Subpart 44.2 - Consent to Subcontracts

Parent topic: Part 44 - Subcontracting Policies and Procedures

44.201 Consent and advance notification requirements.

44.201-1 Consent requirements.

(a) If the contractor has an approved purchasing system, consent is required for subcontracts

specifically identified by the contracting officer in the subcontracts clause of the contract. The

contracting officer may require consent to subcontract if the contracting officer has determined that

an individual consent action is required to protect the Government adequately because of the

subcontract type, complexity, or value, or because the subcontract needs special surveillance. These

can be subcontracts for critical systems, subsystems, components, or services. Subcontracts may be

identified by subcontract number or by class of items (e.g., subcontracts for engines on a prime

contract for air-frames).

(b) If the contractor does not have an approved purchasing system, consent to subcontract is

required for cost-reimbursement, time-and-materials, labor-hour, or letter contracts, and also for

unpriced actions (including unpriced modifications and unpriced delivery orders) under fixed-price

contracts that exceed the simplified acquisition threshold, for-

(1) Cost-reimbursement, time-and-materials, or labor-hour subcontracts; and

(2) Fixed-price subcontracts that exceed-

(i) For the Department of Defense, the Coast Guard, and the National Aeronautics and Space

Administration, the greater of the simplified acquisition threshold or 5 percent of the total estimated

cost of the contract; or

(ii) For civilian agencies other than the Coast Guard and the National Aeronautics and Space

Administration, either the simplified acquisition threshold or 5 percent of the total estimated cost of

the contract.

(c) Consent may be required for subcontracts under prime contracts for architect-engineer services.

(d) The contracting officer’s written authorization for the contractor to purchase from Government

sources (see part 51) constitutes consent.

44.201-2 Advance notification requirements.

Under cost-reimbursement contracts, the contractor is required by statute to notify the contracting

officer as follows:

(a) For the Department of Defense, the Coast Guard, and the National Aeronautics and Space

Administration, unless the contractor maintains an approved purchasing system, 10 U.S.C. 3322(c)

requires notification before the award of any cost-plus-fixed-fee subcontract, or any fixed-price

subcontract that exceeds the greater of the simplified acquisition threshold or 5 percent of the total
estimated cost of the contract.

(b) For civilian agencies other than the Coast Guard and the National Aeronautics and Space

Administration, even if the contractor has an approved purchasing system, 41 U.S.C. 3905 requires

notification before the award of any cost-plus-fixed-fee subcontract, or any fixed-price subcontract

that exceeds either the simplified acquisition threshold or 5 percent of the total estimated cost of the

contract.

44.202 Contracting officer’s evaluation.

44.202-1 Responsibilities.

(a) The cognizant administrative contracting officer (ACO) is responsible for consent to

subcontracts, except when the contracting officer retains the contract for administration or

withholds the consent responsibility from delegation to the ACO. In such cases, the contract

administration office should assist the contracting office in its evaluation as requested.

(b) The contracting officer responsible for consent shall review the contractor’s notification and

supporting data to ensure that the proposed subcontract is appropriate for the risks involved and

consistent with current policy and sound business judgment.

(c) Designation of specific subcontractors during contract negotiations does not in itself satisfy the

requirements for advance notification or consent pursuant to the clause at 52.244-2. However, if, in

the opinion of the contracting officer, the advance notification or consent requirements were

satisfied for certain subcontracts evaluated during negotiations, the contracting officer shall identify

those subcontracts in paragraph (j) of the clause at 52.244-2.

44.202-2 Considerations.

(a) The contracting officer responsible for consent must, at a minimum, review the request and

supporting data and consider the following:

(1) Is the decision to subcontract consistent with the contractor’s approved make-or-buy program, if

any (see 15.407-2)?

(2) Is the subcontract for special test equipment, equipment or real property that are available from

Government sources?

(3) Is the selection of the particular supplies, equipment, or services technically justified?

(4) Has the contractor complied with the prime contract requirements regarding-

(i) Small business subcontracting, including, if applicable, its plan for subcontracting with small,

veteran-owned, service-disabled veteran-owned, HUBZone, small disadvantaged and women-owned

small business concerns (see part 19); and

(ii) Purchase from nonprofit agencies designated by the Committee for Purchase From People Who

Are Blind or Severely Disabled 41 U.S.C.8504 (see part 8)?
(5) Was adequate price competition obtained or its absence properly justified?

(6) Did the contractor adequately assess and dispose of subcontractors’ alternate proposals, if

offered?

