Most significant Federal contracts include certain “Flowdown Clauses” that must be included in the prime contract under Federal statutes. As a prime contractor, these same clauses should also generally be flowed-down in whole or in substance to the primary subcontractors. These Flowdown Clauses help to ensure that Federal priorities and socio-economic preferences are the focus of large contracts and subcontracts to ensure that they are acted upon.
The Flowdown Clauses address such areas as:
The specific clauses to be included in the prime contract and then flowed down to the subcontracts depend on the nature of the contract itself. For example, the clauses that apply to the purchase of commercial items differ from those of traditional goods and services. Or for example, the clauses for a fixed-price competitively awarded contract differ from those of a cost-plus contract. Another example is the Cost Accounting Standards (CAS) clauses. Not all contracts are subject to the CAS, although the CAS clauses are often inappropriately included.
We often see the Federal government and prime contractors attempting to include contract clauses and provisions in subcontracts where the clauses do not apply. Subcontractors often feel compelled to accept these clauses so as not to jeopardize the award of the contract.
Our professionals are very familiar with the various Federal clauses, their purposes, when they apply and when they don’t. We can help you to review the proposed terms and conditions of your contract, and we can help to ensure that your contract includes only those clauses that apply and that you can reasonably comply with.
Please contact us today for further information on how we can help you to review your existing contracts and proposed contract to ensure that only the appropriate clauses are included.