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Ask Asad Rahman Your Own Question
Asad Rahman
Asad Rahman, Lawyer
Category: Legal
Satisfied Customers: 2170
Experience:  Practicing Attorney with 10 years experience
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I am filling out an application on .gov in order to register

Customer Question

Hi there, I am filling out an application on SAM.gov in order to register my company to place bids on government projects. I design women's outdoor apparel. I have many connections within the indicstry which is how we develop such a diverse collection of apparel. Now that I am reading FAR 52.203 I am wandering if my company will even qualify to place a bid. 52.203 reads as follows:

6 Restrictions on Subcon-
tractor Sales to the Government.
As prescribed in 3.503

2, insert the
following clause:
R
ESTRICTIONS ON
S
UBCONTRACTOR
S
ALES TO
THE
G
OVERNMENT
(JUL 1995)
(a) Except as provided in (b) below, the
Contractor shall not enter into any agree-
ment with an actual or prospective subcon-
tractor, nor otherwise act in any manner,
which has or may have the effect of restrict-
ing sales by such subcontractors directly to
the Government of any item or process
(including computer software) made or fur-
nished by the subcontractor under this con-
tract or under any follow-on production con-
tract.
(b) The prohibition in (a) above does not
preclude the Contractor from asserting
rights that are otherwise authorized by law
or regulation.
(c) The Contractor agrees to incorporate
the substance of this clause, including this
paragraph (c), in all subcontracts under this
contract which exceed $100,000.
(End of clause)
Alternate I
(OCT 1995). As prescribed
in 3.503

2, substitute the following
paragraph in place of paragraph (b) of
the basic clause:
(b) The prohibition in paragraph (a) of this
clause does not preclude the Contractor from
asserting rights that are otherwise author-
ized by law or regulation. For acquisitions of
commercial items, the prohibition in para-
graph (a) applies only to the extent that any
JA: What state are you in? It matters because laws vary by location. Has anything been filed or reported?
Customer: I am only registering. No contract has been awarded. We manufacture in the US and overseas and have the capability to deliver our goods across the world. This is language from the federal government.
JA: Anything else you want the lawyer to know before I connect you?
Customer: I don;t think so.
Submitted: 8 months ago.
Category: Legal
Customer: replied 8 months ago.
how long should I wait before someone answers my question?
Expert:  Asad Rahman replied 8 months ago.

I am sorry no one responded sooner. What in that regulation is of concern to you? I need some more info to give you an answer.

Customer: replied 8 months ago.
Well this regulation states that I would not be allowed to hire a subcontractor to complete work for a government bid. But I guess I just don't understand how I would get the job done otherwise. My company designs women's outdoor apparel. We've been told we could supplement our income by landing government contracts I only provide certain aspects of service in the process. I would need to recruit other companies to bid on a manufacturing contract. For instance, let's just say I want to bid on a contract to provide uniforms to prisoners in Arizona. This is the process that I would go through to provide manufacturing: I would develop marking, grading and tech packs. I would reach out to several different fabric converters and fabric wholesalers to find the best price on fabric. *Is the fabric converter considered a "subcontractor" according to this regulation? If the fabric was located outside of the US I would then reach out to a broker who could negotiate the customs fees to get the fabric delivered to the US. *Is that broker considered a "subcontractor"? I would then reach out to my manufacturing group and they would provide quotes from manufacturers who have space available at the time. I can see from the government's stand point that they will want to vet each company who does business for them but our manufacturing pool is gigantic. All manufacturers are vetted for legal practice before they can enter our pool of options. i.e. No child labor, etc. So we only deal with reputable companies but there are hundreds of options. There are some manufacturers that I love dealing with but often times, the manufacturers with the best reputation for quality will not have space available on their manufacturing line for a small run of prison uniforms. *Would the manufacturer I choose be considered a "subcontractor"? I would then hire a shipping company to deliver the fabric from the converter to the manufacturer. *Is this shipping company a subcontractor? I would then hire a quality control company to oversee the delivery and manufacturing process. I might even hire two different quality control companies just to insure that one company isn't bribed. So essentially I hire one quality control company to watch the process and another to watch that company to make sure that everything they tell me is true. *Are these companies considered "subcontractors"? I would then fly to the manufacturer and oversee the products as they come off the line to make sure my specs are being met. I would also arrange for delivery of the product to its final destination. *Would that shipping company be considered a subcontractor? In this industry I don't know if anyone who has the capability of providing every aspect of a given manufacturing request. We all have to work together to make these things happen as we all provide a different key that is imperative in the manufacturing process. If I owned the manufacturing facility I would still need to do all the same things as a manufacturer is not a fabric converter or a shipping and logistics company or a technical/ conceptual designer. I want to make sure I'm not violating laws by bidding on a contract and then recruiting other companies to get the job done... which is just the nature of manufacturing.
Customer: replied 8 months ago.
A portion of this regulation reads,
"The prohibition in paragraph (a) of this clause does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation."What does that mean? Do I have the right to bid this process by asserting rights that are authorized by law not included in this regulation?
Expert:  Asad Rahman replied 8 months ago.

My understanding of this clause is that it prohibits you from disallowing your subcontractor from contracting with the government directly.

Customer: replied 8 months ago.
I'm sorry. I don't understand your answer.
Expert:  Asad Rahman replied 8 months ago.

The intent of the clause is to prevent you from putting in your contract with your subcontractor that they cannot sell the same product or services directly to the government. This is the way of the government ensuring they can get A cheaper price. For example if you sell uniforms to the government using a suppliers but For example if you sell uniforms to the government using a suppliers buttons The government wants to be able to buy spare buttons directly from that supplier without you or Mark up. So they do not want you to put a clause in your subcontract for hitting them from selling the buttons to the government.

Customer: replied 8 months ago.
I can see the intent of the clause but my question is: would I be violating this clause by bidding a contract that will employee subcontractors?
Expert:  Asad Rahman replied 8 months ago.
NO you would not be as long as your subcontract does not prohibit the subcontractor from selling direct to the government