FAR 52.215-23 - Limitations on Pass-Through Charges

***

Prescribed in 15.408(n)(2)
Effective Date:	1 October 2009
Clause or Provision:	Clause
Provision or Clause Number:	52.215-23 - Limitations on Pass-Through Charges
Principle Type And/Or Purpose of Contract:
Required:	Cost Reimbursement, Supply; Cost Reimbursement, R&D; Cost Reimbursement, Service; Cost Reimbursement, Construction
Applicable:	Time and Materials/Labor Hour; Facilities; Architect-Engineering; Dismantling, Demolition or Removal of Improvements; Leasing of Motor Vehicles; Time & Material/Labor Hour; Fixed Price, Construction; Fixed Price, Service; Fixed Price, R&D; Indefinite Delivery; Transportation; Utility Services
Optional:	Simplified Acquisition Procedures (Excludes Micro-Purchase)
Subject:	Subcontract(s)/Subcontractor(s)
ProcurementType:
Contract Threshold:
Prescription Overview:	Prescription (n) Limitations on Pass-Through Charges (2) (i) Except as provided in paragraph (n)(2)(ii), the contracting officer shall insert the clause 52.215-23, Limitations on Pass-Through Charges, in solicitations and contracts including task or delivery orders as follows: (A) For civilian agencies, insert the clause when— (1) The total estimated contract or order value exceeds the simplified acquisition threshold as defined in section 2.101 and (2) The contemplated contract type is expected to be a cost-reimbursement type contract as defined in Subpart 16.3; or (B) For DoD, insert the clause when— (1) The total estimated contract or order value exceeds the threshold for obtaining cost or pricing data in 15.403-4; and (2) The contemplated contract type is expected to be any contract type except— (i) A firm-fixed-price contract awarded on the basis of adequate price competition; (ii) A fixed-price contract with economic price adjustment awarded on the basis of adequate price competition; (iii) A firm-fixed-price contract for the acquisition of a commercial item; (iv) A fixed-price contract with economic price adjustment, for the acquisition of a commercial item; (v) A fixed-price incentive contract awarded on the basis of adequate price competition; or (vi) A fixed-price incentive contract for the acquisition of a commercial item. (ii) The clause may be used when the total estimated contract or order value is below the thresholds identified in 15.408(n)(2)(i) and for any contract type, when the contracting officer determines that inclusion of the clause is appropriate. (iii) Use the clause 52.215-23 with its Alternate I when the contracting officer determines that the prospective contractor has demonstrated that its functions provide added value to the contracting effort and there are no excessive pass-through charges.
Clause Overview:	a)Definitions Added Value Excessive Pass-Through Charge Subcontract Subcontractor (b) General The Government will not pay excessive pass-through charges. The Contracting Officer shall determine if excessive pass-through charges exist. (c) Reporting Required reporting of performance of work by the Contractor or a subcontractor. The Contractor shall notify the Contracting Officer in writing if— (1) The Contractor changes the amount of subcontract effort after award such that it exceeds 70 percent of the total cost of work to be performed under the contract, task order, or delivery order. The notification shall identify the revised cost of the subcontract effort and shall include verification that the Contractor will provide added value; or (2) Any subcontractor changes the amount of lower-tier subcontractor effort after award such that it exceeds 70 percent of the total cost of the work to be performed under its subcontract. The notification shall identify the revised cost of the subcontract effort and shall include verification that the subcontractor will provide added value as related to the work to be performed by the lower-tier subcontractor(s). (d) Recovery of excessive pass-through charges If the Contracting Officer determines that excessive pass-through charges exist; (1) For other than fixed-price contracts, the excessive pass-through charges are unallowable in accordance with the provisions in FAR subpart 31.2; and (2) For applicable DoD fixed-price contracts, as identified in 15.408(n)(2)(i)(B), the Government shall be entitled to a price reduction for the amount of excessive pass-through charges included in the contract price. (e) Access to records (1) The Contracting Officer, or authorized representative, shall have the right to examine and audit all the Contractor’s records (as defined at FAR 52.215-2(a)) necessary to determine whether the Contractor proposed, billed, or claimed excessive pass-through charges. (2) For those subcontracts to which paragraph (f) of this clause applies, the Contracting Officer, or authorized representative, shall have the right to examine and audit all the subcontractor’s records (as defined at FAR 52.215-2(a)) necessary to determine whether the subcontractor proposed, billed, or claimed excessive pass-through charges. (f) Flowdown The Contractor shall insert the substance of this clause, including this paragraph (f), in all cost-reimbursement subcontracts under this contract that exceed the simplified acquisition threshold, except if the contract is with DoD, then insert in all cost-reimbursement subcontracts and fixed-price subcontracts, except those identified in 15.408(n)(2)(i)(B)(2), that exceed the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4. Alternate I (OCT 2009) As prescribed in 15.408(n)(2)(iii), substitute the following paragraph (b) for paragraph (b) of the basic clause: (b) General. The Government will not pay excessive pass-through charges. The Contracting Officer has determined that there will be no excessive pass-through charges, provided the Contractor performs the disclosed value-added functions.
Important Notes/Requirements:
Subcontract Threshold:
Incorporated by Reference:	Yes
Uniform Contract Format:	I
Editor:	Marshall

---

Personal notes.