obtained.
Title to property over $5,000 shall vest as set forth in the
contract.
Action:
Alternate II is the university default. If buying high dollar
equipment or fabricating equipment, state in the contract who
holds title and when the title transfers (at purchase or at delivery)



                                                      119
            52.247-34 F.o.b. Destination.
Purpose:
Designate who is responsible for risk of loss in transit
Issue:
Supplies shall be delivered to the destination consignee’s wharf,
warehouse unloading platform, or receiving dock, at the expense of
the Contractor. The Government shall not be liable for any
delivery, storage, demurrage, accessorial, or other charges involved
before the actual delivery of the supplies to the destination,
unless such charges are caused by an act or order of the
Government acting in its contractual capacity.
Action:
If shipping instruments or other high value hardware deliverables
ask for FOB Origin


                                                      120
52.247-63 Preference for U.S.-Flag Air Carriers
 Purpose:
 Imposes requirement to use only U.S-flag air
 carriers for government-funded travel.
 Issue:
 Foreign travel becomes an unallowable cost if U.S.
 flag air carrier is not used, except under certain
 predefined situations.
 Action:
 Educate your researchers.
 • International Air Transportation Fair Competitive Practices Act
   of 1974 (49 U.S.C. 40118) (Fly America Act)



                                                    121
    52.246-9 Inspection of Research and
        Development – Short Form
Purpose:
Establishes conditions under which Government may
inspect/evaluate work.
Issue:
This clause is only available for R&D, and when delivery of
designs and reports is the objective. Other inspection
clauses require establishment and maintenance of an
inspection system and, under some circumstances, re-
performance.
Action:
Argue that contract is for basic R&D and only deliverables
are technical reports or fabrications/prototypes.

                                             122
    52.249-5 Termination for Convenience of the
   Government (Educational and other Nonprofit
                      Institutions)
Purpose:
Specifies actions the Contractor must take when it
receives a termination notice from Government.
Issue:
This is the only termination clause prescribed for use
with universities performing R&D (either CR or FP).
Termination for Default becomes a possibility on non-
R&D contracts.
Action:
Make sure the contract is for Research and
Development.

                                          123
APPENDIX




           124
    52.204-02 Security Requirements
Purpose:
Establishes protocols which will apply to the
contract if it involves classified information.
Issue:
Security controls; classified information.
Action:
Request Alternate I, which provides educational
institutions the opportunity to revise SOW or
terminate if the level of classification increases.

                                        125
 52.212-04 Contract Terms and Conditions
            Commercial Items
Purpose:
Sets forth abbreviated set of fixed-price terms and conditions
for the acquisition of commercial supplies and services. Note
the C.O. may use FAR 12 because it may contain the only tools
the agency knows how to use, e.g. purchase orders.
Issue:
Often used by contracting activities not accustomed to
working with educational institutions. Includes warranty,
patent indemnity, T for D and default.
Action:
Negotiate out unacceptable terms.


                                              126
           52.227-3 Patent Indemnity
Purpose:
Establishes the Government’s right to be indemnified for
patent infringement by Contractor, if Contractor is
delivering supplies and/or services normally offered for sale
in the open market. See prescription for exclusions.
Issue:
Many universities will not/can not provide patent
indemnity.
Action:
Should not be included in R&D contract; also see
Authorization & Consent (52.227-1, Alt 1).



                                              127
     52.227-14 Rights in Data - General
Purpose:
Establishes ownership of data and copyrights.
Issue:
Basic clause allows contractors to establish
copyright only on publications first produced
under the contract. For educational institutions,
Alternate IV will allow ownership of all data and
software.
Action:
Request that Alternate IV be included.

                                      128
   52.227-17 Rights in Data - Special Works
Purpose:
Establishes that contract deliverables are for sole use of the
Government (e.g., work-for-hire).
Issue:
All data and deliverables are owned by the Government.
Contractor may not publish or release without prior
approval; must request permission for ownership and/or
use.
Action:
The prescription is very clear about the few situations for
which the Government may invoke this clause – unless you
intend to accept this restriction, get it removed.


                                               129
           52.242-15 Stop-Work Order
Purpose:
Establishes responsibilities of each party when government
issues a stop-work order.
Issue:
Contractor must stop work on date stated. Government has
up to 90 days to cancel the order, extend it, or terminate the
contract. Contractor will be reimbursed for allowable cost
incurred prior to effective date and allowable, non-cancellable
obligations.
Action:
Request reduction of 90-day suspension to 30 days.


                                                130
  52.243-2 Changes - Cost Reimbursement
Purpose:
Establishes conditions under which Government may direct
changes to SOW.
Issue:
Only the Contract Officer may direct changes. These
changes are unilateral. If changes increase cost and/or time,
contract officer may make equitable adjustment to cost
based upon Contractor’s request for adjustment.
Action:
Submit adjustment request within 30 days of change notice
to request an equitable adjustment. Request Alt V.



                                             131
   252.204-7000 Disclosure of Information
Purpose:
To safeguard classified or other sensitive information.
Issue:
Requires government prior approval to publish or
disseminate. Purpose is not apparent from
prescription.
Action:
Refer to 27.404(g)(2)&(3) and NSDD-189 as justification
for getting restriction removed. Also, note IRS Ruling
76-296.


                                           132
     252.223-7004 Drug-Free Workforce
Purpose:
Requires contractor to maintain certain anti-drug
polices and procedures.
Issue:
Intended for contracts utilizing classified information
and to protect national security. Unlike basic federal
requirement, this clause adds random drug testing.
May violate institutional policy; union contracts.
Action:
Get it removed or contact University Counsel.

                                            133
 OTHER POTENTIALLY PROBLEMATIC FAR
             CLAUSES
52.216-12, Cost Sharing Contract-No Fee, Alt I
52.217-09, Option to Extend the Term of the Contract
52.222-50, Combating Trafficking in Persons
52.224-01, Privacy Act Notification
52.224-02, Privacy Act
52.232-12, Advance Payments, Alt II, IV, V
52.232-17, Interest
52.233-01, Disputes
52.249-08, Default (Fixed-Price Supply and Service)
52.249-09, Default (Fixed Price Research and Development)
52.252-02, Clauses incorporated by Reference
52.252-04, Alterations in Contract
52.252-06, Authorized Deviations in Clauses

                                               134
THANK YOU



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