One of the many unique aspects of procurement contracting is that the government’s reach extends beyond its contract with the awardee and into the commercial contracts between the contractor and its subcontractors. When an entity is awarded a government contract invariably provisions in the prime contract must be imposed on subcontractors. Other clauses are not required but best practices dictate they too should be flowed-down to the subcontractors. Private parties working on government projects end up with commercial agreements that See more +

One of the many unique aspects of procurement contracting is that the government’s reach extends beyond its contract with the awardee and into the commercial contracts between the contractor and its subcontractors. When an entity is awarded a government contract invariably provisions in the prime contract must be imposed on subcontractors. Other clauses are not required but best practices dictate they too should be flowed-down to the subcontractors. Private parties working on government projects end up with commercial agreements that include elements of public contract law, which creates unique dilemmas and potential hazards for a practitioner or business owner unfamiliar with government contracting.

Starting here with Fundamentals, I will be releasing a series of four tutorials on federal flow-down clauses. The purpose of this resource is to educate those in government contracting and those who are not but may be facing a flow-down issue on the nature of these clauses and best practices for how to handle them in order to reduce risk and mitigate liability.

More specifically, the tutorials will include an overview of what flow down clauses are, their purpose and why they are important, their legal impact on the commercial relationship between the prime and sub, how they function, which clauses are required and which are discretionary and how to tell the difference, which non-mandatory provisions should be included in the subcontract and why, and best practices from both the prime’s and sub’s perspective for how to incorporate flow-downs into the subcontract agreement, how to negotiate discretionary clauses, and how to ensure compliance.

For Fundamentals, you can expect to learn what flow-down clauses are, from where they derive, why they are important in procurement contracting, their differing relevance to the government, the prime, and the sub, their larger impact, and in general terms (for now) the legal intricacies they generate. With this first tutorial, you will have a good foundation on which to build a deeper knowledge of this topic as the series progresses. See less -