What are FAR Part 44 Subcontracting Policies?

Definition

FAR Part 44 Subcontracting Policies establish federal acquisition requirements governing subcontract consent, advance notification, contractor purchasing systems, and the review of subcontracting practices. FAR Part 44 addresses how contractors purchase materials and services, manage subcontracts, and maintain purchasing systems that support Government interests. :contentReference[oaicite:0]{index=0}

The rules apply to purchasing and subcontract management from development of a requirement through completion of subcontract performance. A Contractor Purchasing System Review (CPSR) evaluates the contractor's purchasing system and provides the administrative contracting officer with a basis for approving, withholding, or withdrawing purchasing-system approval. :contentReference[oaicite:1]{index=1}

Table of Contents

FAR Part 44 distinguishes between subcontract consent and advance notification. The applicable requirements depend on the contractor's purchasing-system approval status, contract type, subcontract type, value, and the terms of the prime contract.

For contractors with an approved purchasing system, consent generally applies to subcontracts specifically identified by the contracting officer or to situations where additional consent is required because of the subcontract's type, complexity, value, or need for special surveillance. Contractors without an approved purchasing system can face broader consent requirements for specified subcontract types and unpriced actions. :contentReference[oaicite:2]{index=2}

Advance notification requirements can also apply under cost-reimbursement contracts. Contractors should therefore maintain procedures that identify the applicable contract clause, notification trigger, responsible employee, and supporting information before subcontract award. :contentReference[oaicite:3]{index=3}

Subcontract Selection and Procurement Controls

FAR Part 44 purchasing procedures should establish how subcontractors are evaluated and selected. Contracting-officer evaluation considerations include whether subcontracting is consistent with an applicable make-or-buy program, whether the selected supplies or services are technically justified, whether adequate price competition was obtained, and whether the proposed subcontractor is responsible. :contentReference[oaicite:4]{index=4}

A controlled purchase order process should connect requisitions and sourcing decisions with documented approvals, supplier selection, pricing support, and subcontract terms. Policies should also explain how technical requirements from the prime contract are translated into subcontract requirements.

The purchasing system should address small-business subcontracting requirements, treatment of affiliates, contract-type selection, cost or price analysis, and appropriate documentation. These areas are specifically considered when the Government evaluates a contractor's purchasing system. :contentReference[oaicite:5]{index=5}

Accounting and Invoice Controls

Subcontracting policies also intersect with accounting operations because subcontract awards, invoices, accruals, and payments ultimately affect project costs and financial reporting. Contractors should establish procedures for reviewing subcontract invoices, validating supporting records, applying appropriate accounting classifications, and retaining evidence of approvals.

invoice processing procedures should connect invoice capture, validation, matching, GL coding, approval, and posting with the underlying subcontract and receiving evidence. This creates a traceable relationship between subcontract obligations and accounting records.

The chart of accounts should support consistent classification of subcontract costs so management and Government reviewers can trace expenditures into the general ledger and financial reports. FAR Part 44 also directs attention to compliance with Cost Accounting Standards when evaluating purchasing systems. :contentReference[oaicite:6]{index=6}

For period-end accounting, Configuring Accruals Policy can support defined accrual policies for recurring expenses, GL coding, and related accrual processes.

CPSR and Purchasing System Evaluation

A CPSR evaluates the contractor's purchasing system, including policies, procedures, and actual performance. FAR 44.303 identifies areas such as market research, price competition, pricing practices, subcontractor responsibility, small-business policies, major subcontract programs, Cost Accounting Standards, contract types, management controls, and higher-level quality standards. :contentReference[oaicite:7]{index=7}

Under FAR 44.302, the administrative contracting officer determines whether a CPSR is needed based on factors including past performance and the volume, complexity, and dollar value of subcontracts. The regulation currently provides a $25 million expected-sales level as a trigger for performing a determination of whether a CPSR is needed, subject to the exclusions and agency authority specified in the regulation. :contentReference[oaicite:8]{index=8}

Contractors can use these review areas to structure internal monitoring. A practical review should trace representative subcontract transactions from requirement development and sourcing through award, administration, invoice processing, and completion.

Subcontracting Clauses and Risk Controls

A Subcontracting Clause defines contractual requirements that may need to flow into subcontract arrangements. The purchasing team should review applicable prime-contract clauses before award and determine which requirements must be incorporated into the subcontract.

Contractors should also maintain Financial Reporting Policies that explain how subcontract costs, commitments, accruals, and related accounting information are recorded and reported. Consistent reporting procedures improve traceability between purchasing records and financial statements.

Risk Disclosure Policies can complement subcontracting controls by defining how material purchasing, supplier, contractual, or financial risks are documented and communicated within the organization.

Best Practices for FAR Part 44 Compliance

  • Map each prime-contract subcontracting requirement to a documented internal procedure.
  • Identify consent and advance-notification requirements before applicable subcontract awards.
  • Maintain evidence supporting supplier selection, price competition, responsibility determinations, and approvals.
  • Connect subcontract records with purchase orders, invoices, accounting entries, and payments.
  • Monitor CPSR-related purchasing controls across preaward, postaward, performance, and contract-completion stages.
  • Review corrective actions and update purchasing procedures when Government recommendations or organizational changes require them.

FAR 44.304 calls for surveillance covering pertinent phases of purchasing and subcontracting and includes review of corrective actions arising from previous Government recommendations. Maintaining an ongoing monitoring process therefore helps keep purchasing practices aligned with documented procedures. :contentReference[oaicite:9]{index=9}

Summary

FAR Part 44 Subcontracting Policies provide the framework for subcontract consent, advance notification, purchasing-system evaluation, and subcontract management. Contractors should translate these requirements into documented sourcing, approval, accounting, invoice, and monitoring procedures that create traceable evidence throughout the subcontract lifecycle. :contentReference[oaicite:10]{index=10}

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