I do not see any regulations where a Sole Source Justification is required when the Government Contractor is exercising an option with one of its subcontractors? Is there a regulation I am not interpreting correctly that does require this action?
I do not see a requirement for the contractor to write a sole source justification for exercising an option with a subcontractor in any of the standard clauses, however, there could be special provisions in the contract or other extenuating circumstances that would cause the contracting officer to require it.
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Requirements for subcontracting are contained in the specific contract and, depending on the contract type, there are certain subcontracting clauses that are required to be contained in the contract. For example, FAR clause 52.244-5 -- Competition in Subcontracting, says:
(a) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract.
In addition FAR clause 52.244-2 -- Subcontracts, has many requirements including a requirement to get the contracting officers consent before placing subcontracts that are listed in the clause.
Also, the contractor is also required to have an approved purchasing system which should include requirements for competition at the subcontract level. Depending on the status of that purchasing system, the contracting officer could feel the need to impose additional requirements, depending on the situation.
In summary, we do not intend to infringe on the judgement of the contracting officer and we recommend that you discuss this issue with the contracting officer.