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                            52.215-23_Alternate I
        
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FAC Number: 2024-03 Effective Date: 02/23/2024
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Subpart52.052.152.252.3
Section52.20052.20152.20252.20352.20452.20552.20652.20752.20852.20952.21052.21152.21252.21352.21452.21552.21652.21752.21852.21952.22052.22152.22252.22352.22452.22552.22652.22752.22852.22952.23052.23152.23252.23352.23452.23552.23652.23752.23852.23952.24052.24152.24252.24352.24452.24552.24652.24752.24852.24952.25052.25152.25252.253
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52.215-23 Limitations on Pass-Through Charges.52.215-23 Limitations on Pass-Through	Charges.       As prescribed in 15.408(n)(2), use	the following clause:          Limitations	on Pass-Through Charges (Jun 2020)                                       (a)                   *Definitions*.	As used in this clause-                *Added value* means	that the Contractor performs subcontract management functions that	the Contracting Officer determines are a benefit to the Government	(*e.g.*, processing orders of parts or services, maintaining	inventory, reducing delivery lead times, managing multiple sources	for contract requirements, coordinating deliveries, performing quality assurance	functions).                *Excessive pass-through	charge*, with respect to a Contractor or subcontractor that adds	no or negligible value to a contract or subcontract, means a charge	to the Government by the Contractor or subcontractor that is for	indirect costs or profit/fee on work performed by a subcontractor	(other than charges for the costs of managing subcontracts and any	applicable indirect costs and associated profit/fee based on such	costs).                *No or negligible value* means the Contractor	or subcontractor cannot demonstrate to the Contracting Officer that	its effort added value to the contract or subcontract in accomplishing	the work performed under the contract (including task or delivery	orders).                *Subcontract* means any contract, as defined	in Federal Acquisition Regulation	(FAR) 2.101, entered into by	a subcontractor to furnish supplies or services for performance	of the contract or a subcontract. It includes but is not limited	to purchase orders, and changes and modifications to purchase orders.                *Subcontractor*, as defined in FAR  44.101, means any supplier,	distributor, vendor, or firm that furnishes supplies or services	to or for a prime Contractor or another 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)                   *Subcontracts.* 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, as defined in FAR  2.101 on the date of subcontract	award, except if the contract is with DoD, then insert in all cost-reimbursement	subcontracts and fixed-price subcontracts, except those identified	in FAR  15.408(n)(2)(i)(B)(*2*),	that exceed the threshold for obtaining cost or pricing data in	FAR  15.403-4 on the date of	subcontract award.                                 (End of clause)          *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.    **Parent topic:**  52.215 [Reserved]
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