Washington Management Group

Flow Down

Practical Advice on GSA Schedule Contracting
By: Carolyn Alston, General Counsel, Washington Management Group

September 2011

A client recently asked which clauses in the GSA Schedule contract must be included in its subcontracts. Subcontractor is generally defined very broadly in government contracting to include any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. For purposes of commercial item contracting, Federal Acquisition Regulation (FAR) defines "subcontractor" to include a transfer of commercial items between divisions, subsidiaries, or affiliates of a contractor or subcontractor.

FAR clause 52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, lists clauses that are required to be implemented in commercial item contracts. The text of these clauses typically requires that a commercial item contractor include the provisions in its subcontracts. I have listed below some of the more significant clauses for GSA schedule contractors. Each clause may become applicable at a different dollar threshold or have varying exemptions.

  • 52.203-13, Contractor Code of Business Ethics and Conduct (Apr 2010) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
  • 52.203-15, Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009 (Jun 2010) (Section 1553 of Pub. L. 111-5).
  • 52.219-8, Utilization of Small Business Concerns (Dec 2010) (15 U.S.C.637 (d) (2) and (3)), in all subcontracts that offer further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $650,000 ($1.5 million for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.
  • 52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246).
  • 52.222-35, Equal Opportunity for Veterans (Sep 2010) (38 U.S.C. 4212).
  • 52.222–36, Affirmative Action for Workers with Disabilities (Oct 2010) (29 U.S.C. 793).
  • 52.222-41, Service Contract Act of 1965 (Nov 2007) (41 U.S.C. 351, et seq.).
  • 52.222-54, Employment Eligibility Verification (Jan 2009).

Alternate II of this clause provides that where a contractor agreed to accept orders using American Recovery and Reinvestment Act funds, the right of the Comptroller General and the Inspectors General to audit records flow down to subcontractors.

The FAR does not prohibit a prime contractor from including additional clauses in its subcontracts. In fact, prime contractors regularly flow down provisions that are consistent with their business interest. For example, the government has liberal rights to cancel or terminate contracts for convenience. A prime may include similar rights in its subcontracts so that if the government gets out of an agreement the prime can end its subcontract also. Subcontractors should carefully examine all subcontract agreements to determine their liabilities to the prime.

To read the full text of FAR clause 52.212-5 and its Alternate II, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items go to the following link

https://www.acquisition.gov/far/current/html/52_212_213.html

For additional information WMG clients should contact their consultant.

Do you have a government contracting question? Please email it to me at CarolynsCorner@washmg.com.

About Carolyn:

Carolyn Alston is General Counsel of Washington Management Group. She provides legal counsel to WMG's federal acquisition consulting operation, focusing on Multiple Award Schedule contract award, compliance, and audit procedures.

Prior to joining WMG, Carolyn had a distinguished career with the U.S. General Services Administration. Her experience as a senior attorney in the GSA's Office of General Counsel led to her role as the lead in developing and writing GSA's Multiple Award Schedule policy. Her GSA career culminated in running the agency's successful GSA Schedule program as Assistant Commissioner for Acquisition at GSA.

Carolyn holds a BA from Cornell University and a JD from Georgetown Law Center. Carolyn is a member of the bar in Maryland and the District of Columbia.



DISCLAIMER

WMG offers the information provided on this web site for informational purposes only.

WMG is a well recognized expert in GSA Schedule contracting, with more than 30 years of corporate experience. The information provided on this site is based on our substantial acquisition expertise, particularly with respect to commercial item contracting. Nothing on this site should be interpreted as legal advice.

As you recognize, most decisions regarding your GSA Schedule contract are highly dependent upon the facts of your particular circumstances. You should not rely on this site to make specific decisions about your contract. If you are considering taking specific actions on a matter affecting your GSA Schedule contract, we highly recommend that you contact WMG regarding a proposal for individual acquisition consulting services or that you seek advice from legal counsel with expertise in GSA Schedule contracting.

   

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