RGCI - When to Request a Consent to Subcontract If You Dont 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.

Written by Lynne Nalley, CPA

Lynne Nalley, CPA Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)