Hey All,
Got a question related to the interpretation of FAR 52.244-2 and want to get the sagacious advice of the broader CO community.
FAR 52.244-2(e)1) reads
"The Contractor shall notify the Contracting Officer reasonably in advance of placing any subcontract or modification thereof for which consent is required under paragraph (, ©, or (d) of this clause, including the following information:"
Now, I interpret that to mean that any modification of a subcontract which consent was originally required, requires additional advanced notification. DCMA also interprets it this way (see DCMA-INST 143 Section 2.2.1). Some even go further and say that consent is required for those modifications. I understand that this may be administratively burdensome, but one could tweak the interpretation to say that only all non-administrative modifications to those subcontracts (e.g. any modification that changes scope, price/cost, or period of performance) require the advance notice.
I have a contractor (a fairly large one) pushing back on this interpretation. The say:
"Once the original consent is received, bilateral fixed price modifications require consent under the same parameters as the original subcontract consent requirements at 52.244-2. It would be impractical and administratively burdensome for COs to have to consent to EVERY single increase in an already approved fixed price subcontract, which is why the FAR defines the requirements for approval of fixed price modifications at the same levels as the original consent requirements, i.e. above $150,000 for. Put another way, the Prime may elect to have a separate fixed price subcontract issued under the small purchase threshold to the same supplier and not require consent per 52.244-2, so issuing a fixed price modification would be no different.
The regulatory parameters work out as follows:
The definition of “contract” under FAR Subpart 2.1 includes “bilateral modifications”, i.e. modifications signed by both parties. Such modifications meet definition of “contract” under FAR Subpart 2.1 and, therefore, meet the definition of “subcontract” under FAR 52-244-2 (a) for the purpose of consent requirement.
As such, the Contracting Officer’s consent is required for subcontracts AND bilateral modifications that are either 1) cost reimbursable, time and materials or labor-hour type of any value, or 2) fixed price AND either exceeds the simplified acquisition threshold (currently set at $150,000) or exceeds 5% of the total estimated price of the prime (See FAR 52.244-2 ©(2)(ii))."
As some background, this is a T&M contract and the contractor does not have an approved purchasing system. This is for a particular subcontract (fixed-price over $150,000), but I'm more interested in the larger interpretation.
So, what do you all think?
PS: Sorry for the fairly long post.