Overview
FAR Subpart 51.1 prescribes the policies and procedures that allow Contracting Officers (COs) to authorize contractors—and by extension, subcontractors—to use Government supply sources. This authority is typically exercised to leverage the Government’s purchasing power and logistics infrastructure to reduce costs or improve efficiency on specific types of federal contracts.
Key Rules
- Eligibility: Authorization is primarily granted for cost-reimbursement contracts. It may also be used for negotiated contracts (if a substantial portion is cost-reimbursement) and contracts under the AbilityOne Program (41 U.S.C. chapter 85).
- Fixed-Price Exception: Contractors with fixed-price contracts are generally excluded, except when acquiring security equipment required for protecting classified information.
- The "Interest" Test: The CO must determine that authorizing the use of Government sources is in the Government’s best interest based on cost, suitability, and delivery factors.
- Mandatory Use for AbilityOne: COs must authorize contractors to purchase items available from the Committee for Purchase From People Who Are Blind or Severely Disabled via DLA, GSA, or VA distribution facilities.
- Written Findings: A formal written finding is required before issuing an authorization (except for AbilityOne supplies), justifying the decision based on administrative costs, lower item prices, and contractor recommendations.
- Debt Liability: The authorizing Government agency is ultimately responsible for any indebtedness incurred by the contractor that remains unpaid to the Government supply source.
- Title to Property: Title generally vests according to the "Government Property" clause of the contract; however, for educational institutions, title to items under $5,000 typically vests with the contractor.
Responsibilities
- Contracting Officer (CO):
- Determines if using Government sources is beneficial.
- Places a written justification (D&F) in the contract file.
- Requests Activity Address Codes (FEDSTRIP/MILSTRIP) from GSA or DoD.
- Issues the formal letter of authorization with specific limitations (dollar amounts, duration, etc.).
- Ensures the contractor complies with authorization terms and pays bills promptly.
- Contractor:
- Must only order items required for contract performance.
- Must use specified ordering procedures (FEDSTRIP, MILSTRIP, or Optional Form 347).
- Responsible for making prompt payments upon receipt of billing.
- Must include a specific authorization statement on all Federal Supply Schedule orders.
- GSA/DoD/VA:
- Assigns activity address codes.
- Provides ordering information and technical assistance to the contractor.
- Bills the contractor only after supplies have been shipped.
Practical Implications
- Cost Savings vs. Administrative Burden: While Government supply sources (like GSA Global Supply) often offer lower prices, the CO must weigh these savings against the administrative "overhead" of managing Activity Address Codes and monitoring contractor compliance.
- Financial Risk Management: Because the Government is liable for a contractor's unpaid debts to supply sources, COs should perform due diligence on a contractor's financial stability before granting authorization.
- Supply Chain Integration: For large-scale cost-reimbursement projects (e.g., managing a national laboratory or a major overseas construction site), this subpart allows contractors to plug directly into the federal logistics "grid," ensuring items meet specific military or federal specifications that might be hard to source commercially.
- Audit Readiness: Contractors using these sources must maintain rigorous records. Since the Government often holds title to these goods immediately or upon payment, these items are subject to strict Government Property audits under FAR Part 45.