Any Subcontracting Limits on Unrestricted Procurements?

[John M]

Are there any limits on subcontracting for full & open competitive procurements? All the limitations I have read apply only to set-asides or sole source procurements. Seems to me that there has to be some limit. Using an extreme hypothetical to illustrate the point, a prime contractor should not be allowed to subcontract out 99% of the work.

[formerfed]

....a prime contractor should not be allowed to subcontract out 99% of the work.

Why not? If the ability to successfully manage a large subcontract or a combination of several contractors is important and the agency has evaluated and still considers the source as the msot advantageous, what's the problem? Maybe it distorts some small business statistics, but that's about it.

[Guest Vern Edwards]

Are there any limits on subcontracting for full & open competitive procurements? All the limitations I have read apply only to set-asides or sole source procurements. Seems to me that there has to be some limit. Using an extreme hypothetical to illustrate the point, a prime contractor should not be allowed to subcontract out 99% of the work.

FAR does not establish specific limits on subcontracting except under set-asides. See, however, FAR 36.501 pertaining to construction contracts, which requires the CO to impose limits.

[John M]

Why not? If the ability to successfully manage a large subcontract or a combination of several contractors is important and the agency has evaluated and still considers the source as the msot advantageous, what's the problem? Maybe it distorts some small business statistics, but that's about it.

I see. Thank you both for the helpful responses.

[garth]

On DoD contracts there is an excessive pass through clause that requires a contractor (on specified contract types) to justify their cost if the total subcontract effort exceeds 70% of the total cost of the work to be performed.

You might look at 252.215-7003, Excessive Pass-Through Charges - Identification of Subcontract Effort, and the clause at 252.215-7004, Excessive Pass-Through Charges to see if they are applicable to your question.

[John M]

On DoD contracts there is an excessive pass through clause that requires a contractor (on specified contract types) to justify their cost if the total subcontract effort exceeds 70% of the total cost of the work to be performed.

You might look at 252.215-7003, Excessive Pass-Through Charges - Identification of Subcontract Effort, and the clause at 252.215-7004, Excessive Pass-Through Charges to see if they are applicable to your question.

Thanks. The provisions you cite do not apply to fixed-price contracts based on adequate price competition, which makes sense. And even so, the Contracting Officer can include the clause in such contracts if he/she thinks appropriate. So, the Gov't has a tool to prevent excessive subcontracting to avoid unreasonable pass through fees.