Consent to Subcontract required for modification that brings total over the SAT?

[larry1702]

Purchasing System not approved (never audited)

Operating under a cost-type contract with FAR 52.244-2 included

My question is whether we need to get consent to subcontract if we modify an existing subcontract that was under the SAT, and now the total value is over the SAT. 

Thank you in advance

 

[bob7947]

Members:

Do you need more information for a response.

[general_correspondence]

I would err on asking for consent, otherwise awards would appear fragmented without consent.

[Retreadfed]

2 hours ago, bob7947 said:

Do you need more information for a response.

My preliminary questions would be (1) how is the subcontract priced, (2) what agency wrote the prime contract?  Depending on the answers to these questions, I could have follow-up questions. 

[ji20874]

The original poster needs to read the clause at FAR 52.244-2.  The paragraphs that discuss when consent is needed are (b), (c)(1), (c)(2), and (d).

Para. (b) and para. (d) are inapplicable here.

We can’t tell whether (c)(1) or (c)(2) applies because we don’t the answer to the questions that retreaded asked.  

But I think the answer to the question that was asked is NO, because consent to subcontract is never required for a modification that merely takes an existing subcontract from below the SAT to above the SAT.  If consent is required, it will be because—

• (A) the modification is bilateral*; and 
• (B) the modification itself is reached by para. (c)(1) or (c)(2) of the clause.

*A bilateral modification is a contract, as contract is defined in FAR subpart 2.1 and used in 52.244-2.

[bob7947]

OK Retread.  He up to the end of tomorrow to respond.

[C Culham]

In addition to what Retread has offered as questions I would like to add another.   Has the OP asked the agencies Administrative Contracting Officer (ACO)/Contracting Officer (CO) the question?  I pose this as how an individual might conclude what is the appropriate requirement under the contract and its clauses could be different.  Not all CO's read the clauses in the same way.   As much as I hate to say it if the CO feels (states) consent is required then I guess one would seek the ACO's consent.

[larry1702]

21 hours ago, Retreadfed said:

My preliminary questions would be (1) how is the subcontract priced, (2) what agency wrote the prime contract?  Depending on the answers to these questions, I could have follow-up questions. 

(1) I was not involved in the original subcontract award, it's Fixed price that was negotiated.

(2) Department of State 

[larry1702]

2 hours ago, C Culham said:

In addition to what Retread has offered as questions I would like to add another.   Has the OP asked the agencies Administrative Contracting Officer (ACO)/Contracting Officer (CO) the question?  I pose this as how an individual might conclude what is the appropriate requirement under the contract and its clauses could be different.  Not all CO's read the clauses in the same way.   As much as I hate to say it if the CO feels (states) consent is required then I guess one would seek the ACO's consent.

Unfortunately the Contracting Officer doesn't respond to these types of questions or says they need to ask Legal, which takes months for a response. 

 

[Retreadfed]

3 hours ago, larry1702 said:

(1) I was not involved in the original subcontract award, it's Fixed price that was negotiated.

(2) Department of State 

I'm not so sure that ji is correct that contractors do not need consent for modifications to subcontracts.  FAR 52.244-2 defines a subcontract as "any contract, as defined in FAR subpart  2.1, entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to purchase orders."  The definition of "contract" states that it includes "bilateral contract modifications."  Further, the definition of "subcontract" found in 52.244-2 mentions modifications to purchase orders but indicates that other types of transactions, are also considered to be subcontracts.  Based on this, if the subcontract modification is a "bilateral (sub)contract modification" I believe the modification is one that needs to be examined to determine if it requires consent.

For fixed price subcontracts under prime contracts awarded by civilian agencies such as State, consent is required for subcontracts that exceed "either the simplified acquisition threshold or 5 percent of the total estimated cost of the contract."  If the modification meets this test, I believe it is a "subcontract" that   requires consent.  The fact that the modification may bring the total subcontract value above the SAT is irrelevant to me.  Instead, the question is whether the modification is considered a "subcontract" as discussed in my first paragraph, and if it is, whether the modification meets the test for requiring consent.

[ji20874]

1 hour ago, Retreadfed said:

I'm not so sure that ji is correct that contractors do not need consent for modifications to subcontracts. 

retreadfed,

I did not write that contractors do not need consent for modifications to subcontracts.  Please re-read my comment.  I think you read it too hastily the first time.  

[C Culham]

I have not leveled this current thread with the following but in a quick read I thought it might help add context to this current discussion.

 

[Neil Roberts]

On 2/4/2020 at 8:40 AM, larry1702 said:

My question is whether we need to get consent to subcontract if we modify an existing subcontract that was under the SAT, and now the total value is over the SAT. 

Thank you in advance.

My view is "Yes,'" if the FFP of the subcontract change is over the SAT or 5% of the total estimated cost of your company's contract with the Department of State, as provided by 52.244-2 paragraph (c).

[Retreadfed]

15 hours ago, ji20874 said:

I think you read it too hastily the first time.  

I agree.  It seems we are in agreement.