FAR 52.244-2—Subcontracts.
Plain-English Summary
FAR 52.244-2, Subcontracts, is the Government’s core clause for controlling a prime contractor’s use of subcontractors. It defines key terms such as approved purchasing system, consent to subcontract, and subcontract; explains when consent is required for fixed-price, cost-reimbursement, time-and-materials, and labor-hour contracts; and distinguishes between contractors with and without an approved purchasing system. The clause also requires advance notice to the Contracting Officer with detailed information about the proposed subcontract, including the work, subcontract type, proposed subcontractor, price, cost or pricing data, CAS-related statements, and a negotiation memorandum. It limits what Government consent or purchasing-system approval means, prohibits cost-plus-a-percentage-of-cost subcontracts, imposes notice duties for subcontractor claims and litigation, reserves the Government’s right to review the purchasing system, and allows the parties to exempt certain subcontracts that were already evaluated during negotiations. In practice, this clause is about balancing contractor purchasing autonomy with Government oversight, especially where subcontracting can affect price reasonableness, cost allowability, schedule, and performance risk. It matters because failure to obtain required consent, provide required data, or follow purchasing-system rules can create compliance findings, delay awards or modifications, and expose the contractor to cost, performance, or audit issues.
Key Rules
Key definitions control scope
The clause defines approved purchasing system, consent to subcontract, and subcontract broadly. The definition of subcontract includes purchase orders and changes or modifications to purchase orders, so many downstream buying actions can trigger the clause.
Consent depends on contract type
For fixed-price contracts, consent is required only for unpriced contract actions, including unpriced modifications or delivery orders, and only when paragraph (c) or (d) requires it. For other contract types, the consent rules in paragraph (c) apply directly.
No approved system means broader consent
If the contractor lacks an approved purchasing system, consent is required for any cost-reimbursement, time-and-materials, or labor-hour subcontract, and for fixed-price subcontracts above the stated threshold. The threshold differs for DoD, Coast Guard, and NASA versus civilian agencies.
Approved system narrows but does not eliminate consent
Even with an approved purchasing system, the contractor must still obtain written consent for any subcontracts specifically listed in paragraph (d). The clause allows the contracting parties to identify those subcontracts in the blank space of the clause.
Advance notice must be detailed
Before placing a subcontract requiring consent, the contractor must notify the Contracting Officer reasonably in advance and provide specific information about the work, subcontract type, subcontractor, price, cost or pricing data, CAS statements, and a negotiation memorandum. This is meant to support informed Government review of pricing and risk.
Consent is not approval of everything
Government consent to a subcontract, or approval of a purchasing system, does not by itself make subcontract terms acceptable, make costs allowable, or relieve the prime contractor of responsibility. The contractor remains accountable for performance and compliance.
Cost-plus-percentage-of-cost is prohibited
No subcontract or modification under the contract may provide payment on a cost-plus-a-percentage-of-cost basis. For cost-reimbursement subcontracts, any fee must stay within the fee limits in FAR 15.404-4(c)(4)(i).
Litigation and claim notice is required
The contractor must promptly notify the Contracting Officer of subcontractor or vendor claims and immediately notify the Government of any action or suit that may lead to litigation related to the contract and for which reimbursement may be sought.
Government may review purchasing systems
The Government reserves the right to review the contractor’s purchasing system under FAR subpart 44.3. This keeps purchasing-system approval and surveillance tied to ongoing compliance, not a one-time event.
Some subcontracts may be exempted
Paragraph (j) allows the parties to identify subcontracts that were evaluated during negotiations and therefore are exempt from paragraphs (c) and (e). This is a targeted exception, not a general waiver of subcontract controls.
Responsibilities
Contracting Officer
Determine whether consent to subcontract is required under the contract type and purchasing-system status; review advance notices and supporting data; identify any subcontracts exempted under paragraph (j); and retain the right to review the contractor’s purchasing system under FAR subpart 44.3.
Contractor
Obtain required consent before placing covered subcontracts; provide timely advance notice and all required supporting information; maintain compliance with purchasing-system requirements; avoid prohibited cost-plus-percentage-of-cost arrangements; and notify the Contracting Officer of relevant claims, suits, or litigation risk.
Agency
Apply the clause correctly in solicitations and contracts, including inserting the clause when prescribed; evaluate whether a contractor’s purchasing system merits approval; and oversee subcontracting practices where Government interests in price, cost, and performance are affected.
Subcontractor/Vendor
Provide accurate certified cost or pricing data, Certificates of Current Cost or Pricing Data, and CAS-related disclosures or certificates when required by other contract provisions; and support the prime contractor’s negotiation and compliance obligations.
Practical Implications
Contractors need a strong internal subcontract review process because many purchase orders, modifications, and unpriced actions can trigger consent requirements.
The biggest compliance mistake is assuming that an approved purchasing system means no further Government involvement; paragraph (d) can still require consent for named subcontracts.
