Subcontractor costs to Government

It depends on the terms of the prime contract and the reasons for the cost increase.

1. is the prime contract fixed-price, cost-reimbursement, time-and-materials, or something else?

2. Why were the sub's costs increased?

Cost reimbursable.

Costs increased from innitial proto-type to full production. sub has sinnce held pricing.

Thanks, Vern!

Well, if the prime contract is cost-reimburseable, then, pursuant to the allowable cost and payment clause, FAR 52.216-7, the prime should be able to recover the additional subcontract costs from the government if:

1. the additional subcontract costs are allowable pursuant to FAR Subpart 31.2, and

2. the prime's total costs incurred, including any allowable subcontractor costs, are within the limitation of cost or limitation of funds stated in the prime contract.

Vern- I owe you a beer! Many thanks!

Jeff

Adding to what Vern said, even if the prime's costs exceed the LOC/LOF amount, the government generally has discretion regarding funding the overrun. Thus, under these clauses, the prime may be able to recover overrun costs, but no fee.