H. Price Determination for Subcontracts

Comment: One respondent asked who makes the pricing determination if DoD is procuring through the subcontract. The respondent recommended that language be added that "the prime contractor is responsible for determining reasonableness of price for components and spare parts under subcontracts."

DoD Response: The rule does not change the pricing determination procedures for subcontractors used by the contracting officer. In accordance with DFARS 244.402, prime contractors are responsible for determining whether a particular subcontract item meets the definition of a commercial item. This does not affect the contracting officer's responsibilities to determine price reasonableness of prime contractors and subcontractors at FAR 15.404-3. However, the contracting officer may provide assistance to prime contractors being denied access to lower-tier subcontractor records.

Comment: One respondent suggested that applying the rule at lower tiers would be impracticable and could cause significant delays in the negotiation and award of subcontracts that could adversely impact performance of the prime contract.

DoD Response: The definition of commercial items is not limited solely to items supplied directly from prime contractors. It also extends to commercial items acquired by the prime contractor to be sold to the Government from subcontractors at all tiers, including items transferred from a contractor's division, affiliates, or subsidiaries. The prime contractor has the responsibility to determine if a subcontracted item meets the definition of a commercial item, as defined in FAR 2.101.

Comment: One respondent stated that the rule is in potential conflict with DFARS part 244. The respondent stated that if the rule applies to subcontracts, it would conflict with the language at DFARS 244.402(a) that requires contractors to determine if the subcontract item meets the definition of a commercial item.

DoD Response: The rule aligns with DFARS 244.402(a). It further supports the contracting officer's responsibility to make the commercial item determination for items acquired and the prime to flow this requirement down to subcontractors.