PART 9-23 SUBCONTRACTING POLICIES AND PROCEDURES

$9-23.000 Scope of part.

This part sets forth policies and procedures for the evaluation, review, and approval of contractors' procurement systems. Reliance upon a contractor's approved procurement system will usually eliminate the need for reviewing and approving or consenting to most individual subcontracts. However, programmatic and other considerations still will require Government involvement at an early stage in the planning of procurement actions and approval of some subcontracts.

Subpart 9-23.1 Review of Contractors' Procurement Systems §9-23.100 Scope of subpart.

This subpart sets forth the requirements for conducting contractor procurement system reviews (CPSRS).

$9-23.101 Objectives.

The objectives of the reviews are to provide:

(a) A means for evaluating the efficiency and effectiveness with which the contractor manages the procurement function in spending Government funds;

(b) The basis for the Contracting Officer to grant, continue, withhold, or withdraw approval of the contractor's procurement system;

(c) Reliable current information on the contractor's procurement system for use in source selection, determining the appropriate type of contract, estimating contract costs, and establishing profit or fee objectives; and

(d) Current procurement system information for appropriate DOE activities.

§9-23.102 Responsibilities.

(a) DOE Contracting Officers or designee, will conduct CPSRS of DOE cognizant con

tractors.

(b) The Department of Defense normally will conduct CPSRS for other than DOE cognizant contractors.

(c) The Senior Procurement Official, Headquarters is responsible for the overall conduct of the DOE-wide CPSR program.

§9-23.103 Definitions.

(a) The term "contractor”, as used in this part, refers to a “prime contractor” or “subcontractor" and means a separate entity of a contractor, such as an affiliate, division, or plant, which performs its own purchasing.

(b) DOE cognizant contractors are those contractors over which DOE has cognizance as identified in FMC 73-6, or where DOE has the preponderance of Government business. Included are operating contractors and pilot and demonstration plant contractors.

§9-23.104 Review criteria.

(a) A CPSR is an evaluation of a contractor's procurement system and the effectiveness with which procurements are placed in the performance of Government contracts. It is not limited to a specific Government contract.

(b) A CPSR will be initiated when the Contracting Officer deterimines that the nature or extent of subcontracting warrants. Generally, a CPSR shall be performed if the contractor is expected, within the next 12 months, to have in excess of $5,000,000 subcontracting with Government funds under other than fixed-price, competitively awarded contracts. (For the purpose of this paragraph, contract modifications are not considered to be competitively awarded.)

(c) The procurement systems of contractors meeting the criteria in (b) above, shall not be reviewed if the Contracting Officer determines, in writing, and the Director, Office of Procurement Management (attn. PR-32) agrees that the extent or nature of the subcontracting will not justify the cost of the CPSR. In exceptional cases, a contractor not meeting the criteria in (b) above, may be reviewed if the Contracting Officer determines that the facts warrant such action.

(e) CPSRS will be conducted in accordance with the appropriate agency directives and guides.

(f) An outline of the proposed CPSR review, including the time schedule, composition, and assignments of the review team, shall be forwarded to the Director, Office of Procurement Management (attn. PR-32). Initial and follow-up review teams shall include a DCAS representative, if available, and representatives from the Directorate of Procurement and Contracts Management and other DOE representatives as appropriate.

§9-23.105 Types of review.

89-23.105-1 Initial reviews.

An initial review shall be conducted when the contractor meets the criteria in §9-23.104. It shall be a complete evaluation as described in §9-23.106.

§9-23.105-2 Subsequent reviews.

If a contractor's procurement system is approved, the Contracting Officer shall determine annually, the need for a subsequent review if it still meets the criteria in §9–23.104. A subsequent review may be limited to specific areas, but shall include sufficient consideration of each of the factors listed in §9–23.106(a) to establish the current adequacy or inadequacy of the entire system. Such review shall generally be conducted in order to:

(a) Examine changes instituted since the previous review;

(b) Ascertain the status of prior recommendations upon which action has not been completed; and,

(c) Determine whether the contractor's procurement system, especially the significant cost impact areas, warrants continued approval. Subsequent reviews shall be performed no less often than every two years.

§9-23.105-3 Special reviews.

After approval of the contractor's procurement system, the Contracting Officer may initiate special reviews in connection with weaknesses revealed as a result of:

(a) The initial or subsequent review;

(b) The review of subcontracts submitted under the notification requirement of contract clauses;

(c) Changes in the contractor's procurement policies, procedures, or personnel;

(d) Changes in plant workload or type of work; or

(e) Information provided by Government personnel.

