Does an OTA that does not include CAS coverage in the Prime Contract count towards the $50M limit on CAS covered contracts for determining if a contractor is non-traditional?
Started by JackSparrow · May 8, 2020 · 8 replies
- JOriginal post
JackSparrow
May 8, 2020 · 6y ago
My company recently won an OTA worth Approximately 45M as a non-traditional defense contractor. A non-traditional defense contractor is defined by statute as “an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to the full coverage under the cost accounting standards (CAS) prescribed pursuant to Section 1502 of title 41 and the regulations implementing such section.”
The award did not include any language regarding CAS coverage. My understanding is that a CAS covered contract means any negotiated contract or subcontract in which a CAS clause is required to be included. 48 CFR § 9903.301. I know the normal rules of the FAR acquisition process do not apply to OTAs. My question is does the contract count as a CAS covered contract and therefore the $45M would need to be counted against possible future awards and my company's status as a non-traditional defense contractor? Once again, there is no CAS clause in the contract. We are not a small business due to affiliation rules but are run separately from our parent company and affiliates due to our security clearance status. Any help would be greatly appreciated. Thanks.
- R
Retreadfed
May 8, 2020 · 6y ago
The CAS apply to contracts. An OTA is not a contract. Therefore, the CAS do not apply to OTAs.
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JackSparrow
May 8, 2020 · 6y ago
Thanks Retreadfed! Much appreciated.
- D
Don Mansfield
May 8, 2020 · 6y ago
The CAS apply to procurement contracts. An OTA is not a procurement contract. Therefore, the CAS do not apply to OTAs.
An OTA is a contract.
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JackSparrow
May 9, 2020 · 6y ago
Thanks Don! That makes sense as the OTA is a binding agreement. Appreciate the help and clarification.
- N
Neil Roberts
May 9, 2020 · 6y ago
JackSparrow said:
The award did not include any language regarding CAS coverage.
Jack, I don't see how anyone could successfully argue that your firm had a previous CAS covered contract when there is no requirement for CAS in the OTA.
- J
JackSparrow
May 11, 2020 · 6y ago
Thanks Neil! First OTA so still learning the ropes.
- h
here_2_help
May 11, 2020 · 6y ago
To clarify, the definition of nontraditional defense contractor does not turn on the dollar value of CAS-covered contract awards it has received. It turns on whether the contractor has, or has previously had in the past year, a contract subject to Full CAS coverage. Or the entity can be a small business.
You might think that no contractor would voluntarily choose to become subject to Full CAS coverage unless it had to ($50 million in CAS-covered awards), but it turns out that an entity has to elect Modified CAS coverage, and many fail to correctly execute the CAS Representation/Certification in Section K of the solicitation. Thus, their contract becomes subject to Full coverage by default. Oops!
Hope this helps.
- J
JackSparrow
May 11, 2020 · 6y ago
Thanks here_2_help. Will definitely keep an eye out for that situation in the future. Thanks again!