Need 100-120 word reply to each question.
What are some of the “hidden requirements” contained within the Section I of a Government contract (the FAR/DFARS/etc. clauses)? Pick one and advise your classmates what a company must do to comply.
Some of the hidden requirements contained within the section I of a government contract are the Anti-Kickback Procedures clause, the Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions clause, the Audits and Records-Sealed Bidding clause, and the Audits and Records-Negotiation clause. I decided to pick the Anti-Kickback Procedures clause. FAR 52.203-7 defines a kickback as used in the Anti-Kickback Procedures clause to mean any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided to any prime contractor, prime contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract (Federal Acquisition Regulation [FAR], 2016). In my opinion, this means that any item or thing of value provided to a contractor from a person in or involved with the government in exchange for rewarding good behavior or to obtain favorable treatment in relation to a contract is illegal.
In FAR 52.203-7, kickbacks are described as prohibiting any person from providing or attempting to provide or offering to provide any kickback; soliciting, accepting, or attempting to accept any kickback; or including, directly or indirectly, the amount of any kickback in the contract price charged by a prime contractor to the U.S. or in the contract price charged by a subcontractor to a prime contractor or higher tier subcontractor (Federal Acquisition Regulation [FAR], 2016).
In order to comply with this particular clause, a company must include a clause from FAR 52.203-7 in their contract(s) that says ‘the contractor agrees to incorporate the substance of this clause, including this subparagraph (c)(5) but excepting subparagraph (c)(1), in all subcontracts under this contract which exceed $100,000.00.’ Under this particular clause, it’s okay for a prime contractor to write the following: ‘FAR 52.203-7 Anti-Kickback Procedures is incorporated by reference, with the exception of subparagraph (c)(1) of that clause,’ This would be legally acceptable because the substance of the clause would be incorporated in the subcontract.
Federal Acquisition Regulation, pt. 52.203-7 (2016)
Small businesses in particular tend to “copy and paste” the entire Section I of their prime contract and flow it to their subs. Is this a wise practice? Why or why not?
As a small business, copy and pasting the prime contractor’s Section I to the subcontractor would not be advisable, but the situation will dictate. In other words, it depends. The FAR highly recommends that clauses should be referenced instead of providing full text whenever possible, but there are a few clauses that state that the contractor must incorporate the substance of the clause in their subcontracts. Some of those clauses include the “The Anti-Kickback Procedures”, “Restrictions on Subcontractor Sales to the Government”, and “Limitation on Payments to Influence Certain Federal Transactions”. Therefore, in those cases, the small business owner has no option but to copy and paste the clause into the sub’s contract.
Small businesses have a higher risk of losing out if a subcontractor fails to follow a clause compared to larger businesses. There may be instances where this is the small business’s one and only shot to breakthrough and become a successful business. If they are liable to the actions of the subcontractor, and that sub fails to follow a clause such as “Preventing Personal Conflicts of Interest”, that small business will be the one that is penalized, and may have even lost their chance to conduct anymore business with the Government. Therefore, each clause should be analyzed thoroughly, and the small business owner should consider what the consequences are if they copy and paste from their contract and flow it to the subs, or whether they make it more specific to the sub’s roles and responsibilities. It would certainly be a strong recommendation for any small business owner who is just starting out to take the time and put the extra effort into each and every clause for the subcontractor.
Federal Acquisition Regulation (FAR Subpart 52). Retrieved on November 24, 2016 from: https://www.acquisition.gov/?q=/browse/far/52
Federal Government Contract Overview. Retrieved on November 24, 2016 from: http://corporate.findlaw.com/law-library/federal-government-contract-overview.html