Subpart 17.4
Leader Company Contracting
Leader company contracting allows the government to leverage a uniquely capable contractor to assist others, but it requires strong justification, safeguards for competition, and careful oversight.
Overview
FAR Subpart 17.4 covers Leader Company Contracting, a special contracting method where the government contracts with a "leader company" to furnish supplies or services and also to assist one or more "follower companies" in producing or providing similar items. This approach is used when it is necessary to ensure production capacity, standardization, or to foster competition among suppliers. The subpart outlines the general principles, limitations, and procedures for using leader company contracts, emphasizing that such arrangements should only be used when other methods are not feasible and when it is in the government's best interest.
Key Rules
- General Principles (17.401)
- Leader company contracting is appropriate when it is necessary for the government to obtain supplies or services from a company with unique capabilities, and to have that company assist others in developing similar capabilities.
- Limitations (17.402)
- This method should only be used when it is not feasible to obtain the required items or services otherwise, and the leader company must agree to assist the follower companies. The arrangement must not restrict competition or create unfair advantages.
- Procedures (17.403)
- The subpart provides procedures for structuring leader company contracts, including requirements for documenting the need, obtaining necessary approvals, and ensuring fair and reasonable pricing.
Responsibilities
- Contracting Officers: Must determine the necessity for leader company contracting, ensure compliance with limitations, document the rationale, and obtain required approvals.
- Contractors: Leader companies must agree to assist follower companies and comply with contract terms; follower companies must work with the leader as specified.
- Agencies: Must oversee the use of this method, ensure it is justified, and monitor for compliance with competition and pricing requirements.
Practical Implications
- This subpart exists to enable the government to leverage unique industrial capabilities while fostering broader supplier participation and competition. It impacts contracting by introducing additional documentation, justification, and oversight requirements. Common pitfalls include inadequate justification, failure to maintain competition, or improper structuring of the leader-follower relationship.