Congress Looks to Redefine the 'Subcontract'.

• Date: 01 July 2018
• Author: Cassidy, Susan B.

If an agreement qualifies as a "subcontract" under a government contract, then it may be subject to certain flow-down, compliance and reporting requirements.

These requirements are intended to protect the government's interests, and have significant ramifications for contractors such as increasing transaction costs and expanding potential areas of exposure. These compliance obligations and risks can even deter some companies from performing under government contracts, especially those companies offering commercial items.

So what is a "subcontract?"

Currently, there is no uniform definition of subcontract in the applicable procurement regulations or in the procurement chapters under Titles 10 and 41 of the U.S. Code. Indeed, there are more than 20 varying definitions of subcontract in the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement, with many clauses failing to specify which definition applies.

Congress is looking to address this lack of uniformity.

The House version of the fiscal year 2019 National Defense Authorization Act, which passed on May 24, offers a single definition of subcontract that would be added to Chapter 1 of Title 41 and Chapters 137 and 140...