Advance notice is not just a heads-up — it requires pricing, CAS, and negotiation documentation, so procurement and pricing teams must coordinate early.
Government consent does not cure bad subcontract terms or unallowable costs, so contractors still need to perform their own legal, pricing, and cost allowability review.
Litigation and claim notice obligations are easy to miss; contractors should route subcontractor disputes to contracts staff immediately to preserve reimbursement rights and avoid late notice issues.
Official Regulatory Text
As prescribed in 44.204 (a)(1) , insert the following clause: Subcontracts (Jun 2020) (a) Definitions . As used in this clause- "Approved purchasing system" means a Contractor’s purchasing system that has been reviewed and approved in accordance with part 44 of the Federal Acquisition Regulation (FAR). "Consent to subcontract" means the Contracting Officer’s written consent for the Contractor to enter into a particular subcontract. Subcontract means any contract, as defined in FAR subpart 2.1 , entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to purchase orders. (b) When this clause is included in a fixed-price type contract, consent to subcontract is required only on unpriced contract actions (including unpriced modifications or unpriced delivery orders), and only if required in accordance with paragraph (c) or (d) of this clause. (c) If the Contractor does not have an approved purchasing system, consent to subcontract is required for any subcontract that- (1) Is of the cost-reimbursement, time-and-materials, or labor-hour type; or (2) Is fixed-price and exceeds- (i) For a contract awarded by the Department of Defense, the Coast Guard, or the National Aeronautics and Space Administration, the greater of the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of the contract; or (ii) For a contract awarded by a civilian agency other than the Coast Guard and the National Aeronautics and Space Administration, either the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of the contract. (d) If the Contractor has an approved purchasing system, the Contractor nevertheless shall obtain the Contracting Officer’s written consent before placing the following subcontracts: ________________________________________________________________________________ (e) (1) The Contractor shall notify the Contracting Officer reasonably in advance of placing any subcontract or modification thereof for which consent is required under paragraph (b), (c), or (d) of this clause, including the following information: (i) A description of the supplies or services to be subcontracted. (ii) Identification of the type of subcontract to be used. (iii) Identification of the proposed subcontractor. (iv) The proposed subcontract price. (v) The subcontractor’s current, complete, and accurate certified cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions. (vi) The subcontractor’s Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract. (vii) A negotiation memorandum reflecting- (A) The principal elements of the subcontract price negotiations; (B) The most significant considerations controlling establishment of initial or revised prices; (C) The reason certified cost or pricing data were or were not required; (D) The extent, if any, to which the Contractor did not rely on the subcontractor’s certified cost or pricing data in determining the price objective and in negotiating the final price; (E) The extent to which it was recognized in the negotiation that the subcontractor’s certified cost or pricing data were not accurate, complete, or current; the action taken by the Contractor and the subcontractor; and the effect of any such defective data on the total price negotiated; (F) The reasons for any significant difference between the Contractor’s price objective and the price negotiated; and (G) A complete explanation of the incentive fee or profit plan when incentives are used. The explanation shall identify each critical performance element, management decisions used to quantify each incentive element, reasons for the incentives, and a summary of all trade-off possibilities considered. (2) The Contractor is not required to notify the Contracting Officer in advance of entering into any subcontract for which consent is not required under paragraph (b), (c), or (d) of this clause. (f) Unless the consent or approval specifically provides otherwise, neither consent by the Contracting Officer to any subcontract nor approval of the Contractor’s purchasing system shall constitute a determination- (1) Of the acceptability of any subcontract terms or conditions; (2) Of the allowability of any cost under this contract; or (3) To relieve the Contractor of any responsibility for performing this contract. (g) No subcontract or modification thereof placed under this contract shall provide for payment on a cost-plus-a-percentage-of-cost basis, and any fee payable under cost-reimbursement type subcontracts shall not exceed the fee limitations in FAR 15.404-4 (c)(4)(i). (h) The Contractor shall give the Contracting Officer immediate written notice of any action or suit filed and prompt notice of any claim made against the Contractor by any subcontractor or vendor that, in the opinion of the Contractor, may result in litigation related in any way to this contract, with respect to which the Contractor may be entitled to reimbursement from the Government. (i) The Government reserves the right to review the Contractor’s purchasing system as set forth in FAR subpart 44.3 . (j) Paragraphs (c) and (e) of this clause do not apply to the following subcontracts, which were evaluated during negotiations: _______________________________________________________________________________ (End of clause) Alternate I (June 2020) . As prescribed in 44.204 (a)(2), substitute the following paragraph (e)(2) for paragraph (e)(2) of the basic clause: (e)(2) If the Contractor has an approved purchasing system and consent is not required under paragraph (c), or (d) of this clause, the Contractor nevertheless shall notify the Contracting Officer reasonably in advance of entering into any (i) cost-plus-fixed-fee subcontract, or (ii) fixed-price subcontract that exceeds either the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of this contract. The notification shall include the information required by paragraphs (e)(1)(i) through (iv) of this clause.