2019 NDAA - Consent to Subcontract

The President signed the 2019 NDAA (National Defense Authorization Act) named for Senator John McCain today. So beginning today, we will be covering just a few of the provisions included in the legislation - those that might be of interest to Government contractors (and prospective Government contractors).

Section 824 of the NDAA deals with an inconsistency that has vexed many contractors. Contractors work very hard to maintain "approved" purchasing systems. We've discussed on this blog the process of becoming "approved". The Government conducts a CPSR (Contractor Purchasing System Review) every three years examining purchasing and subcontracting policies and procedures, deciding whether they are adequate (they usually are), and testing compliance with those policies and procedures (one can always find an infraction). At the end of this little dance, which usually takes several months, the Government will approve or disapprove the purchasing system. Most of the time, the systems are approved.

What has happened all to frequently however is that even with an approved system, contracting officers sometimes withhold their consent to subcontract solely on disagreement with the proposed subcontract price. Well, if a contractor has an approved system, the Government has already satisfied itself that the policies for selecting and determining fair and reasonable subcontract prices are sound and satisfactory for Government contracting. So, in cases where approval has been withheld, was there something new to the contractor's process that hadn't been evaluated previously or did the contractor deviate from its approved practices. Sadly, no. A contracting officer is just being officious and wielding power.

Under the 2019 NDAA, a contracting office can no longer unilaterally withhold consent to subcontract merely because he or she disagrees with the proposed price.They can still withhold consent but now they must obtain written approval from the program manager prior to withholding consent. That should reduce the incidences of withholding consent - at least until contracting officers can conger up other reasons, other than disagreement with price, to withhold consent.