44.203 Consent limitations
Source: FAR 44.203 on acquisition.gov
Contracting officer consent to subcontracts is limited and does not guarantee government acceptance of terms, prices, or costs unless explicitly stated, and certain subcontract types are strictly prohibited.
Overview
FAR 44.203 outlines the limitations and conditions under which contracting officers may grant consent to subcontracts. It clarifies that consent or approval of a contractor’s purchasing system does not automatically validate subcontract terms, prices, or cost allowability unless explicitly stated. The section prohibits contracting officers from consenting to certain types of subcontracts, such as those with excessive fees, cost-plus-a-percentage-of-cost arrangements, or those that improperly bind the government. It also addresses the use of indirect appeals by subcontractors and sets boundaries for what can be included in subcontract dispute clauses.
Key Rules
- Consent Does Not Imply Approval of Terms or Costs
- Consent or purchasing system approval does not mean the government accepts subcontract terms, prices, or costs unless specifically stated.
- Prohibited Subcontract Types
- Contracting officers cannot consent to subcontracts with excessive fees, cost-plus-a-percentage-of-cost payment methods, or those that bind the government to third-party dispute outcomes.
- Indirect Appeal Clauses
- Consent should not be refused solely because a subcontract allows for indirect appeals, provided the clause does not obligate the government beyond its contractual relationship with the prime contractor.
Responsibilities
- Contracting Officers: Must ensure prohibited subcontract types are not approved and clarify the limits of their consent. They must also review dispute clauses for compliance.
- Contractors: Must avoid submitting subcontracts for consent that violate these limitations and ensure dispute clauses are compliant.
- Agencies: Oversee contracting officer compliance and ensure procurement integrity.
Practical Implications
- This section exists to protect the government from unfavorable subcontract terms and excessive costs. It impacts daily contracting by requiring careful review of subcontract structures and dispute clauses. Common pitfalls include submitting noncompliant subcontracts or misunderstanding the scope of contracting officer consent.
(a) The contracting officer’s consent to a subcontract or approval of the contractor’s purchasing system does not constitute a determination of the acceptability of the subcontract terms or price, or of the allowability of costs, unless the consent or approval specifies otherwise.
(b) Contracting officers shall not consent to-
(1) Cost-reimbursement subcontracts if the fee exceeds the fee limitations of 15.404-4(c)(4)(i);
(2) Subcontracts providing for payment on a cost-plus-a-percentage-of-cost basis;
(3) Subcontracts obligating the contracting officer to deal directly with the subcontractor;
(4) Subcontracts that make the results of arbitration, judicial determination, or voluntary settlement between the prime contractor and subcontractor binding on the Government; or
(5) Repetitive or unduly protracted use of cost-reimbursement, time-and-materials, or labor-hour subcontracts (contracting officers should follow the principles of 16.103(c)).
(c) Contracting officers should not refuse consent to a subcontract merely because it contains a clause giving the subcontractor the right of indirect appeal to an agency board of contract appeals if the subcontractor is affected by a dispute between the Government and the prime contractor. Indirect appeal means assertion by the subcontractor of the prime contractor’s right to appeal or the prosecution of an appeal by the prime contractor on the subcontractor’s behalf. The clause may also provide that the prime contractor and subcontractor shall be equally bound by the contracting officer’s or board’s decision. The clause may not attempt to obligate the contracting officer or the appeals board to decide questions that do not arise between the Government and the prime contractor or that are not cognizable under the clause at 52.233-1, Disputes.