Level of scrutiny for sub claim on cost-reimbursable K

Interesting choice of terms: "inefficiencies" and "self-inflicted costs". I'll go ahead and guess you mean the costs are not reasonable in amount.

Maybe they are not reasonable. Is that the subcontractor's fault or the fault of the prime contractor, who failed to adequately manage its subcontractor?

DCAA asserts that--

"The prime contractor is primarily responsible for subcontract award, technical and financial

performance, monitoring, and payment to the subcontractor for the work accomplished under

subcontract terms."

If that's true, then who is responsible for letting the subcontractor operate inefficiently?

I would suggest you review your management of the subcontractor before you start disallowing its incurred costs.

Thanks, for the response.

Sub claims govt responsible due to lack of timely OFI and OFE. Very likely the case.

My question goes more to the standard of review a prime must employ before issuing any cost and price cert.

supra,

"standard of review" -- that's a legal question. What do your attorneys say?

H2H

If the sub submits an invoice under a fixed-price subcontract under a cost-reimbursement prime contract, then the prime should ensure that the invoice was submitted pursuant to the terms of the subcontract.

If the sub submits an invoice (voucher) for reimbursement of costs incurred under a cost-reimbursement subcontract under a cost-reimbursement prime contract, then the prime should ensure that the costs reimbursed by the prime are allowable pursuant to FAR 31.201-2. I presume that the standard for the prime's review is reasonable diligence -- that of a prudent business person. The prime should disallow any subcontract costs that are not allowable under FAR, based on its judgment. If the prime has any doubts about the allowability of the sub's incurred costs, it should it should confer with the contracting officer. The burden is presumably on the sub to prove to the prime that its costs are allowable. There may be a risk to a prime in reimbursing a sub for dubious costs and then seeking reimbursement for those costs from the government.