Monday, March 25, 2013

Consultants vs. Subcontractors

There is sometimes confusion concerning whether something or someone is a consultant or a subcontractor. Not only are Government contractors and prospective contractors uncertain about the definitions and status but Government procurement officials are as well. From an "administration" standpoint, there is a great difference between the two. Subcontracts must be solicited, analyzed, negotiated, and administered by the prime contractor much like the Government would handle the prime contract. Consultants on the other hand, only need to comply with FAR 31.205-33 provisions (provide a consulting agreement, work product,and invoice).

There is a general rule of thumb to apply when distinguishing between subcontractors and consultants. A subcontractor is hired to perform a part of the prime contractor's statement of work (SOW). Such work might include subsystems, finished parts, or skilled labor to perform specific functions. For example, a base maintenance contractor might subcontract barracks painting requirements to a painting company. Or, an aircraft manufacturer might subcontract the avionics portion of a contract to a company that specializes in avionics.

Consultants are not usually hired for a specific contract or to complete a portion of the prime contractor's SOW. They are often subject matter experts whose expertise is not tied to a single contract.

FAR Definitions. The Federal Acquisition Regulations (FAR) have a few definitions that will help clarify the difference between subcontractors and consultants.


FAR 3.502-1: Subcontractor (1) means any person, other than the prime contractor, who offers to furnish or furnishes any supplies, materials, equipment or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract and (2) includes any person who offers to furnish or furnishes general supplies to the prime contract or a higher tier subcontractor.

FAR 3.1001: Subcontractor means any supplier, distributor, vendor, or firm that furnished supplies or services to or for a prime contractor or another subcontractor.


FAR 31.205-33: Professional and consultant services ... means those services rendered by persons who are members of a particular profession or possess s special skill and who are not officers or employees of the contractor. Examples include those services acquired by a contractor or subcontractor in order to enhance their legal, economic, financial, or technical positions. Professional and consultant services are generally acquired to obtain information, advice, opinions, alternatives, conclusions  recommendations, training or direct assistance, such as studies, analyses, evaluations, liaison with Government officials, or other forms or representation.


  1. The definition of subcontractor in FAR 3.502-1 is in the context of the clause for Subcontractor Kickbacks.
    The definition of subcontractor in FAR 3.1001 is in the context of the clause for Contractor Code of Business Ethics and Conduct

  2. The issue that confuses people is whether consultants are procurements, and therefore must be processed according to the procurement requirements set forth in various dollar threshold categories (micro, SAT, etc.). Noting that all you need is an agreement, work product and invoice leads the reader to overlook other procurement requirements supporting selection and price reasonableness.