Monday, June 11, 2018

2019 NDAA - Consent to Subcontract Under Approved Purchasing Systems

What good is having an approved purchasing system if contracting officers keep second-guessing the results of the process? You know, like telling the contractor a subcontract price is too high based on nothing more than a desire to clout - to show who's boss.

The past month or so, we've spent a few of those days writing about provisions in the House's version of the 2019 NDAA (National Defense Authorization Act) involving acquisition related matters. Today we begin a series on the Senate's version of the NDAA. Ultimately these two versions get worked out in compromise committee so we can't know yet what the final NDAA will look like. Also, the White House has weighed in on the NDAA with provisions it disagrees with (or, in some cases, "strongly disagrees" with.

FAR (Federal Acquisition Regulations) Part 44 deals with subcontracting policies and procedures. Section 44.3 details CPSRs (Contractor's Purchasing System Reviews) and 44.305 discusses granting, withholding, and withdrawing approval of a contractor's purchasing system.

The ACO (Administrative Contracting Officer) is responsible for granting, withholding, or withdrawing approval of a contractor's purchasing system. Such approval can be given only after determining that the contractor's purchasing policies and practices are efficient and provide adequate protection of the Government's interest.

Once approved, the Government waives the contractual requirement for advance notification in fixed price contracts and waives the contractual requirement for consent to subcontracts in fixed-price contracts and for specified subcontracts in cost-reimbursement contracts if not called out for special surveillance.

Evidently, there have been more than a few cases where, notwithstanding an approved purchasing system, contracting officers have been withholding consent based solely on disagreement with a proposed subcontract price.

The Senate added Section 818 to its version of the 2019 NDAA to curtail such abuse. Under the new provision, if a contracting officer wants to withhold consent to subcontract where the contractor's purchasing system has been approved, the contracting officer must have a written approval from his or her program manager prior to withholding consent.

This seems to be a non-controversial provision and should probably remain in the final bill. Its really too bad though that the Government needs to come up with statutory language to force the Government to behave itself.

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