Overview
This section provides foundational terminology used in FAR Part 44 to define the scope of subcontracting, the entities involved in procurement, and the formal process for evaluating a contractor's internal purchasing operations.
Key Rules
- Contractor Flexibility: The definition of "contractor" extends beyond the legal corporate entity to include specific affiliates, divisions, or plants, provided they perform their own independent purchasing.
- Comprehensive CPSR Scope: A Contractor Purchasing System Review (CPSR) is defined as a holistic, end-to-end evaluation covering everything from the initial development of a requirement to the final completion of subcontract performance.
- Broad Subcontract Definition: Subcontracts are not limited to formal bilateral agreements; they specifically include purchase orders and any subsequent changes or modifications.
- Inclusion of All Tiers: "Subcontractor" is defined broadly to include any supplier, distributor, or vendor furnishing items to either a prime contractor or another subcontractor, capturing the entire supply chain.
- Formal Approval Status: An "approved purchasing system" is strictly limited to those that have undergone the specific review and approval process dictated by FAR Part 44.
Practical Implications
- Audit Readiness: Contractors must maintain documentation for the entire lifecycle of a purchase—not just the award—as the CPSR evaluates the process from "requirement to completion."
- Regulatory Flow-downs: Since purchase orders and modifications are legally defined as subcontracts, contractors must ensure appropriate FAR clauses are flowed down even on simplified procurement documents.