DOD moves to limit excessive pass-through costs

An interim rule bars Defense Department contracting officers from paying excessive pass-through fees for subcontracted work that exceed the value of the prime contractors' contribution to the work.

The rule amends the Defense Federal Acquisition Regulation Supplement to implement Section 852 of the National Defense Authorization Act for Fiscal 2007.

Published in the May 13 Federal Register, the rule allows the government to pay prime contractors for subcontracted management functions that the contracting officer determines benefit the government. Excessive pass-through fees are defined as charges for indirect costs or added profits that don't benefit the government.

Contractors are to exclude excessive charges from their proposals.

About the Author

Technology journalist Michael Hardy is a former FCW editor.

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