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Subcontracting Summit: A Case Study Approach to Best Practices Virtual Class Series

September 20, 2017 @ 2:00 pm - 3:15 pm



Click Here to Learn About PCI’s discounted OPEN PASS to Access 6 Different Webinar and Virtual Class Series

Session Outline

The first session of this 9-part Subcontracting Summit will cover an in depth review and interpretation of Part 44 as follows:

FAR Part 44—Subcontracting Policies and Procedures

  1. General
    1. Policies and procedures for consent to subcontracts or advance notification of subcontracts, and review and approval of contractors’ purchasing systems;
    2. Subpart 44.2 does not apply to prime contracts for commercial items under part 12;
    3. Key definitions:
      1. Approved purchasing system (“APS”)
      2. Contractor purchasing system review (“CPSR”)
    4. Consent limitations
      1. CO’s consent to a subcontract or CPS does not constitute a determination of the acceptability of the subcontract terms or price, or of the allowability of costs unless otherwise specified.
      2. CO cannot consent to fees on cost-reimbursement contracts that exceed limitations of FAR 15.404-4(c)(4)(i); subcontracts for payment on a cost-plus-a-percentage-of-cost basis; subcontracts obligating CO to deal directly with subcontractor; subcontracts that place binding determinations on the government; or repetitive use of cost-reimbursement, TM, or LH subcontracts.
      3. Subcontract can contain provisions for indirect appeal.
    5. Contract Clauses at § 44.204
    6. Extent of Review
      1. CO reviews contractor’s purchasing system, and when applicable, does not include subcontracts awarded by the contractor exclusively in support of Government contract that are competitively awarded firm-fixed-price, competitively awarded fixed-price with economic price adjustment, or awarded for commercial items pursuant to Part 12.
      2. CO must give special attention to a host of factors, including market research results, price competition, pricing policies and techniques, methods of evaluating subcontractor responsibility, treatment accorded affiliates, policies and procedures pertaining to small business concerns, planning, award, and post management of major subcontract programs, cost accounting standards compliance, type of contract appropriateness, management control systems, and higher-level quality standards implementation.
    7. Surveillance
      1. CO shall maintain a sufficient level of surveillance to ensure that the contractor is effectively managing its purchasing program.
    8. Granting, Withholding, or Withdrawing Approval
      1. Approval only after showing contractor’s purchasing policies and practices are efficient and adequately protect government’s interests.
    9. Notification
    10. Withholding or withdrawing approval
      1. CO shall withhold or withdraw approval of a subcontractor’s purchasing system when major weaknesses exist or when the contractor cannot provide sufficient information upon which to make an affirmative determination. Withdrawal can happen at any time if CO learns of deteriorating of purchasing system.
      2. If withheld or withdrawn, CO must inform contractor in writing within 10 days of in-plant review, specify the deficiencies, and request a plan from contractor to be furnished within 15 days to accomplish corrections of noted deficiencies.
    11. FAR 52.244-6 applies to subcontracts for commercial items.
    12. Agencies may supplement FAR 52.244-6 only as necessary to reflect agency unique statutes applicable to the acquisition of commercial items.
  2. Consent to Subcontracts
    1. If contractor has APS, consent required for subcontracts specifically identified by CO in subcontracts clause of contract. May be necessary to protect the government because of the subcontract type, complexity, or value, or because subcontract needs special surveillance.
    2. If contractor does not have APS, consent to subcontract is required for cost-reimbursement, T&M, LH, or letter contracts, and for unpriced actions under fixed price contracts that exceed the simplified acquisition threshold.
    3. Consent may also be required for subcontracts under prime contracts for architect-engineer services.
    4. Advance notification requirements apply for cost-reimbursement contracts.
    5. CO’s Evaluation:
      1. Includes review of contractor’s notification and supporting data to ensure that the proposed subcontract is appropriate for the risks involved and consistent with current policy and sound business judgment.
      2. CO must review the request and supporting data and consider a host of factors, including availability of government sources, small business subcontracting considerations, price competition, alternate proposals, the contractor’s determinations regarding the subcontractor, appropriateness of the subcontract, relaying the price contract’s requirements, etc.
  3. Contractors Purchasing Systems Reviews
    1. CPSR objective is to evaluate the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting.
    2. Requirements
      1. CO determines CPSR need on contractor’s past performance and the volume, complexity, and dollar value of the subcontracts.
      2. If contractor’s sales to the Government are expected to exceed $25 million during the next 12 months, perform a review to determine whether a CPSR is needed.
      3. After the initial determination, CO shall determine whether a purchasing system review is necessary at least every three years.
  4. Subcontracts for Commercial Items and Commercial Components
    1. This part applies to commercial items and subcontracts defined by FAR Part 12.
    2. Policy Requirements
      1. Contractors and subcontractors shall (1) incorporate commercial items as components delivered to the government and (2) not be required to apply to any of its divisions, subsidiaries, affiliates, subcontractors, or suppliers that are furnishing commercial items or commercial components any clause except when required by law or custom.

