FAR 52.244-2 - Subcontracts

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Prescribed in 44.204(a)(1)
Effective Date:	1 October 2010
Clause or Provision:	Clause
Provision or Clause Number:	52.244-2 - Subcontracts
Principle Type And/Or Purpose of Contract:
Required:
Applicable:	Time and Materials/Labor Hour; Facilities; Architect-Engineering; Dismantling, Demolition or Removal of Improvements; Fixed Price, Supply; Cost Reimbursement, Supply; Communication Services; Leasing of Motor Vehicles; Time & Material/Labor Hour; Cost Reimbursement, Construction; Fixed Price, Construction; Cost Reimbursement, Service; Fixed Price, Service; Cost Reimbursement, R&D; Fixed Price, R&D; Indefinite Delivery; Transportation; Simplified Acquisition Procedures (Excludes Micro-Purchase); Utility Services
Optional:
Subject:	Subcontract(s)/Subcontractor(s)
ProcurementType:
Contract Threshold:	>150,000
Prescription Overview:	Prescription (a) (1) The contracting officer shall insert the clause at 52.244-2, Subcontracts, in solicitations and contracts when contemplating— (i) A cost-reimbursement contract; (ii) A letter contract that exceeds the simplified acquisition threshold; (iii) A fixed-price contract that exceeds the simplified acquisition threshold under which unpriced contract actions (including unpriced modifications or unpriced delivery orders) are anticipated; (iv) A time-and-materials contract that exceeds the simplified acquisition threshold; or (v) A labor-hour contract that exceeds the simplified acquisition threshold. (2) If a cost-reimbursement contract is contemplated, for civilian agencies other than the Coast Guard and the National Aeronautics and Space Administration, the contracting officer shall use the clause with its Alternate I. (3) Use of this clause is not required in— (i) Fixed-price architect-engineer contracts; or (ii) Contracts for mortuary services, refuse services, or shipment and storage of personal property, when an agency-prescribed clause on approval of subcontractors’ facilities is required. (b) The contracting officer may insert the clause at 52.244-4, Subcontractors and Outside Associates and Consultants (Architect-Engineer Services), in architect-engineer contracts.
Clause Overview:	Clause (a) Definitions As used in this clause— “Approved purchasing system” means a Contractor’s purchasing system that has been reviewed and approved in accordance with Part 44 of the Federal Acquisition Regulation (FAR). “Consent to subcontract” means the Contracting Officer’s written consent for the Contractor to enter into a particular subcontract. “Subcontract” means any contract, as defined in FAR Subpart 2.1, entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to purchase orders. Fixed Price Unpriced Contract Actions - Requirements (b) When this clause is included in a fixed-price type contract, consent to subcontract is required only on unpriced contract actions (including unpriced modifications or unpriced delivery orders), and only if required in accordance with paragraph (c) or (d) of this clause. Requirements for Contractor without an Approved Purchasing System (c) If the Contractor does not have an approved purchasing system, consent to subcontract is required for any subcontract that— (1) Is of the cost-reimbursement, time-and-materials, or labor-hour type; or (2) Is fixed-price and exceeds— (i) For a contract awarded by the Department of Defense, the Coast Guard, or the National Aeronautics and Space Administration, the greater of the simplified acquisition threshold or 5 percent of the total estimated cost of the contract; or (ii) For a contract awarded by a civilian agency other than the Coast Guard and the National Aeronautics and Space Administration, either the simplified acquisition threshold or 5 percent of the total estimated cost of the contract. Consent Required Even with an Approved Purchasing System (d) If the Contractor has an approved purchasing system, the Contractor nevertheless shall obtain the Contracting Officer’s written consent before placing the following subcontracts: ________________________________________________ ________________________________________________ ________________________________________________ Contracting Officer Notification (e)(1) The Contractor shall notify the Contracting Officer reasonably in advance of placing any subcontract or modification thereof for which consent is required under paragraph (b), (c), or (d) of this clause, including the following information: (i) A description of the supplies or services to be subcontracted. (ii) Identification of the type of subcontract to be used. (iii) Identification of the proposed subcontractor. (iv) The proposed subcontract price. (v) The