Overview
FAR 44.201 establishes the criteria under which prime contractors must obtain the Contracting Officer’s (CO) formal consent before awarding subcontracts and defines when contractors must provide advance notification of pending awards. These regulations serve as a risk-management tool to ensure the government maintains oversight of subcontracted work that is high-value, complex, or performed under specific contract types.
Key Rules
- Approved vs. Non-Approved Purchasing Systems:
- With an Approved System: Consent is generally only required for subcontracts specifically named by the CO in the contract (e.g., critical systems or high-value components).
- Without an Approved System: Consent is mandatory for subcontracts under cost-reimbursement, T&M, or labor-hour contracts if they meet specific thresholds (typically the Simplified Acquisition Threshold (SAT) or 5% of the total contract cost).
- Threshold Variations by Agency:
- DoD, NASA, and Coast Guard: The threshold for consent/notification is the greater of the SAT or 5% of the total estimated cost.
- Civilian Agencies: The threshold is either the SAT or 5% of the total estimated cost.
- Advance Notification (Statutory):
- Under cost-reimbursement contracts, contractors must notify the CO before awarding Cost-Plus-Fixed-Fee (CPFF) subcontracts or fixed-price subcontracts exceeding the applicable thresholds.
- Crucial Distinction: For civilian agencies, this notification is required by statute even if the contractor has an approved purchasing system.
- Automatic Consent: If a CO provides written authorization for a contractor to use Government supply sources (per FAR Part 51), that authorization automatically constitutes consent to subcontract.
Practical Implications
- Administrative Burden: Contractors without a "Contractor Purchasing System Review" (CPSR) approval face significant administrative delays, as they must pause for CO consent on nearly all major subcontracts.
- Compliance Risk for Civilian Contracts: Contractors often mistakenly assume that an approved purchasing system exempts them from all notifications; however, they must still provide advance notification for civilian agency cost-reimbursement contracts regardless of system status.
- Risk-Based Oversight: COs use these clauses to "carve out" specific surveillance for critical components (like engines for airframes), even when a contractor is otherwise highly rated.