FAR 44.305-3—Withholding or withdrawing approval.
Plain-English Summary
FAR 44.305-3 explains when the Administrative Contracting Officer (ACO) must withhold or withdraw approval of a contractor’s purchasing system, and what happens procedurally when that occurs. It covers the grounds for action, including major weaknesses, inability to provide enough information for an affirmative determination, deterioration of the system, protection of the Government’s interest, and recurring noncompliance with specific requirements such as certified cost or pricing data, cost accounting standards, advance notification requirements, and small business subcontracting. It also sets out the post-review notification process: written notice to the contractor, identification of deficiencies, and a request for a corrective action plan within 15 days. If the contractor’s plan is accepted, the ACO must conduct a follow-up review once the contractor says the deficiencies have been corrected. In practice, this section is about preserving Government oversight and ensuring the contractor’s purchasing system is reliable enough to support subcontracting, pricing, accounting, and socioeconomic compliance obligations.
Key Rules
Withhold for major weaknesses
The ACO must withhold or withdraw approval when the contractor’s purchasing system has major weaknesses or when the contractor cannot provide sufficient information to support an affirmative determination. Approval depends on the system being adequately documented, controlled, and reviewable.
Withdraw for deterioration or protection
The ACO may withdraw approval at any time if the purchasing system has deteriorated or if withdrawal is needed to protect the Government’s interest. This gives the ACO discretion to act before problems cause further risk.
Recurring noncompliance requires action
Approval must be withheld or withdrawn when there is recurring noncompliance with required standards. The rule specifically highlights certified cost or pricing data, cost accounting standards, advance notification requirements, and small business subcontracting obligations.
Written notice within 10 days
After completing the in-plant review, the ACO must notify the contractor in writing within 10 days if approval is withheld or withdrawn. The notice must clearly identify the deficiencies that must be corrected before approval can be granted.
Corrective action plan in 15 days
The ACO must request that the contractor submit a plan for corrective action within 15 days. The plan should explain how the contractor will fix the deficiencies and restore an approvable purchasing system.
Follow-up review after correction
If the ACO accepts the contractor’s plan, the ACO must perform a follow-up review as soon as the contractor reports that the deficiencies have been corrected. The purpose is to verify that the fixes are real and effective, not just promised.
Responsibilities
Administrative Contracting Officer (ACO)
Evaluate the contractor’s purchasing system and withhold or withdraw approval when required by major weaknesses, insufficient information, deterioration, protection of the Government’s interest, or recurring noncompliance. Provide written notice within 10 days after the in-plant review, specify the deficiencies, request a corrective action plan within 15 days, and conduct a follow-up review after the contractor reports correction if the plan is accepted.
Contractor
Maintain a purchasing system that supports an affirmative approval determination and avoid recurring noncompliance with applicable requirements. If approval is withheld or withdrawn, submit a corrective action plan within 15 days and notify the ACO when deficiencies have been corrected so a follow-up review can occur.
Government/Agency
Rely on the ACO’s oversight to protect the Government’s interests by ensuring contractor purchasing systems remain adequate for compliance with pricing, accounting, notification, and subcontracting requirements.
Practical Implications
A contractor’s purchasing system approval is not permanent; it can be lost if controls weaken or compliance problems repeat.
Recurring issues in cost or pricing data, CAS, advance notification, or small business subcontracting are especially serious because the rule specifically calls them out.
The 10-day notice and 15-day corrective action deadlines mean contractors need a rapid response process ready before problems escalate.
A good corrective action plan should be specific, realistic, and tied to root causes; vague promises are unlikely to restore approval.
For contracting officers, this section is a risk-control tool: it supports timely intervention before system deficiencies affect pricing, subcontracting, or other contract administration outcomes.
Official Regulatory Text
(a) The ACO shall withhold or withdraw approval of a contractor’s purchasing system when there are major weaknesses or when the contractor is unable to provide sufficient information upon which to make an affirmative determination. The ACO may withdraw approval at any time on the basis of a determination that there has been a deterioration of the contractor’s purchasing system or to protect the Government’s interest. Approval shall be withheld or withdrawn when there is a recurring noncompliance with requirements, including but not limited to- (1) Certified cost or pricing data (see 15.403 ); (2) Implementation of cost accounting standards (see 48 CFR chapter 99 ); (3) Advance notification as required by the clauses prescribed in 44.204 ; or (4) Small business subcontracting (see subpart 19.7 ). (b) When approval of the contractor’s purchasing system is withheld or withdrawn, the ACO shall within 10 days after completing the in-plant review (1) inform the contractor in writing, (2) specify the deficiencies that must be corrected to qualify the system for approval, and (3) request the contractor to furnish within 15 days a plan for accomplishing the necessary actions. If the plan is accepted, the ACO shall make a follow-up review as soon as the contractor notifies the ACO that the deficiencies have been corrected.