To maintain control over government agencies and ensure consistency in federal procurements FAR Part 52 contains numerous mandatory clauses to be included in prime Government contracts under stated criteria. (Editor’s Note. We refer the interested reader to our Fourth Quarter 2002 issue of the GCA DIGEST (Vol. 5, No.4) where we provide a complete list of mandatory and recommended FAR clause flow-downs that are identified by the Committee on Federal Subcontracting Section of the Public Law group of the American Bar Association. You can call them at 1-800-285-2221 to obtain a copy of their publication for $45.) Where the FAR authorizes COs to include the clause in the prime contract by reference i.e. FAR citation, title and date as opposed to the entire text, prime contractors must flow down the substance of FAR clauses and not just incorporate them by reference.

The author stresses the need to carefully review the clauses flowed down by the prime or higher-tier subcontract since there is the tendency for subcontracts to indiscriminately include excess FAR clauses including those intended only for a prime contractor. Typically, a prime contractor may use a commercially available standard subcontract that includes fill-ins and preprinted terms (e.g. contract payments, changes, terminations) and then will incorporate wholesale all the FAR prime contract clauses in the subcontract with little consideration for whether it should be flowed down. The results frequently are (1) the FAR clauses duplicate or often conflict with the preprinted commercial terms (2) the clauses have no substantive application to the subcontract because they are prime-contractor unique and (3) inclusion of the referenced FAR clauses likely fails to reflect the intentions between the parties. Another common example is under a cost plus fixed fee prime contract where firm fixed subcontracts are issued, the prime contractor often flows down its cost type clauses resulting in considerable confusion. Problems are not fixed when the prime contractor simply introduces the clauses by stating the word "prime contractor" will substitute for "government" or similar expressions. Subcontractors are encouraged to ensure their agreements do not include all prime contract FAR clauses and also when FAR-prescribed flow-down clauses are incorporated other conflicting terms should be eliminated.

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