3.503
Unreasonable restrictions on subcontractor sales
Prime contractors must not impose unreasonable restrictions on subcontractors' ability to sell directly to the government, and a specific FAR clause must be included in all applicable contracts to enforce this policy.
Overview
FAR 3.503 addresses the prohibition of unreasonable restrictions on subcontractor sales, ensuring that prime contractors do not impose limitations on subcontractors that would prevent them from selling directly to the U.S. Government or using their products in other government contracts. The regulation aims to foster competition and prevent anti-competitive practices that could harm the government's interests or the broader supplier base. It requires contracting officers to include a specific clause in solicitations and contracts that prohibits such unreasonable restrictions, except in limited circumstances where justified by the government.
Key Rules
- Prohibition on Unreasonable Restrictions
- Prime contractors cannot impose unreasonable restrictions on their subcontractors' ability to sell directly to the government or to other contractors for government use.
- Mandatory Contract Clause
- Contracting officers must include the clause at FAR 52.203-6, "Restrictions on Subcontractor Sales to the Government," in all solicitations and contracts, unless an exception applies.
Responsibilities
- Contracting Officers: Must ensure the appropriate clause is included in all applicable contracts and monitor compliance.
- Contractors: Must not impose or enforce unreasonable restrictions on subcontractor sales to the government.
- Agencies: Oversee compliance and address violations or requests for exceptions.
Practical Implications
- This regulation exists to promote open competition and prevent anti-competitive practices in government contracting.
- Contractors should review their subcontract agreements to ensure compliance and avoid restrictive language.
- Violations can result in contract remedies or penalties, making compliance critical for both primes and subs.