After laboring to comply with FAR 44 in determining the needs, conducting exhaustive competition and selection of the right contractor and painstakingly documenting all the factors to present to the CO, this one little sentence tells you that all your work may be in vain, once a particularly angry auditor finds your methods not to his/her liking.
But does this language really mean what the auditors think it means? Can the Government’s knowledge, approval and acquiescence really mean that little?
Well, not quite… This brilliantly written decision from a while ago shows you just how it is all supposed to make sense:
Husky Oil NPR Operations, Inc., IBCA 1792, 86-1 BCA ¶18,568, stating at 93,246
. The Government obtains knowledge dealing with allowability of costs in various ways: from audit reports, disclosure statements, procurement system reviews, payment of invoices and administrative functions, like approvals of subcontracts. It is in the contractor’s best interest to document it all with the view of proving that the Government had specific knowledge of the allowability of cost in question and it did not disagree with the proposed approach or treatment (we are not talking about expressly unallowable costs here, which Cos are not authorized to overrule).
It is not sufficient to just show that the Contractor sent something to the Government and they did not said “no”. Specific knowledge and action must be established. It is essential that you show that you relied on the Government’s knowledge, not knowing that the Government disagrees or specifically disapproves something.
In the example of a subcontract consent pursuant to 52.244-2, the extent to which the CO is provided and examines the details of awarding a specific subcontract, determination of pricing, sole source etc. can be paramount in defending allowability for the pesky auditor or under a claim.
FAR 44.202-2 provides a road map for requesting a proper consent to subcontract and detailing the specific actions which went into determining the needs for the project, the approach taken in procurement methods, the type of awarded subcontract and price reasonableness determination. If you follow this process, document it properly and your CO consents in writing, the documentation will go a long way to support allowability of all resulting costs (provided your subcontract is properly written and subsequently managed and enforced to protect Government’s interests).
Here are some of the details to include in your request for consent:
- Is this subcontract needed to assist the Prime in performing the work? Was an in-house option considered?
- General description of the services/goods being purchased and how they benefit the ongoing Prime Contract (FAR 44.202-2 (a) (3))
- Type of Competition: Open Competition, Short List Competition, Sole Source
- Basis for Procurement Evaluation: Lowest Price/Technically Acceptable; Best Value Overall/Trade-Off; Sealed Bids etc.