REQUIREMENT FOR CONSENT TO SUBCONTRACTS (i) cost-reimbursement, time and materials or labor-hour subcontracts; and (ii) fixed-price subcontracts exceeding either $25,000 or 5% of the total estimated prime contract price. (3) See 7.702-33 or 7.703-25 for requirements for approval of subcontracts under facilities contracts. (d) Purchases by a contractor from General Services Administration supply sources, under a written authorization by the contracting officer (see 5.906), shall be treated as having been made with the consent of the contracting officer as required by the clause set forth in 7.204-28 or 7.403–23. 23.201-3 Subcontracts Clause for Time and Materials and Labor-Hour Contracts. See 7.901-10 for requirements for approval of subcontracts under time and materials and labor-hour contracts. 23.202 Consent to Subcontracts. (a) In reviewing for the purpose of granting consent, the contracting officer shall consider: (i) the technical justification for selection of the particular supplies, equipment, or services; (ii) whether the decision to enter into the proposed subcontract is consistent with the contractor's approved "make-or-buy" program, if any (see 3.901); (iii) whether the proposed subcontract will require the use of Govern- (iv) the responsibility of the proposed subcontractor (see 1.906); (vi) any cost or price analysis or price comparisons accomplished, (vii) the effectiveness of subcontract management by the prime contractor; (viii) the type of subcontract used (see Part 3, Subpart 4); (ix) the estimated total extent of subcontracting, including procurement of parts and materials; (x) the extent to which the prime contractor obtains assurance of the adequacy of the subcontractor's procurement system; (xi) availability from Government sources of industrial facilities or special test equipment (see Part 13, Subpart 3); and (xii) whether the decision to obtain warranties from subcontractors conforms to the provisions of paragraph 1.324 of this Regulation. (b) In reviewing subcontracts, careful and thorough evaluation is particularly necessary when: (i) the prime contractor's procurement system or performance thereunder is considered inadequate; SUBCONTRACTING POLICIES AND PROCEDURES (ii) subcontracts are for items for which there is no competition or for which the proposed prices appear unreasonable (see 3.807-10(b)); (iii) close working arrangements or business or ownership affiliations exist between the prime and the subcontractor which may preclude the free use of competition or result in higher subcontract prices than might otherwise be obtained; (iv) a subcontract is being proposed at a price less favorable than that which has been given by the subcontractor to the Government, all other factors such as manufacturing period and quantity being comparable, or (v) a subcontract is to be placed on a cost-reimbursement, time and materials, labor-hour, fixed-price incentive, or fixed-price redeterminable basis. Where subcontracts have been placed on a cost-reimbursement, time and materials, or labor-hour basis, contracting officers should be hesitant to consent to the repetitive or unduly protracted use of such type of subcontracts and should follow the principles of 3.803(b). (c) Consent to a subcontract or relief from the requirement for obtaining consent, by virtue of the approval of the contractor's procurement system, does not constitute a determination as to the acceptability of the subcontract price (23.201) or the allowability of costs (7.203-8 or 7.402-8). However, it should minimize the requirement for retroactive review of subcontracts, except cost-reimbursement subcontracts, for the purpose of determining reasonableness of costs, unless there is some indication that the costs may be unreasonable. In all cases, costs resulting from such subcontracts shall be subject to the test of allocability. 23.203 Disputes and Arbitration Provisions in Subcontracts. (a) Consent by the contracting officer to a subcontract does not constitute approval of the terms and conditions of the subcontract. Nevertheless, the contracting officer shall not consent to a provision in the subcontract purporting to give the subcontractor the right to obtain a direct decision of the contracting officer or the right of direct appeal to the NASA Board of Contract Appeals. The Government is entitled to the management services of the prime contractor in adjusting disputes between himself and his subcontractors. The contracting officer should act only in disputes arising under the prime contract, and then only with and through the prime contractor, even if a subcontractor is affected by the dispute between the Government and the prime contractor. The contracting officer shall not participate in disputes between a prime contractor and his subcontractors. (b) However, the contracting officer should not refuse consent to a subcontract, particularly under a cost-reimbursement contract, merely because it contains a clause giving the subcontractor, if he is affected by a dispute arising under the prime contract, an indirect appeal to the NASA Board of Contract Appeals through assertion of the prime contractor's right to take such an appeal, or through prosecution of such an appeal by the prime contractor on behalf of the subcontractor. Such a clause must not attempt to obligate the contracting officer or the Board to decide questions which do not arise between REQUIREMENT FOR CONSENT TO SUBCONTRACTS the Government and the prime contractor or which are not cognizable under the "Disputes" clause of the prime contract, and must not attempt to obligate the contracting officer to notify or deal directly with the subcontractor. However, such a clause may appropriately provide that the prime contractor and subcontractor shall be equally bound by the contracting officer's or the Board's decision on a dispute. (c) The prime contractor and his subcontractor may agree to settle disputes by arbitration. The results of such arbitration and the cost resulting therefrom, however, are no more binding on the Government than are the results of a judicial determination or a voluntary settlement; they are subject to independent review and approval under the prime contract. The contracting officer shall not consent to provisions in subcontracts purporting to make the results of arbitration (or judicial determinations or voluntary settlements) binding on the Government. 23-204 Additional Contract Clauses. Additional contract clauses with respect to subcontracting with small business and labor surplus area concerns are set forth in Part 1, Subparts 7 and 8. 23.250 Special Contracting Officer Consent Requirements for Critical Subcontracts. If the contracting officer (in conjunction with the technical representative, when appropriate) determines that a proposed subcontract may be critical because of special considerations in the source selection, in the incentive arrangements, or other reasons, provisions shall be included in the "Schedule" of the prime contract (if not already provided for in the standard "Subcontracts" clause) for the contracting officer to consent to the critical subcontract prior to award by the contractor. 23.251 Headquarters Review of Critical Subcontracts. If a requirement is established by the Headquarters Source Selection Official or the Director of Procurement for a Headquarters review of a critical subcontract prior to its award, the contracting officer shall: (i) include a provision in the contract "Schedule" (if not already provided for in the standard "Subcontracts" clause) for advance notification and consent of the contracting officer prior to award of the subcontract; and (ii) prior to consenting to the subcontract, submit to the Director of Procurement, NASA Headquarters (Code KDP-3) for review the: (A) subcontract; (B) contractor documentation in suppor of the subcontract including that documentation required by notification provisions of the "Subcontracts" clause); and (C) contracting officer's review and evaluation (in accordance with 23.202) with appropriate recommendations. Consent shall not be granted by the contracting officer until notification (with limitations and objections, if any) is received from the Director of Procurement. NASA PROCUREMENT REGULATION 23.251 |