Non-Compliance with Subcontract Reporting in Prime Contractor Oversight
Definition
Prime contractors without NASA-approved purchasing systems must report certain subcontractors by federal law, but limited enforcement and visibility lead to recurring compliance breaches in award and oversight processes. This affects decisions on vendor selection, price negotiation, and order administration under FAR regulations. Systemic gaps expose programs to audit failures and potential penalties.
Key Findings
- Financial Impact: Risk of fines and disallowed costs in millions
- Frequency: Ongoing in contract performance
- Root Cause: Primes not required to provide full visibility into fixed-price subcontracts below thresholds ($250K or 5% of contract value)
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Space Research and Technology.
Affected Stakeholders
Contracting Officers, Compliance Auditors, Prime Contractor Buyers
Deep Analysis (Premium)
Financial Impact
$1.5M-$3M per audit cycle in questioned costs; potential contract suspension affecting mission schedules • $100K-$500K per program in cost overruns for unanticipated compliance labor; reduced program margins • $1M-$3M in questioned/disallowed costs per contract; program suspension risk; reputational damage affecting future contract awards
Current Workarounds
Aerospace primes track subcontractors in fragmented systems: legacy ERP, email folders, PowerPoint lists; manual export to eSRS; no automated cost validation against NASA Form 533 • Aerospace primes use WhatsApp, email, Word docs to share subcontract data between Procurement and Finance; manual copy-paste into eSRS; no version control • Budget analyst maintains parallel Excel workbooks (one for commercial, one for federal); relies on subcontractor self-reporting of federal allocation percentages; manual email reminders to subcontractors; ad-hoc cost audits before eSRS filing
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Evidence Sources:
Related Business Risks
Idle Capacity and Bottlenecks from Single Supplier Reliance in Space Supply Chains
Supply Chain Disruptions Causing Cost and Schedule Risks in Artemis Program
Chronic Cost and Schedule Growth in Mission Development
Chronic Cost Overruns in Space Acquisition Programs Due to Inaccurate Estimates and Technical Risks
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