What are flow down requirements?

What are flow down requirements?

• A flow down clause is a contract provision by which the parties incorporate the terms. of the general contract between the owner [Government]and the general contractor [Prime Contractor] into the lower tier agreement. It may also be referred to as a pass- through or conduit clause…

What are mandatory flow down clauses?

FAR clauses included in Government contracts that prime contractors are required to flow down to their subcontractors in their subcontracts. Agency supplemental regulations also include clauses with flow down requirements. Flow Down Clauses can significantly impact the obligations and risk of performing a subcontract.

What is the TINA threshold for subcontractors?

Effective July 1, 2018, the threshold under the Truthful Cost or Pricing Data Act (still commonly referred to by its former name, the Truth in Negotiations Act (or TINA)) for contractors to submit to the government certified “cost or pricing data” increases significantly from $750,000 to $2 million.

What are subcontracting limitations?

The limitations on subcontracting rules generally require that small business prime contractors self-perform 50% of supply and service contracts awarded to them, with lower self-performance percentages for different kinds of construction contracts.

What are flow down terms and conditions?

What is the meaning of flow down and how do you define it? A flow down clause is a contractual provision where a contracting party (prime contractor) legally binds another party (subcontractor) to the terms and conditions of contract (the prime contract) between the prime contractor and a third party (client).

What does pay when paid mean?

In layman’s terms, a “pay-when-paid” clause is the prime contractor informing the subcontractor that they will pay them after they receive payment from their customer. That is usually the property owner, but can also be the developer.

Does the FAR apply to subcontractors?

Subcontractor status is important to prime and subcontractors. A federal prime contractor is required to flow-down multiple Federal Acquisition Regulation (“FAR”) clauses to its subcontractors.

What is a flow through clause in a subcontract and why is it used?

A flow-down clause (also referred to as a pass-through or conduit clause) is usually found in a construction contract and provides that subcontractors will be bound to the general contractor in the same fashion as the general contractor is bound under its contract with the property owner.

What is the Nonmanufacturer rule?

The nonmanufacturer rule allows a small business to supply products it did not manufacture.

How do you comply with FAR 52.219 14?

FAR 52.219 14 requires that when you submit a proposal in response to a solicitation designated as a small business set-aside agree that “[a]t least 50% of the cost of the contract shall be expended by the prime contractor].” The amount of the limitation is NAICS specific.

Are far flow down clauses to subcontractors mandatory?

Not all FAR flow down clauses to subcontractors are mandatory in a contract. There are also “discretionary” clauses. FAR does not require a Prime to include discretionary clauses in subcontracts. However, there are times when a Prime considers it either necessary or advantageous to include FAR clauses in a subcontract, even when not mandatory.

How much do you have to flow down for subcontractors?

– $700,000 for everything else. Also, there is no requirement to flow down 52.219-8 to “small business concern” subcontractors. Below is a list of some common areas where discretionary flow down clauses would be advisable.

Do your contract obligations flow down to the subcontractor?

As a Prime, you want to make sure that some of your contractual obligations flow down to the subcontractor. FAR Government Contracts are regulated by the Federal Acquisition Regulations (FAR), 48 C.F.R., as well as agency-specific regulations. State law governs the subcontract, not federal contract law – excluding mandatory flow-down clauses.

What are the Prime flow down requirements for federal government contracts?

Prime contractors performing federal government projects must ensure that they have the proper prime flow down requirements. Failure to include the appropriate FAR clauses in federal government contracts can result in a termination for default by the government.