Subcontracting on federal contracts: finding and vetting subs
How much of a set-aside you can subcontract, where to find subcontractors, the wage and payment rules that flow down, why pass-through deals fail, and how to vet a sub before you sign.
Read the subcontracting terms first
On a small-business set-aside, FAR 52.219-14 (Limitations on Subcontracting) limits how much of the contract a small prime can pay to subcontractors that aren't similarly situated (small under the same rules). Under SBA's rule at 13 CFR 125.6, a prime may pay others no more than 50% of what it is paid for services, 50% for supplies (less the cost of materials), 85% for general construction and 75% for specialty trade construction; work by similarly situated subcontractors counts as the prime's own. Some contracts also require the contracting officer's consent before certain subcontracts (FAR 52.244-2).
Where to find subcontractors
- SAM.gov registrations, by NAICS code, place and certification; check each one is active.
- Past awards and reported subawards on USAspending.gov: who has done this work, and which primes subcontract it.
- Large primes' small business liaison officers: primes on contracts with a subcontracting plan must report their progress against small-business goals.
- SpendQuery's vendor finder and supplier pages: registered companies and recent winners by code and place.
Pass-through deals don't work
A prime that hands the whole job to someone else breaks the limitations on subcontracting on a set-aside, and can be found affiliated with the sub (the ostensible subcontractor rule), which can make it other than small for that contract. Separately, FAR subpart 3.4 restricts fees contingent on winning a government contract, except to bona fide employees or established commercial selling agencies. Get advice before agreeing to any fee tied to an award.
Wage rules flow down
On service contracts covered by the Service Contract Act and construction covered by Davis-Bacon, the wage determination in the contract applies to subcontractors too, and the prime is responsible for it. A sub quoting far below the wage determination for a labor category is a warning sign: either the rate is wrong or it plans to underpay. Ask for payroll records (certified payrolls on Davis-Bacon work) and compare job classifications with the wage determination.
Vet before you sign
- Check the sub's SAM.gov registration, and that it isn't excluded from federal awards.
- Verify any status it claims (8(a), HUBZone, SDVOSB, WOSB) in SAM.gov and SBA's certification search.
- Ask for references from similar recent work, and confirm licenses, insurance and bonding the job needs.
- Put scope, price, schedule, flow-down clauses and payment terms in a written subcontract, with default and termination terms.
- Payment: under FAR 52.232-40, a prime that receives accelerated payments pays its small business subs early, to the maximum extent practicable, within 15 days, once it has their proper invoice; on construction, FAR 52.232-27 requires paying subs within 7 days of being paid.
- Line up a second vetted sub before you need one.
On SpendQuery
Official sources
Questions people ask
How much of a set-aside contract can I subcontract?
Under FAR 52.219-14 and 13 CFR 125.6, no more than 50% of the amount paid for services (or for supplies, less materials), 85% for general construction and 75% for specialty trades may go to subcontractors that aren't similarly situated small businesses.
Do I have to make sure my subcontractor pays the required wages?
Yes, on contracts covered by the Service Contract Act or Davis-Bacon: the wage determination flows down and the prime is responsible. Ask for payroll records.
Can I act as a middleman?
Only if you do or manage a real share of the work. Passing the whole job to a sub breaks the limitations on subcontracting on set-asides and can make you affiliated with the sub.
Is it legal to take a commission on a federal contract win?
FAR subpart 3.4 restricts contingent fees for obtaining government contracts, with exceptions for bona fide employees and established commercial selling agencies. Get advice before agreeing to one.
More guides
- How to find government contracts
- What is a small business set-aside?
- How to read a SAM.gov contract notice
- How to register in SAM.gov
- NAICS codes and small-business size standards
- Federal contract types, explained
- How to market your business to government buyers
- Sole-source contracts for small businesses
- Joint ventures and the SBA Mentor-Protégé Program
- Size protests and certificates of competency
- How to decide whether to bid on a government contract
- How to find federal grants
- The federal fiscal year-end spending rush
- What are the easiest government contracts to get?
- FY2026 federal contract spending: which agencies grew and shrank
- Government contract lists: open bids, awards and small business
- Who buys janitorial services from the federal government
- How government contractors get paid: timing, invoices and factoring
- How to respond to RFIs and sources-sought notices
- How to start a government contracting business from scratch
- Who won federal IT support contracts in your state
- A free tool to ask government spending questions in plain English
- How to find federal bids your small business qualifies for
- How to find which federal agencies buy your product or service
- Free tools to search state and local government contracts
- How to understand the FAR without reading all of it
Updated 2026-10-20. General information, not legal advice; the solicitation and the FAR govern each purchase.