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  • Question

    The subcontractor has three contracts with the prime, each contract is under 5% of the total contract value, but when the total value of the subcontracts from this contractor combined is roughly about 7.2% of total estimated contract value. Does each sub-contract agreement stand alone or do we add them together for the 5%?


    Answer

    FAR 44.204 -- Contract Clauses states the contracting officer shall insert the clause at FAR 52.244-2, Subcontracts in solicitations and contracts when contemplating a cost-reimbursement contract.  FAR 52,244-2 (c) states if the Contractor does not have an approved purchasing system, consent to subcontract is required for any subcontract that is of the cost-reimbursement, time-and-materials, or labor-hour type or if the subcontract is fixed price and exceeds the greater of the simplified acquisition threshold or 5 percent of the total estimated cost of the contract.

    The first issue is FAR 52.244-2 is not in the delivery order.  Is this clause in the Basic Ordering Agreement (BOA)?  If the clause is not in the BOA, then contact the PCO using a Contract Deficiency Report (CDR) requesting a modification adding the clause to the contract.

    If the FAR clause 52.244-2 is added to the contract, you need to look at the type of subcontracts.  If the subcontract is cost-reimbursement, time-and-materials, or labor-hour type, then consent to subcontract is required.  If the subcontract is fixed price and that one contract exceed the simplified acquisition threshold ($150,000), or is more than 5 percent of the total estimated cost of the contract, the prime contractor needs to submit a request for consent to subcontract.  Each subcontract stands by itself and should not be combined with other subcontracts to determine is consent to subcontract is required. 


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