When to Request a Consent to Subcontract If You Don't Qualify for a Purchasing Review

Probably now. Depending on the type and dollar amount of your subcontracts, FAR 52.244-2 Subcontracts clause requires a contractor that does not have an approved purchasing system (never been reviewed or is disapproved) to obtain written consent from the Contracting Officer before subcontract award.

Consent to subcontract can also be required when a contractor’s purchasing system is approved. A Contracting Officer can include the name of or a list of subcontracts that require written consent within the FAR clause 52.244-2(d). This may be requested when a subcontract is for a critical item, is a complex product or large dollar value.

What is a Subcontract?

There is sometimes confusion that a subcontract is different than a purchase order. FAR 52.244-2 clarifies this and defines subcontract as any contract to furnish supplies or services for performance of the prime contract or a higher-tier subcontract and includes purchase orders and changes and modifications to purchase orders.

Is Consent Required on All Subcontracts?

Pretty much – YES, but there are a few low dollar fixed price subcontracts that may not require consent. If your purchasing system has never been reviewed or is disapproved, consent to subcontract is required as follows:

• If your prime or higher-tier contract is not firm fixed price all of the following subcontracts require consent:
  • Cost-reimbursement;
  • Time-and-materials;
  • Labor-hour;
  • Fixed-price and exceeds the greater of the Simplified Acquisition Threshold (SAT) or 5 percent of the total estimated cost of the contract for DoD, Coast Guard, or NASA; and
  • Fixed-price and exceeds either the SAT or 5% of the estimated cost of the contract for a civilian agency.
• Even if you have a fixed price prime or higher-tier contract, you must get consent until your contract has the final price established (i.e., Undefinitized Contracting Action (UCA)).

What Information is Required?

FAR 52.244-2 provides a list of information to be provided to the Contracting Officer in writing before award of the subcontract. It includes:

• A description of the supplies or services to be subcontracted.
• Identification of the type of subcontract to be used.
• Identification of the proposed subcontractor.
• The proposed subcontract
• The subcontractor’s current, complete, and accurate certified cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions.
• The subcontractor’s Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract.
• A negotiation memorandum discussing price elements, whether cost or pricing data required, reliance on subcontractors certified cost or pricing data, whether the data provided was adequate, any significant differences between your price objective and the price negotiated, and explanation of fee calculation.

What Happens Next?

We sent the written request to subcontract; now we are done. Not so fast. First you need to ensure you receive written consent from the Contracting Officer and include it in the purchase order/subcontract file. Sometimes the Contracting Officer doesn’t respond. In this case, it is important that the buyer follow-up with the Contracting Officer and maintain the documentation to show that several attempts were made to obtain consent.

Adequate documentation should be maintained to show that the written request was provided to the Contracting Officer before award of the subcontract and follow-up correspondence, if applicable. DCAA will question subcontract costs when documentation of contracting officer notification and consent is not obtained, retained, or there is no follow-up correspondence when the Contracting Officer does not respond.

Redstone GCI offers comprehensive support to your company, including drafting policies and procedures for consent to subcontract, reviewing purchasing and subcontract files to ensure compliance with purchasing requirements, and providing expert training on consent to subcontract and purchasing topics through both webinars and in-person sessions. Our goal is to ensure that your company adheres to all necessary guidelines and regulations, minimizing risk and enhancing operational efficiency.