Overview
FAR Subpart 44.2 establishes the policies and procedures for requiring a contractor to obtain government consent before awarding a subcontract. It outlines the specific circumstances under which the government must evaluate a prime contractor's subcontracting choices to protect the government's interest in terms of cost, quality, and risk management.
Key Rules
- Thresholds for Consent:
- Approved Purchasing Systems: If a contractor has an approved purchasing system, consent is generally only required for subcontracts specifically identified by the Contracting Officer (CO).
- Unapproved Purchasing Systems: Consent is mandatory for cost-reimbursement, time-and-materials, and labor-hour subcontracts, as well as fixed-price subcontracts exceeding the Simplified Acquisition Threshold (SAT) or 5% of the total contract value (thresholds vary slightly between DoD/NASA and civilian agencies).
- Prohibited Subcontracts: Contracting Officers are strictly prohibited from consenting to subcontracts that use the "cost-plus-a-percentage-of-cost" system of contracting or those that exceed statutory fee limitations.
- Advance Notification: Contractors under cost-reimbursement contracts must notify the CO before awarding certain types of subcontracts, regardless of whether they have an approved purchasing system (statutory requirement).
- Non-Transferability: Consent to a subcontract does not automatically imply that the subcontract price is allowable or that the terms are acceptable for cost-reimbursement purposes unless specifically stated.
- SAM Verification: Contractors must ensure that proposed subcontractors are not listed as excluded in the System for Award Management (SAM).
Responsibilities
- Administrative Contracting Officer (ACO): Typically responsible for the actual "consent to subcontract" action, unless the CO specifically retains this authority.
- Contracting Officer (CO):
- Must identify specific subcontracts requiring consent in the prime contract.
- Evaluates the contractor’s notification and supporting data for sound business judgment.
- Determines if the proposed subcontract type is appropriate for the risks involved.
- Prime Contractor:
- Responsible for selecting subcontractors and performing cost/price analysis.
- Must justify the technical need and price fairness of the subcontract to the CO.
- Must comply with small business subcontracting plans and "make-or-buy" programs.
Practical Implications
- Administrative Burden: Contractors without an "Approved Purchasing System" face a significant administrative burden, as they must seek formal government approval for most major subcontracts, which can delay procurement timelines.
- CPSR Importance: These regulations provide a strong incentive for contractors to maintain a high-quality Contractor Purchasing System Review (CPSR) status. An approved system grants the contractor much more autonomy and reduces government intervention.
- Audit Readiness: During the consent process, the government will scrutinize whether the contractor obtained "adequate price competition." If a contractor awards a sole-source subcontract, they must have a robust, written justification ready, or risk the CO withholding consent.
- Negotiation Nuance: Simply naming a subcontractor in a winning proposal does not constitute consent. Contractors must ensure the CO explicitly identifies those subcontractors in the contract clause (52.244-2) to avoid having to re-submit for consent later.