Contracting with Small Business with no accounting system

DFARS 242.7502( a ) only requires an accounting system, not an acceptable accounting system.  The contract clause that comes from this (DFARS 252.242-7006) has separate definitions for "accounting system" and "acceptable accounting system."  Your contractors have no accounting system at all?  None?

A possible solution is to do a tear-down-and-quote approach.  Negotiate a firm-fixed-price for the contractor to ( i ) determine the problem and ( ii )provide a firm-fixed-price quotation for the actual repair.  If you like the quoted repair price, you issue a firm-fixed-price work authorization of some sort -- if you don't like the price, you either negotiate it to your liking or you direct the contractor to return the item to you.  Imagine a CLIN for the tear-down-and-quote and a CLIN for the repair work.  The tear-down-and-quote CLIN has an estimated quantity representing your best guess of occurrences for the period of performance.  The repair CLIN is a draw-down CLIN showing your best estimate of repair costs.  It is all FFP, not IDIQ (you may have estimated quantities without IDIQ).

.                                         UNIT
ITEM  DESCRIPTION           QTY  UNIT    PRICE    AMOUNT
--------------------------------------------------------
001   Tear-Down-and-Quote    50   EA       $75    $3,750
.                          (est)
.
002   Repair                 1    LS   $50,000   $50,000
.     as authorized by
.     work orders

tinymule64 said:

In my organization, there seems to be a recurring issue with developing contract vehicles for repair work with very small businesses.  I have been requested on a couple of occasions to issue IDIQ repair contracts with small businesses who are OEMs on ship components.  The fact that these contracts are issued sole source is another challenge in and of itself as there is very little leverage.  In addition, these services are vital because the components they need to repair are emergent (Needed within a day or two of issues arising) and extremely important for ship/sub operation. None of these small businesses have an approved accounting system and they all refuse to make the internal changes necessary to have an adequate accounting system.  In accordance with DFARS 242.7502(a), this would take, CR, T&M, and Labor Hour out of the equation.  And as the work is emergent and can't be defined, I've been told we can't issue an IDIQ with FFP orders.  My guess is that this can't be an issue only at my organization.  Are there any strategies or contract types that people use for this type of repair work that don't require an accounting system?  Or is the only option to issue a pass through contract which is obviously not ideal?

What are you talking about?

Are you saying that these are original equipment manufacturers, but that they don't have accounting systems of any kind?

Are you saying that they do have accounting systems and that you or some other government person has reviewed them and found it to be inadequate in some way(s)? If so, in what way(s) are they inadequate?

Tinymule64, how are you finding these OEM's to be responsible if they do not have an accounting system?    Having  an accounting system adequate for the contract type contemplated is an element of responsibility.  See FAR 9.104-1(e) and 9.105-1(b)(2).