252.244-7998 Contractor Purchasing System Administration

This clause was introduced by the Revolutionary FAR Overhaul (EO 14275) and does not appear in the codified eCFR. It applies to contracts using the RFO model.

RFO Prescription

244.301-71 Contract clause.

Insert the Contractor Purchasing System Administration basic clause or its alternate as
follows:

(a) Insert the clause at 252.244-7998, Contractor Purchasing System
Administration—Basic, in solicitations and contracts containing the clause at FAR
52.244-2, Subcontracts.

(b) Insert the clause at 252.244-7998, Contractor Purchasing System
Administration—Alternate I, in solicitations and contracts that contain the clause at
252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System,
but do not contain FAR 52.244-2, Subcontracts.

Current Text (RFO)

CONTRACTOR PURCHASING SYSTEM ADMINISTRATION—BASIC
(FEB 2026)(DEVIATION 2026-O0015)

(a) Definitions. As used in this clause—

"Acceptable purchasing system" means a purchasing system that complies with the
system criteria in paragraph (c) of this clause.

"Material weakness" means a deficiency or combination of deficiencies in the internal
control over information in contractor business systems, such that there is a reasonable
possibility that a material misstatement of such information will not be prevented, or
detected and corrected, on a timely basis. A reasonable possibility exists when the
likelihood of an event occurring is—

(1) Probable; or

(2) More than remote but less than likely (section 806 of Pub. L. 116-283).

"Purchasing system" means the Contractor's system or systems for purchasing and
subcontracting, including make-or-buy decisions, the selection of vendors, analysis of
quoted prices, negotiation of prices with vendors, placing and administering of orders,
and expediting delivery of materials.

(b) General. The Contractor shall establish and maintain an acceptable purchasing
system. Failure to maintain an acceptable purchasing system, as defined in this clause,
may result in disapproval of the system by the Contracting Officer and/or withholding
of payments.

(c) System criteria. The Contractor's purchasing system shall—

(1) Have an adequate system description including policies, procedures, and
purchasing practices that comply with the Federal Acquisition Regulation (FAR) and
the Defense Federal Acquisition Regulation Supplement (DFARS);

(2) Ensure that all applicable purchase orders and subcontracts contain all
flowdown clauses, including terms and conditions and any other clauses needed to carry
out the requirements of the prime contract;

(3) Maintain an organization plan that establishes clear lines of authority and
responsibility;

(4) Ensure all purchase orders are based on authorized requisitions and include
a complete and accurate history of purchase transactions to support vendor selected,
price paid, and document the subcontract/purchase order files which are subject to
Government review;

(5) Establish and maintain adequate documentation to provide a complete and
accurate history of purchase transactions to support vendors selected and prices paid;

(6) Apply a consistent make-or-buy policy that is in the best interest of the
Government;

(7) Use competitive sourcing to the maximum extent practicable, and ensure
debarred or suspended contractors are properly excluded from contract award;

(8) Evaluate price, quality, delivery, technical capabilities, and financial
capabilities of competing vendors to ensure fair and reasonable prices;

(9) Require management level justification and adequate cost or price analysis,
as applicable, for any sole or single source award;

(10) Perform timely and adequate cost or price analysis and technical
evaluation for each subcontractor and supplier proposal or quote to ensure fair and
reasonable subcontract prices;

(11) Document negotiations in accordance with FAR 15.408;

(12) Seek, take, and document economically feasible purchase discounts,
including cash discounts, trade discounts, quantity discounts, rebates, freight
allowances, and company-wide volume discounts;

(13) Ensure proper type of contract selection and prohibit issuance of cost-plus-
a-percentage-of-cost subcontracts;

(14) Maintain subcontract surveillance to ensure timely delivery of an
acceptable product and procedures to notify the Government of potential subcontract
problems that may impact delivery, quantity, or price;

(15) Document and justify reasons for subcontract changes that affect cost or
price;

(16) Notify the Government of the award of all subcontracts that contain the
FAR and DFARS flowdown clauses that allow for Government audit of those
subcontracts, and ensure the performance of audits of those subcontracts;

(17) Enforce adequate policies on conflict of interest, gifts, and gratuities,
including the requirements of 41 U.S.C. chapter 87, Kickbacks;

(18) Perform internal audits or management reviews, training, and maintain
policies and procedures for the purchasing department to ensure the integrity of the
purchasing system;

(19) Establish and maintain policies and procedures to ensure purchase orders
and subcontracts contain mandatory and applicable flowdown clauses, as required by
the FAR and DFARS, including terms and conditions required by the prime contract
and any clauses required to carry out the requirements of the prime contract, including
the requirements of 252.246-7007, Contractor Counterfeit Electronic Part Detection and
Avoidance System, if applicable;

(20) Provide for an organizational and administrative structure that ensures
effective and efficient procurement of required quality materials and parts at the best
value from responsible and reliable sources, including the requirements of 252.246-
7007, Contractor Counterfeit Electronic Part Detection and Avoidance System, if
applicable;

(21) Establish and maintain selection processes to ensure the most responsive
and responsible sources for furnishing required quality parts and materials and to
promote competitive sourcing among dependable suppliers so that purchases are
reasonably priced and from sources that meet contractor quality requirements,
including the requirements of 252.246-7007, Contractor Counterfeit Electronic Part
Detection and Avoidance System, and the item marking requirements of 252.211-7003,
Item Unique Identification and Valuation, if applicable;

(22) Establish and maintain procedures to ensure performance of adequate
price or cost analysis on purchasing actions;

(23) Establish and maintain procedures to ensure that proper types of
subcontracts are selected, and that there are controls over subcontracting, including
oversight and surveillance of subcontracted effort; and

(24) Establish and maintain procedures to timely notify the Contracting Officer,
in writing, if—

(i) The Contractor changes the amount of subcontract effort after award such
that it exceeds 70 percent of the total cost of the work to be performed under the
contract, task order, or delivery order. The notification shall identify the revised cost of
the subcontract effort and shall include verification that the Contractor will provide
added value; or

(ii) Any subcontractor changes the amount of lower-tier subcontractor effort
after award such that it exceeds 70 percent of the total cost of the work to be performed
under its subcontract. The notification shall identify the revised cost of the subcontract
effort and shall include verification that the subcontractor will provide added value as
related to the work to be performed by the lower-tier subcontractor(s).

(d) Material weaknesses.

(1) The Contracting Officer will provide notification of initial determination to
the Contractor, in writing, of any material weaknesses. The initial determination will
describe the underlying deficiency in sufficient detail to allow the Contractor to
understand the weakness or deficiency.

(2) The Contractor shall respond within 30 days to a written initial
determination from the Contracting Officer that identifies material weaknesses in the
Contractor's purchasing system. If the Contractor disagrees with the initial
determination, the Contractor shall state, in writing, its rationale for disagreeing.

(3) The Contracting Officer will evaluate the Contractor's response and notify
the Contractor, in writing, of the Contracting Officer's final determination concerning—

(i) Remaining material weaknesses;

(ii) The adequacy of any proposed or completed corrective action; and

(iii) System disapproval, if the Contracting Officer determines that one or
more material weaknesses remain.

(e) If the Contractor receives the Contracting Officer's final determination of
material weaknesses, the Contractor shall, within 45 days of receipt of the final
determination, either correct the material weaknesses or submit an acceptable
corrective action plan showing milestones and actions to eliminate the weaknesses.

(f) Withholding payments. If the Contracting Officer makes a final determination to
disapprove the Contractor's purchasing system, and the contract includes the clause at
252.242-7005, Contractor Business Systems, the Contracting Officer will withhold
payments in accordance with that clause.

(End of clause)