Overview
This section prescribes the mandatory and optional contract clauses (FAR 52.244-2, 52.244-4, and 52.244-5) that govern subcontracting requirements, consent procedures, and competitive sourcing obligations based on contract type and dollar value.
Key Rules
- FAR 52.244-2 (Subcontracts): This clause is mandatory for cost-reimbursement contracts and most contracts exceeding the Simplified Acquisition Threshold (SAT), including T&M, Labor-Hour, Letter contracts, and Fixed-Price contracts with unpriced actions.
- Civilian Agency Requirements: For cost-reimbursement contracts, civilian agencies (excluding NASA and the Coast Guard) must use FAR 52.244-2 with its Alternate I.
- FAR 52.244-5 (Competition in Subcontracting): Mandatory for negotiated contracts exceeding the SAT to ensure prime contractors select subcontractors competitively.
- Exemptions:
- The "Subcontracts" clause is generally not required for fixed-price Architect-Engineer (A&E) contracts or specific service contracts (mortuary, refuse, etc.) that use agency-specific facility approval clauses.
- The "Competition in Subcontracting" clause is not required for FFP contracts awarded via adequate price competition or for T&M/Labor-Hour/A&E contracts.
- Professional Services: FAR 52.244-4 is specifically designated for use in Architect-Engineer contracts to manage subcontractors and consultants.
Practical Implications
- Compliance Burden: Prime contractors must be aware that the inclusion of these clauses often requires them to obtain formal Government "consent" before awarding subcontracts, particularly under cost-reimbursement or unpriced contract vehicles.
- Sourcing Strategy: For negotiated procurements over the SAT, prime contractors are legally obligated to maintain a competitive environment for their subcontracts unless specific regulatory exceptions apply.