The Microsoft Word Template for a Letter of Intent and the Microsoft Word Subcontracting Agreement Template have been created specifically to address CMS’s particular rules and requirements for HME competitive bidding. These Templates are to be used by medical equipment suppliers who wish to get involved in the competitive bidding process, but who will need assistance in order to fully supply the entire Competitive Bidding Area ("CBA"). These suppliers either cannot qualify to form a network because they do not fall under the definition of small supplier ("a company which earns $3.5 million in gross revenue or less"), or they prefer maintaining complete control over their operations. Suppliers who prefer to pursue subcontracting arrangements will have direct control over their subcontractors. Also, suppliers who enter into a subcontracting arrangement can also compete for the "Bid" and may serve as both a subcontractor and a contractor if they win the bid.
- The Letter of Intent has been crafted, so that a potential Contractor and Subcontractor can quickly enter into a basic agreement, and then they can finalize the details through a more formal subcontracting agreement. A Letter of Intent is typically the first step in an agreement, and its purpose is to encompass the basic terms of a deal clearly and efficiently. A Letter of Intent should satisfy CMS's request for information regarding subcontractors at the time of the bid.
The Letter of Intent Template contains optional provisions which are highlighted in bold and indented. If a Contractor does not wish to utilize the option, that provision or sentence should be deleted. Per the instruction on the top of the Letter of Intent, the Letter of Intent should be copied onto the Contractor's Letterhead.
- The Subcontracting Agreement Template is for the purpose of facilitating the subcontracting process and intended to be used to create a binding contract between parties. Suppliers will choose from one of three options in subcontracting agreements: (1) product line support and (2) geographic access support, and (3) personnel support. The product line support option is for those suppliers who can deliver product to the entire geographic area of the CBA, but may not be able to supply the amount of product to cover all of its customers needs. The geographic support option is for suppliers who do not have the capacity to deliver items throughout the entire CBA. The personnel support option is for suppliers who do not have the administrative personnel to handle the volume of business in the CBA. A supplier may have more than one reason for having a subcontract and some may choose more than one option.
- Both the Letter of Intent and the Subcontract Template are based on an analysis of CMS rules and regulations governing Competitive Bidding as of June 1, 2007.
- Important Notes: CMS/CBIC requires a suitable Letter of Intent at the time of bid submission only if your Form B Expansion Plan includes the use of subcontractors. Providers may execute the formal subcontracting agreement upon notice of bid acceptance (i.e., at a later date). The following fees include documents for all parties within the subcontracting arrangement, not per provider.
Providers should be aware that there are several payment issues involved with subcontracting. Click Here for information on different payment issues for consideration.