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bulgheroni

CPSR driven by FAR 52-244-2?

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My company believes that if a prime contract does not contain the clause 52.244-2 "Subcontracts", then all subcontracts awarded under that prime are exempt from purchasing system review under FAR Part 44.  This has been enshrined in our policy, and even contains the guidance to contact the Contracting Officer when the clause is omitted, to ensure that the omission is intentional.

The reason given is that FAR 52,244-2(i) says "The Government reserves the right to review the Contractor’s purchasing system as set forth in FAR Subpart 44.3". I contend that the absence of this line in the contract does not create any such automatic exemption.

I have been unable to locate, within in the FAR, any acquisition supplements or any other contracting resources, any support for the company's position.

Is anyone else observing this exemption, and if so what is the basis for it?

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That's an interesting position, and one I have not seen before. If I understand the position correctly, if your company is selected for a CPSR, contracts lacking the 52.244-2 clause would not be included in the CPSR universe of transactions for review.

I suppose, legally, it's not wrong. I'm just wondering what the business driver is here. Does your purchasing system distinguish between the two types of contracts? Do you do things differently, depending on whether or not you think the Government will be looking over your shoulder? Do you, in effect, have two purchasing systems--one for contracts subject to review and another for contracts not subject to review?

If you are treating the two sets of contracts differently, are you missing opportunities to aggregate demand and to obtain volume discounts? Are you creating excess/residual material because you can't share between contract sets?

 

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Correct, our company was indeed recently selected for CPSR, and the subcontracts coded as exempt, some of which are in the class I described, were not included in the universe.

We do not otherwise treat our subcontract differently;  all subcontracts are documented the same way, subject to the requirements of each prime contract.  I believe the company is endeavoring to minimize the risk of CPSR criticism by seeking to exclude everything from the universe that is legitimately exempt, but it seems we are overstepping that definition based on the dubious interpretation of the clause.

Items you mention in your last paragraph are not coming into play here.

Please explain how you say, "legally it's not wrong", when the subcontracts in question do not meet the exclusion criteria of FAR 44.303?

I am seeking to find if any guidance from any authoritative official source exists, which says or suggests that the absence of the Subcontracts clause allows exclusion of such subcontracts from the CPSR universe.

Thanks

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bulgheroni,

 

I have no authoritative guidance to give you, except to say that the FAR is not contractually enforceable. Only contract clauses are contractually enforceable. Vern wrote a piece on that concept recently, and you can find it on WIFCON because reprint rights were graciously shared.

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3 hours ago, bulgheroni said:

My company believes that if a prime contract does not contain the clause 52.244-2 "Subcontracts", then all subcontracts awarded under that prime are exempt from purchasing system review under FAR Part 44.  This has been enshrined in our policy, and even contains the guidance to contact the Contracting Officer when the clause is omitted, to ensure that the omission is intentional...

I have been unable to locate, within in the FAR, any acquisition supplements or any other contracting resources, any support for the company's position.

Why do you think your company needs support from the FAR or some other "authoritative official source"? Seems to me it's doing a pretty good job of thinking for itself.

The Subcontracts clause is what gives the government the right to review a contractor's purchasing system. FAR Subpart 44.3 is not binding on contractors except to the extent that its cited in a contract clause.

The purpose of purchasing system approval is to simplify the subcontract approval process. If a contractor's purchasing system is not approved, then the process of awarding subcontracts that otherwise require approval under FAR Subpart 44.2 becomes more arduous. But that will not affect contracts under which approval is not required or that do not include the Subcontracts clause. CPSR review is irrrelevant to such contracts, and such contracts are irrelevant to CPSR review.

I don't see why subcontracts awarded under prime contracts that do not include the Subcontracts clause should be included in CSPR reviews. I think your company is on solid ground, and I think it is wise of it to put contracting officers on notice. On the other hand, I don't know if it's worth the process of segregating such subcontracts from or within your purchasing system, unless your company knows that a CSPR team would frown on the way it's awarding them.

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Bulgheroni, is 52.244-2 omitted from the contracts because they do not meet the criteria of 44.204 or is it omitted for some other reason?  Also, do any of those contracts contain DFARS 252.244-7001 or DFARS 252.244-7001 Alt I?

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Thanks for your comments on the subject.  Other than the absence of 52.244-2, the subcontracts I am concerned with clearly meet the criteria for belonging in the CPSR universe, i. e. they are under primes other than competitively awarded FFP or FFP-EPA, and they are not awarded under commercial item primes.  Such subcontracts missing the Subcontracts clause (for no apparent reason) are not numerous, but there are some, and our staff is citing that as the only reason for exclusion. If it makes any difference, our company does have a longstanding approved purchasing system.

I am still not getting an answer to my question, which is, are there indeed other companies in the industry, who are currently awarding subcontracts and are subject to purchasing system reviews, who are using this specific reason to exclude subcontracts from the CPSR universe?  And if so, what is the basis for that decision? I would like to hear the reasoning from someone who is actually doing it.

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4 hours ago, bulgheroni said:

I am still not getting an answer to my question, which is, are there indeed other companies in the industry, who are currently awarding subcontracts and are subject to purchasing system reviews, who are using this specific reason to exclude subcontracts from the CPSR universe?  And if so, what is the basis for that decision? I would like to hear the reasoning from someone who is actually doing it.

Though you may not have received the answer you anticipated or wanted, I think the second half of your question was answered ("what is the basis for it?")...you might want to consider that, of those individuals who frequent these forums, many do not post/participate so you may not ever get an anecdotal response from a similarly situated person/company here.

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bulgheroni,

The majority of people here are Federal employees or former Federal employees. Why do you think that they would have insight into data that was NOT provided to the Federal government during a review? You think the contractor that decided to not provide the data would call the intentional omission to the attention of government reviewers? I highly doubt it. Consequently I think you're asking the wrong people and you shouldn't expect an answer.

That said, there are former CPSR reviewers out there, employed by consulting firms. For example, Jean Labadini (former Director of the DCMA CPSR Group) is currently a consultant. I am not endorsing her; there are others who have the same or similar knowledge. Why don't you hire somebody who might know the answer to your question and then pose it to that person?

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