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The New Limitations on Subcontracting: New Rules, New Uncertainties. By Vernon J Edwards.


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12 minutes ago, here_2_help said:

Thank you Vern, for not only writing a thorough article, but for allowing it to be shared.


A very concise analysis that makes one aware of the continued dilemma of determining subcontractor limitation.

The following quote on page 5 made me pause as I had trouble concluding that 13 CFR 125.1 excludes services.

“We do not believe that the SBA intended to exclude subcontracts for services from the limitations on subcontracts, but if the definition in 13 CFR § 125.1 applies to the limitations, as we think it does, then that is what they seem to have done.”

Does not the “or” in the definition of “Subcontract “ at 13 CFR 125.1 explain that an “agreement” for any parts, supplies components is synonymous with subcontract?  Stated another way a subcontract is any second contract no matter what it is for and is inclusive of agreements for, etc.

 I am just having trouble making the jump that the definition at 13 CFR 125.1 does not include services. 

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2 hours ago, C Culham said:

I had trouble concluding that 13 CFR 125.1 excludes services.

From the subject article, preceding its conclusion to use the perceived inadequate definition of "Subcontract" in 13 CFR 125.1:


FAR 52.219-14 does not define subcontract, subcontracting, or subcontractor, nor does it refer to any official definition of any of those terms. None of the definitions of subcontract in the FAR applies to the limitations on subcontracting. FAR Part 2 does not include a definition. The definition of subcontract in FAR 19.701, which provides the “Definitions” for FAR Subpart 19.7, “The Small Business Subcontracting Program,” does not apply to the limitations on subcontracting in FAR Subpart 19.5 because of the rule in FAR 1.108(a) and FAR 2.000(b), which restricts the application of definitions in places other than FAR Part 2 to the part, subpart, or section in which the term is defined.

My emphasis in bold.  Might the FAR Council resolve this issue by revising FAR 2.101 to add a definition of "subcontract"?  I see there is currently an open FAR Case No. 2018-006, "Definition of 'Subcontract'," but I am not sure what their plan is to implement that Case's statutory basis for change, which was that 41 U.S.C. 1906 was amended to change its definition of "subcontract" for reasons unrelated to the matter at hand here.  Regardless of how it happens, there is a basis for consolidating the definition into FAR 2.101 sometime soon: it was part of the Section 809 Panel's first recommendation.



Legislative Branch


  • Establish a definition of Subcontract at 41 U.S.C. § 115

* * *

Executive Branch

  • The FAR Council should do the following: § Amend FAR 2.101, Definitions of Words and Terms, to align with the changes to U.S. Code described under Legislative Branch above.


  • Establish the definition of subcontractor in FAR 2.101, Definitions of Words and Terms.

See Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations, Volume 1 of 3 (January 2018), Recommendation 1, p. 14 (https://discover.dtic.mil/wp-content/uploads/809-Panel-2019/Volume1/Recommendation_01.pdf)

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