Series Summary

If you are perplexed by the twists and turns of subcontracting, the curve balls that prime contractors throw at you, and the challenges presented by your own subcontractors, we have just what you need! Join our instructors Cy Alba, Tim Sullivan, Bill Walter, as well as special guests, for PCI’s “Subcontracting Summit,” a series of nine 75-minute virtual webinars beginning in September.

You and your colleagues are invited to participate as our experienced faculty explains virtually every aspect of the subcontracting process over the nine-part series, using case studies based on actual events whenever possible. Whether you are a prime contractor preparing subcontracting plans or dealing with subcontracting plan audits, a subcontractor losing work share or not being paid, or trying to understand why certain terms show up in subcontracts and how the regulations relate to them, our instructors will provide you with real-life answers and guidance each month. Further, you will hear how each side views a particular subcontracting challenge and how smart contractors have resolved them. You’ll develop a better understanding of what the Federal government’s role in the process is, despite its attempts to stay out of it.

Our program will run every Wednesday from 2:00 p.m. Eastern to 3:15 Eastern beginning Wednesday, September 20, except for December.  Can you spare the time to participate in this exciting program?  Of course you can!  In fact, you can’t afford to miss it!

Framework for each session:

  • Background
  • Case studies/Anecdotes
  • Case law
  • Best practices
  • Q&A: Bring your questions!

Subcontracting Summit: A Case Study Approach to Best Practices Virtual Class Series (to register for the entire series, click here)

All sessions run from 2:00 pm to 3:15 pm (ET).

September 20: Overview of Subcontracting and FAR Part 44

October 25: Joint Ventures and Teaming Agreements

November 15: Risk Management

January 24: Flowdowns

February 7: Subcontracting Plans

March 7: Best Practices in Prime’s RFP Development

April 4: Subcontract Pricing

May 2: Purchasing System

June 13: Administration


Continuing Education Credits

1.25 CLE/ 1.5 CPE (Finance)/0.125 CEU credits may be earned for this course. This course is recommended for 1.0 CLP credits.

11.25 CLE/ 13.5 CPE (Finance)/1.125 CEU credits may be earned for this series. This series is recommended for 9.0 CLP credits.

This course has been approved for CLE in CA, PA, VA and TX.  Because this activity has been approved in another CLE jurisdiction, you may also receive credit for participation in AK, AZ, AR, CO, FL, HI, IL, ME, MT, NJ, NY, ND, OH, OR and WI (additional state requirements may apply). If you are seeking CLE credits for a jurisdiction other than the ones listed above, please contact us for additional information.

This course can be submitted to Project Management Institute (PMI) for PDU.  Upon their approval, it may be worth 1.25 PDU credits or 11.25 PDU credits for the series.





Raisa Dunton

The Public Contracting Institute is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

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