FAR 30.607—Subcontract administration.
Plain-English Summary
FAR 30.607 addresses how Cost Accounting Standards (CAS) administration is handled when a subcontractor, rather than the prime contractor, is the source of a required CAS price adjustment or a determination of noncompliance. It explains the flow of information between contracting officials at different tiers, specifically requiring the CFAO for the lower-tier subcontractor to send the negotiation memorandum or noncompliance determination to the CFAO for the next higher-tier contractor or subcontractor. It also establishes that higher-tier CFAOs may not alter the lower-tier CFAO’s determination, preserving consistency and authority in the CAS administration process. Finally, it covers the situation where a subcontractor refuses to submit a General Dollar Magnitude (GDM) or Detailed Cost Impact (DCI) proposal, stating that remedies are then pursued at the prime contractor level. In practice, this section ensures that CAS issues are handled in an orderly chain of administration, prevents conflicting determinations across contract tiers, and gives the Government a clear enforcement path when a subcontractor does not cooperate.
Key Rules
Lower-tier notice required
When a negotiated CAS price adjustment or a noncompliance determination is made at the subcontract level, the subcontractor’s CFAO must provide the negotiation memorandum or determination to the CFAO for the next higher-tier contractor or subcontractor. This ensures the issue is visible to the Government officials responsible for the upper tiers of the contracting chain.
Higher tiers may not revise
The CFAO for the contractor or next higher-tier subcontractor may not change the lower-tier CFAO’s determination. The rule preserves the authority of the official who made the original subcontract-level decision and avoids inconsistent CAS outcomes across tiers.
Prime-level remedies for refusal
If a subcontractor refuses to submit a GDM or DCI proposal, the Government does not resolve the matter solely at the subcontract level. Instead, remedies are pursued at the prime contractor level, which gives the Government leverage through the prime’s contractual relationship.
Chain-of-administration coordination
The section requires coordination among CFAOs across subcontract tiers so that CAS adjustments and noncompliance findings are tracked and acted on consistently. This helps ensure that downstream subcontract issues are not isolated from the broader contract administration process.
Responsibilities
CFAO for the subcontractor
Issue the negotiation memorandum or determination of noncompliance when a subcontract-level CAS price adjustment or noncompliance finding is required, and furnish a copy to the CFAO for the next higher-tier contractor or subcontractor.
CFAO for the contractor or next higher-tier subcontractor
Receive the lower-tier memorandum or determination and administer the matter consistently, without changing the lower-tier CFAO’s determination.
Subcontractor
When required, submit a GDM or DCI proposal to support CAS price adjustment or noncompliance analysis; if it refuses, it triggers enforcement at the prime contractor level.
Prime contractor
Serve as the level at which remedies are pursued if a subcontractor refuses to submit the required GDM or DCI proposal, and support Government efforts to obtain compliance through subcontract administration.
Government contracting officials
Coordinate across tiers to ensure CAS determinations are communicated, preserved, and enforced properly, and use prime-level remedies when subcontractor cooperation is not forthcoming.
Practical Implications
CAS issues at the subcontract level do not stay confined there; they must be communicated upward so the Government can manage the full contract chain.
Higher-tier officials should treat the lower-tier CFAO’s determination as controlling, not as a draft or recommendation to be reopened.
A subcontractor’s refusal to provide a GDM or DCI proposal can shift the Government’s enforcement focus to the prime contractor, so primes need to monitor subcontractor compliance closely.
Contractors and subcontractors should maintain clear records of CAS communications, determinations, and transmittals to avoid disputes about notice and authority.
A common pitfall is assuming a higher-tier CFAO can “fix” or override a lower-tier CAS determination; FAR 30.607 does not allow that.
Official Regulatory Text
When a negotiated CAS price adjustment or a determination of noncompliance is required at the subcontract level, the CFAO for the subcontractor shall furnish a copy of the negotiation memorandum or the determination to the CFAO for the contractor of the next higher-tier subcontractor. The CFAO of the contractor or the next higher-tier subcontractor shall not change the determination of the CFAO for the lower-tier subcontractor. If the subcontractor refuses to submit a GDM or DCI proposal, remedies are made at the prime contractor level.