We as a prime contractor have been wrestling with who is responsible for reviewing a subcontractors final indirect cost rate proposal and determining the rates. It's an easy thing if the subcontractor has an approved accounting system but what if he doesn't and you are awarding a T&M subcontract. FAR 42.202(e)(2) states "The prime contractor is responsible for managing it subcontracts". Does this mean every function described in 42.302(a)? Further when you get to T&M subcontracts there is no requirement to flow down the T&M payment clause 52.232-7 nor is there a requirement to flow down the allowable cost and payment clause 52.216-7. However, a purdent contractor should include some of the requirements in these clauses in their T&M subcontract. Vern and Don have said contractors do not have to comply with FAR in awarding subcontracts except when clauses specifically contain a flow down requirement. I hope I haven't misinterpreted this. DCAA wants to hold prime contractor's feet to the fire on everything and some ACO's want us to follow the FAR to the letter. Drives me nuts and forgive me for rambling. The real question is how do you determine who looks at a subcontractor's final indirect cost rate proposal? FAR 42.703-1(a) says "A single agency (see 42.705-1) shall be responsible for establishing final indirect cost rates for each business unit." Is it only the government based on the matrix of cognizance within DCMA and DCAA? Is the prime responsible, and if so when? What if the subcontractor will not provide access to his books? Who does it then?