subcontractor’s current, complete, and accurate certified cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions. (vi) The subcontractor’s Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract. (vii) A negotiation memorandum reflecting— (A) The principal elements of the subcontract price negotiations; (B) The most significant considerations controlling establishment of initial or revised prices; (C) The reason certified cost or pricing data were or were not required; (D) The extent, if any, to which the Contractor did not rely on the subcontractor’s certified cost or pricing data in determining the price objective and in negotiating the final price; (E) The extent to which it was recognized in the negotiation that the subcontractor’s certified cost or pricing data were not accurate, complete, or current; the action taken by the Contractor and the subcontractor; and the effect of any such defective data on the total price negotiated; (F) The reasons for any significant difference between the Contractor’s price objective and the price negotiated; and (G) A complete explanation of the incentive fee or profit plan when incentives are used. The explanation shall identify each critical performance element, management decisions used to quantify each incentive element, reasons for the incentives, and a summary of all trade-off possibilities considered. (2) The Contractor is not required to notify the Contracting Officer in advance of entering into any subcontract for which consent is not required under paragraph (b), (c), or (d) of this clause. Subcontractor Determinations (f) Unless the consent or approval specifically provides otherwise, neither consent by the Contracting Officer to any subcontract nor approval of the Contractor’s purchasing system shall constitute a determination— (1) Of the acceptability of any subcontract terms or conditions; (2) Of the allowability of any cost under this contract; or (3) To relieve the Contractor of any responsibility for performing this contract. Subcontract Cost+Percentage of Cost Not Allowed (g) No subcontract or modification thereof placed under this contract shall provide for payment on a cost-plus-a-percentage-of-cost basis, and any fee payable under cost-reimbursement type subcontracts shall not exceed the fee limitations in FAR 15.404-4(c)(4)(i). CO Notice of Subcontractor Litigation (h) The Contractor shall give the Contracting Officer immediate written notice of any action or suit filed and prompt notice of any claim made against the Contractor by any subcontractor or vendor that, in the opinion of the Contractor, may result in litigation related in any way to this contract, with respect to which the Contractor may be entitled to reimbursement from the Government. Review of Contractor Purchasing System (i) The Government reserves the right to review the Contractor’s purchasing system as set forth in FAR Subpart 44.3. Exceptions (j) Paragraphs (c) and (e) of this clause do not apply to the following subcontracts, which were evaluated during negotiations: ________________________________________________ ________________________________________________ ________________________________________________ Alternate Alternate I (June 2007) As prescribed in 44.204(a)(2), substitute the following paragraph (e)(2) for paragraph (e)(2) of the basic clause: (e)(2) If the Contractor has an approved purchasing system and consent is not required under paragraph (c), or (d) of this clause, the Contractor nevertheless shall notify the Contracting Officer reasonably in advance of entering into any (i) cost-plus-fixed-fee subcontract, or (ii) fixed-price subcontract that exceeds either the simplified acquisition threshold or 5 percent of the total estimated cost of this contract. The notification shall include the information required by paragraphs (e)(1)(i) through (e)(1)(iv) of this clause.
Important Notes/Requirements:	The contract clause FAR 52.244-2 requires a contractor that does not have an approved purchasing system to obtain consent, when: 1. The contract is a cost-reimbursement, time-and-materials, or labor-hour type, or 2. Is fixed price and exceeds: i. A Department of Defense, Cost Guard, or National Aeronautics and Space Administration, the greater of the simplified acquisition threshold or 5% of the total estimated cost of the contract, or ii. For a contract awarded by a civilian agency other than the ones noted above, either the simplified acquisition threshold or 5% of the total estimated cost of the contract. Also See - Consent to Subcontract
Subcontract Threshold:	>150,000
Incorporated by Reference:	Yes
Uniform Contract Format:	I
Editor:	Marshall

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Personal notes.