Restrictions on subcontracting
Contractors must not subcontract over $45,000 to debarred or suspended parties without compelling justification and written notification to the contracting officer.
Overview
FAR 9.405-2 establishes strict restrictions on subcontracting with parties that are debarred, suspended, proposed for debarment, or voluntarily excluded from government contracting. The regulation aims to protect the Government’s interests by limiting the ability of contractors to engage such entities as subcontractors, especially for subcontracts exceeding $45,000, unless there is a compelling reason and proper notification is provided.
Key Rules
- Consent for Subcontracts
- Contracting officers cannot consent to subcontracts with debarred, suspended, or excluded parties unless the agency head provides a written justification of compelling reasons.
- Prohibition on Subcontracting
- Contractors are prohibited from entering into subcontracts over $45,000 (except for commercially available off-the-shelf items) with debarred, suspended, or excluded parties unless there is a compelling reason.
- Notification Requirement
- If a contractor intends to subcontract with such a party, a corporate officer or designee must notify the contracting officer in writing before proceeding, providing specific information and justification.
- Review of Compliance
- Contractor compliance with these requirements is subject to review during Contractor Purchasing System Reviews.
Responsibilities
- Contracting Officers: Must withhold consent for subcontracts with excluded parties unless justified in writing by the agency head.
- Contractors: Must avoid prohibited subcontracts, notify the contracting officer with required details if exceptions apply, and maintain systems to protect the Government’s interests.
- Agencies: Must review contractor compliance during purchasing system reviews and approve exceptions only with compelling justification.
Practical Implications
This section exists to prevent government funds from flowing to entities deemed untrustworthy or ineligible. Contractors must carefully vet subcontractors, maintain robust compliance systems, and document any exceptions thoroughly. Failure to comply can result in contract violations, system review findings, or further exclusion actions.