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    Whose responsibility is it to pursue the government to audit the supplier's systems in order to receive the award of a cost type effort? And how do you go about it please? My supplier's last approval/extension approval was dated 2012 and was not asked for since. Now, they want cost type POs and PBPs however per my company's process and procedures and most importantly the FARR, we cannot move forward with an order of this type. Who benefits the most and again, who and how is the approval obtained? BTW......There is no current significant reason to have a cost type effort bid. Thank You so much, Kristen


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting officer, program manager and/or legal department as appropriate. 
     
    When you refer to "the supplier's systems" we are assuming you mean the Contractor Purchasing System (CPS) as well as accounting system. 
    FAR 42.202 e(2) states, “the prime contractor is responsible for managing its subcontracts. The CAO’s review of subcontracts is normally limited to evaluating the prime contractor’s management of the subcontracts”.  
     
    FAR 44.201-1(b) notes, "If the contractor does not have an approved purchasing system, consent to subcontract is required for cost-reimbursement, time-and-materials, labor-hour, or letter contracts, and also for unpriced actions (including unpriced modifications and unpriced delivery orders) under fixed-price contracts that exceed the simplified acquisition threshold..."
     
    The FAR requires the contractor to have an approved CPS.  FAR part 44 addresses when advance notification and/or consent would be required, and that is if the prime does not have an approved system.  From your background, it appears company policy requires a subcontractor to have an approved purchasing/accounting/estimating systems before receiving CR type contracts.  If that is true and it is part of your disclosure statement, then that is the way you must operate.
     
    It is incumbent upon the subcontractor as a company that wants to do business with the federal government to pursue these reviews.
     
    If there is no reason from your company's perspective to pursue this then you do not need to do anything, but it would be reasonable to share this with the company in question.  As to who would benefit:  The company (sub to you) would benefit by having access to more varied contracts.  Your company would benefit by building a greater, more flexible supplier base and the government would benefit by having more competitive pricing.  Finally, the taxpayer would benefit by lower costs.  That is the theory of who benefits.
     
    We suggest you discuss with your government contract administration office (for DoD contracts, normally the CACO/ACO of your cognizant DCMA) for more detailed information on how a subcontractor requests government support if needed.

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