Subcontracting in Government Contracts

After the award of a prime government contract, a portion of the work is often subcontracted to one or more companies.  The relationship between the prime and the subcontractor has all of the typical issues and risks, but additional requirements apply because it is a government contract.  The terms you want in the subcontract will often differ depending upon whether your are the prime or the subcontractor.

BCTW's government contract lawyers have extensive experience drafting and reviewing subcontracts from the perspective of the prime and subcontractors.  To lessen the likelihood of misunderstandings and litigation, we work to craft a subcontract that clearly states the rights and obligations of the parties. 

Before beginning work on a subcontract, we discuss with the client a variety of issues, such as their goals for the subcontract, the level and areas of risk they are willing or not wiling to take, and whether they want to be evenhanded or aggressive with the terms.  We draft or review a subcontract based upon the client's input, to attain the goals and mitigate the risks.  

Small businesses acting as subcontractors often lack negotiating power with the prime.  Especially when the prime is a large business, the subcontract provided to the small business may be on a nearly "take it or leave it" basis.  In such circumstances, to avoid billing the client for work that may have little benefit, we limit our review based upon discussions with the client. Often pointing out subcontract terms that are overly broad, represent a substantial risk to the client, or for which the client needs to establish internal processes.

Ensuring the terms of the subcontract are clear and unambiguous is vital to avoiding unnecessary litigation.  Once a dispute occurs, the first thing the parties often do is dig-up the subcontract to see what it says.  At that point, it is too late - you are stuck with the terms of the subcontract, and whatever rights and obligations it provides.  Having the right subcontract will avoid extensive performance disruptions, acrimonious disagreements, and litigation costs.