In conducting such reviews, the same effectiveness criteria used in previous reviews shall be applied to the area being examined.

§9-23.105-4 Follow-up reviews.

If approval of a contractor's procurement system is withheld or withdrawn, a follow-up review shall be made as soon as evidence is received from the contractor that the factors leading to such action have been corrected. Whether this review consists of a complete reexamination of the contractor's procurement system or is confined to the areas found deficient, shall be a matter of judgment and will depend on the time lapse between the notice to the contractor of withholding or withdrawal of approval and the follow-up review.

§9-23.106 Extent of review.

(a) Generally, a review shall consist of a complete evaluation of the contractor's procurement system. This review shall be made in accordance with the appropriate DOE directives and guides, and shall give attention to:

(1) The degree of competition obtained;

(2) Pricing policies and techniques, including methods of obtaining accurate, complete, and current cost or pricing data, and certification as required;

(3) The methods of evaluating subcontractors' responsibilities;

(4) The treatment accorded affiliates and other concerns having close working arrangements with the contractor;

(5) The extent to which assurance is obtained that principal subcontractors apply sound pricing practices and have a satisfactory procurement system in dealing with lower-tier subcontractors;

(6) The appropriateness of the types of subcontract used;

(7) Practices pertaining to small and socially and economically disadvantaged businesses, labor surplus area, and other socio-economic programs;

(8) Attention given to the management of significant subcontract programs;

(9) The contractor's procurement policies and procedures pertaining to such items as “make-or-buy” program, control of property, obtaining of warranties, and organizational conflicts of interest;

tracts;

(10) Compliance with cost accounting standards in award and administration of subcon

(11) Effectiveness of policies and procedures; and

(12) Effectiveness of subcontract close-out actions, policies and procedures.

(b) In reviewing the contractor's procurement system, a determination shall be made as to whether subcontracting is done competitively to the maximum practicable extent. This requires ascertaining whether:

(1) A sufficient number of sources are solicited; and

(2) Subcontracting procedures provide other elements needed for adequate and effective competition, including:

(i) Adequate descriptions of any factors to be evaluated; and

(ii) Evaluation of all offers on a common basis.

(c)Decisions as to whether commercial items conform to the purpose and intent of the exemption from the requirement for submitting and certifying current cost or pricing data shall be analyzed.

§9-23.107 Review of CPSR Reports.

(a) The findings and recommendations of the review team (the CPSR Report) should be reviewed by the Head of the Procuring Activity having cognizance over the contractor and shall be approved by the Director, Office of Procurement Management (attn. PR-32) before the Contracting Officer determines to grant, continue, withhold, or withdraw approval.

(b) Two copies of the CPSR report shall be furnished to the Director, Office of Procurement Management (attn. PR−32), who will consult with appropriate organizations in performance of his review. The submittal shall include:

(i) An outline of the actions planned as a result of the review;

(ii) A draft of whatever correspondence will be issued to the contractor as a result of review;

(iii) A description of the present and any proposed revisions to subcontract notice/ consent/approval dollar thresholds or other limitations;

If revisions are to be made to subcontract dollar thresholds or other limitations; (A) A stratification of the present subcontract review workload, including average workhours expended and lead times experienced in processing requests for subcontract consent and;

(B) An evaluation of the anticipated benefits including average workhours and lead times saved in processing requests for subcontract consent.

§9-23.108 Granting, continuing, withholding, and withdrawing approval.

(a) The Contracting Officer is responsible for granting, continuing, withholding, or withdrawing approval of a contractor's procurement system subject to the requirements of §923.107(a). The Contracting Officer shall approve a procurement system only after a CPSR discloses that the contractor's procurement policies and practices are effective and provide adequate protection of the Government's interests. Approval of a system shall be withheld if there are major weaknesses or if the contractor is unable to provide sufficient information upon which to base an affirmative determination. An approval may be withdrawn at any time on the basis of a determination that there has been a deterioration of the contractor's procurement system, or otherwise to protect the interest of the Government.

(b) The Contracting Officer shall give the contractor written notice granting, continuing, withholding, or withdrawing approval of the procurement system. If the contractor's system is approved, the notification of approval shall include:

(1) The effective date of the approval;

(2) The plant, plants, divisions, or facility of the company that are approved;

(3) The period that the approval covers (usually one year, maximum two years); (4) The extent of applicability (usually all DOE contracts with the approved facility administered by the involved procurement office, all such DOE contracts administered by other DOE procurement offices when the cognizant Contracting Officer concurs);