2019 NDAA - Finally, a Definition for the term 'Subcontract'

Section 832 of the House version of the 2019 NDAA (which passed with an overwhelming majority) includes, at long last, a formalized (and precise) definition of the term 'subcontract'.

The House Armed Services Committee noted that there are multiple definitions of subcontract within the Federal Acquisition Regulations. The Section 809 Committee has made similar observations. Establishing a single definition of the term 'subcontract' will provide clarification, simplicity, and consistency for defense procurement actions.

Its long overdue.

Here is the proposed definition in two parts, what it means and what it does not include:

The term 'subcontract' means a contract entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. The term includes a transfer of commercial product or commercial service between divisions, subsidiaries, or affiliates of a contractor or subcontractor.

The term 'subcontract' does not include

1. a contract the costs of which are applied to general and administrative expenses or indirect costs, or
2. an agreement entered into by a contractor or subcontractor for the supply of a commodity, a commercial product, or a commercial service that is intended for use in the performance of multiple contracts.