Working with our Purchasing and Procurement Offices on Those Pesky Terms and Conditions

By Dan Nordquist posted 05-14-2015 14:05

  

Turning what can be a “muddy” issue into “just foggy” all started when I was asked the following question:  "I have worked over the years with our Purchasing Department to ensure they have the standard FAR clauses in their purchase orders (PO), however, I am no expert.  Now we are in the midst of buying a $5M laser using DOD funds.  Do we need to adjust any PO terms and conditions (T/Cs) because of DFAR (Defense FARS) clauses in the contract?"

I thought of (and immediately took the question to) one of our trusted colleagues, FAR expert and NCURA friend Kathy Lorenzi, who is now a consultant on federal and industry grants and contracts for both for-profit and non-profit organizations.  Here is her response:

In answer to your question, I read through FAR Part 12 and the DFAR Part 12.  I frequently use these parts as a basis to develop subcontracts. However, I think FAR 52.244-6, Subcontracts for Commercial Items, coupled with DFAR 252.244-7000 is more appropriate to your question.  

The FAR clause identifies the clauses that should be flowed to a subcontractor for commercial items under a federal prime.  However, the DFAR clause says, "(a) The Contractor is not required to flow down the terms of any DFAR clause in subcontracts for commercial items at any tier under this contract unless so specified in the particular clause."  With that said, if an organization is purchasing anything that will be delivered to the DOD at any point, I would suggest looking at DFAR 212.3 to see what contract provisions may apply to that particular purchase and should be added as necessary.

 
I hope that both the FAR and DFAR clauses are in your contract.  If not, I think you can still use the instructions provided in the clauses.  The accepted practice is to include clauses in your subcontracts that meet both the required flow-downs and support your business needs to support your requirement under the federal prime.  As we tell students in our FAR training, the Christian Doctrine only applies to prime contracts.  


I hope this answers your question.   If not or you have any follow-on questions, please feel free to get back to me.  I was also reviewing the new requirements under the OMB uniformed guidance.  It looks like OMB is moving grant property and procurement terms to be more in line with the contract side.

Take care,

Kathy

Oh my!” I thought.  This conflicts with Uniform Guidance (UG)!   So I asked, my UG expert in the office at the time, a follow-up question : “Tom, could you please map the current rules for what to include for T/Cs in procurement POs to the new UG?”
After receiving an excellent answer, I emailed WSU’s Purchasing Director Eric Rogers and explained to him what is needed for his POs, not only regarding DFAR T/Cs, but all other procurements on federal grants and contracts (take note of the all-important P.S. in this reply!):

 

Eric, back on this for just a second.  I had worked with Patty Gropp over the years on Purchasing Field Order T/Cs – probably back when I didn’t know as much as I do now….for sure.   Here is a re-cap of what T/Cs to include to make sure we are all on the same page (I am also copying our Assistant Vice President of Capital Planning & Development, POs related to construction or facility improvement or construction contracts made with federal grant/contract money).  I have no idea what State of Washington T/Cs are required, that’s all under your bailiwick. 

For federal Grants – OMB Circular A-110: Subpart C: Procurement Standards: .48 Contract Provisions applies and further points to additional T/Cs to include, for grants, in Appendix A (scroll down to the bottom).  REMINDER – OMB Circular A-110 ends on 12/25/14, see below for the future references.

For federal Contracts - FAR 52.244-6, Subcontracts for Commercial Items govern what T/Cs to include, for contracts.  Any of the supplements to the FAR, i.e., DFAR, DEAR, etc. likely are what Kathy said below “whatever it says in the contract”.  If you come across any federal contract money buying equipment, just let us know and we can help. 

A good update for all of us to make sure all is being communicated properly to those we award bids to. 

Regards, 

Dan Nordquist

P.S.

For future reference, after 12/26/14, the equivalent clause to A-110 §C.48 in the Final/Uniform Guidance becomes, under “Procurement Standards”: 

“§200.326  Contract provisions. The non-Federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for non-Federal Entity Contracts Under Federal Awards.”

And A-110 Appendix A becomes: “Appendix II to Part 200—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards” (there are now 11 potentially applicable contract clauses in the Appendix to 2 CFR 200, up from 8 in A-110’s Appendix A).

These interactions reminded me of how important it is to surround yourself with experts such as Kathy, and to build relationships with your colleagues on campus.  Those of you that work closely with your Purchasing/Procurement Office, and I encourage you to get to know them if you don’t, may want to pass along our article so all these details can become… “just foggy” vs. “muddy”!  

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05-15-2015 16:53

I hope Bruce Morgan reads this!