Consent to Subcontract - Part II

Contractors without Government approved purchasing systems must go through a long and tortuous process before they can subcontract any effort over $100 thousand or 5 percent of the (estimated) contract price. Yesterday we took a look at the data package that contractors must prepare and submit to the contracting officer for review and approval. If you missed that posting, you can read it here. Today we will explain the requirements placed upon the Contracting Officer in reviewing these Consent to Subcontract" requests.

The contracting officer responsibility for reviewing consent to subcontract requests is delineated in FAR Part 44. The overall objective of the contracting officer review is to ensure that the proposed subcontract is appropriate for the risks involved and consistent with current policy and sound business judgement. The contracting officer responsible for consent must, at a minimum, review the request and supporting data and consider the following:

• Is the decision to subcontract consistent with the contractor’s approved make-or-buy program, if any (see 15.407-2)?
• Is the subcontract for special test equipment, equipment or real property that are available from Government sources?
• Is the selection of the particular supplies, equipment, or services technically justified?
• Has the contractor complied with the prime contract requirements regarding—
• 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
• Purchase from nonprofit agencies designated by the Committee for Purchase From People Who Are Blind or Severely Disabled
• Was adequate price competition obtained or its absence properly justified?
• Did the contractor adequately assess and dispose of subcontractors’ alternate proposals, if offered?
• Does the contractor have a sound basis for selecting and determining the responsibility of the particular subcontractor?
• 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?
• Is the proposed subcontract type appropriate for the risks involved and consistent with current policy?
• Has adequate consideration been obtained for any proposed subcontract that will involve the use of Government-provided equipment and real property?
• Has the contractor adequately and reasonably translated prime contract technical requirements into subcontract requirements?
• Does the prime contractor comply with applicable cost accounting standards for awarding the subcontract?
• Is the proposed subcontractor in the Excluded Parties List System?

The guidance goes on to caution that particularly careful and thorough consideration under certain circumstances, especially these "high risk" considerations.

• The prime contractor’s purchasing system or performance is inadequate;
• Close working relationships or ownership affiliations between the prime and subcontractor may preclude free competition or result in higher prices;
• 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
• Subcontracts are proposed on a cost-reimbursement, time-and-materials, or labor-hour basis.

If a contracting officer cannot make these determinations based on the data provided in the consent package, the package will often be returned as "inadequate". Sometimes, if the deficiencies are not too significant, the contracting officer will simply request the contractor to submit the data that is missing. In any event, the process is extended.

Contracting officers do not have a statutory time frame for turning around these requests. We have seen everything from a few days to 60 days. In any event, if you are contemplating subcontracting out some of your work, you need to factor in the time it takes to prepare and obtain contracting officer approval of your consent to subcontract packages into overall contract performance.