(7) Does the contractor have a sound basis for selecting and determining the responsibility of the

particular subcontractor?

(8) Has the contractor performed adequate cost or price analysis or price comparisons and obtained

certified cost or pricing data and data other than certified cost or pricing data?

(9) Is the proposed subcontract type appropriate for the risks involved and consistent with current

policy?

(10) Has adequate consideration been obtained for any proposed subcontract that will involve the

use of Government-provided equipment and real property?

(11) Has the contractor adequately and reasonably translated prime contract technical requirements

into subcontract requirements?

(12) Does the prime contractor comply with applicable cost accounting standards for awarding the

subcontract?

(13) Is the proposed subcontractor listed as excluded in the System for Award Management (see

subpart 9.4)?

(b) Particularly careful and thorough consideration under paragraph (a) of this section is necessary

when-

(1) The prime contractor’s purchasing system or performance is inadequate;

(2) Close working relationships or ownership affiliations between the prime and subcontractor may

preclude free competition or result in higher prices;

(3) Subcontracts are proposed for award on a non-competitive basis, at prices that appear

unreasonable, or at prices higher than those offered to the Government in comparable

circumstances; or

(4) Subcontracts are proposed on a cost-reimbursement, time-and-materials, or labor-hour basis.

44.203 Consent limitations.

(a) The contracting officer’s consent to a subcontract or approval of the contractor’s purchasing

system does not constitute a determination of the acceptability of the subcontract terms or price, or

of the allowability of costs, unless the consent or approval specifies otherwise.

(b) Contracting officers shall not consent to-

(1) Cost-reimbursement subcontracts if the fee exceeds the fee limitations of 15.404-4(c)(4)(i);

(2) Subcontracts providing for payment on a cost-plus-a-percentage-of-cost basis;
(3) Subcontracts obligating the contracting officer to deal directly with the subcontractor;

(4) Subcontracts that make the results of arbitration, judicial determination, or voluntary settlement

between the prime contractor and subcontractor binding on the Government; or

(5) Repetitive or unduly protracted use of cost-reimbursement, time-and-materials, or labor-hour

subcontracts (contracting officers should follow the principles of 16.103(c)).

(c) Contracting officers should not refuse consent to a subcontract merely because it contains a

clause giving the subcontractor the right of indirect appeal to an agency board of contract appeals if

the subcontractor is affected by a dispute between the Government and the prime contractor.

Indirect appeal means assertion by the subcontractor of the prime contractor’s right to appeal or the

prosecution of an appeal by the prime contractor on the subcontractor’s behalf. The clause may also

provide that the prime contractor and subcontractor shall be equally bound by the contracting

officer’s or board’s decision. The clause may not attempt to obligate the contracting officer or the

appeals board to decide questions that do not arise between the Government and the prime

contractor or that are not cognizable under the clause at 52.233-1, Disputes.

44.204 Contract clauses.

(a)

(1) The contracting officer shall insert the clause at 52.244-2, Subcontracts, in solicitations and

contracts when contemplating-

(i) A cost-reimbursement contract;

(ii) A letter contract that exceeds the simplified acquisition threshold;

(iii) A fixed-price contract that exceeds the simplified acquisition threshold under which unpriced

contract actions (including unpriced modifications or unpriced delivery orders) are anticipated;

(iv) A time-and-materials contract that exceeds the simplified acquisition threshold; or

(v) A labor-hour contract that exceeds the simplified acquisition threshold.

(2) If a cost-reimbursement contract is contemplated, for civilian agencies other than the Coast

Guard and the National Aeronautics and Space Administration, the contracting officer shall use the

clause with its Alternate I.

(3) Use of this clause is not required in-

(i) Fixed-price architect-engineer contracts; or

(ii) Contracts for mortuary services, refuse services, or shipment and storage of personal property,

when an agency-prescribed clause on approval of subcontractors’ facilities is required.

(b) The contracting officer may insert the clause at 52.244-4, Subcontractors and Outside Associates

and Consultants (Architect-Engineer Services), in architect-engineer contracts.

(c) The contracting officer shall, when contracting by negotiation, insert the clause at 52.244-5,
Competition in Subcontracting, in solicitations and contracts when the contract amount is expected

to exceed the simplified acquisition threshold, unless-

(1) A firm-fixed-price contract, awarded on the basis of adequate price competition or whose prices

are set by law or regulation, is contemplated; or

(2) A time-and-materials, labor-hour, or architect-engineer contract is contemplated.