Subcontractors Treatment of their Inter-organizational Transfers in Cost proposals Submitted to the Prime Contractor

Are you asking what common practice is, or are you asking what the rule is (assuming there is such a rule)?

It depends on whether or not FAR Part 31 is applicable to the subcontractor's proposal.

On 8/29/2022 at 3:40 PM, BTR2562 said:

Do proposed subcontractors treat their Inter-organizational transfers of materials and/or services the same manner in their cost proposals to the prime contractor  as a prime contractor treats its inter-organizational costs submitted in their prime's cost proposal submitted  to the Government?

If FAR 31.205-26 is applicable to the subcontractor and prime contractor, per paragraph (e), it may be on the basis of cost or price by either party.

On 9/1/2022 at 7:38 AM, Neil Roberts said:

If FAR 31.205-26 is applicable to the subcontractor and prime contractor, per paragraph (e), it may be on the basis of cost or price by either party.

Neil, I believe your post is a bit misleading. The cost principle you cite mandates that inter-organizational transfers must be on the basis of actual, allowable, costs unless a very specific except applies. See (e)(2) and paragraph (f) of the same cost principle, which takes people to FAR Part 15 as well as to Part 2 for the definition of a commercial item (product/service).

here_2_help said:

Neil, I believe your post is a bit misleading. The cost principle you cite mandates that inter-organizational transfers must be on the basis of actual, allowable, costs unless a very specific except applies. See (e)(2) and paragraph (f) of the same cost principle, which takes people to FAR Part 15 as well as to Part 2 for the definition of a commercial item (product/service).

here_to_help, I think your belief is misplaced...the difficulty or ease of qualifying for either cost or price basis does not nullify that a party may qualify for either, no matter how easy or difficult each is. If you want to say that one or the other may likely be more common, then go ahead.