Performance of work by the contractor
Contractors on large fixed-price construction projects must perform a minimum percentage of work with their own forces, typically at least 12%, as specified by the contracting officer.
Overview
FAR 36.501 establishes requirements for contractors to perform a minimum percentage of work with their own forces on larger construction projects. This ensures contractors maintain direct involvement and oversight, rather than subcontracting the majority of the work. The contracting officer sets the minimum percentage, typically not less than 12%, based on project complexity, customary subcontracting practices, and legal or agency requirements. Specialty trades like plumbing, heating, and electrical are generally excluded from this calculation. The section also mandates the inclusion of clause 52.236-1 in most fixed-price construction contracts exceeding $1.5 million, with optional use for contracts at or below this threshold, except for certain small business and set-aside programs.
Key Rules
- Minimum Self-Performance Requirement
- Contractors must perform a significant portion of the work with their own employees, with the minimum percentage set by the contracting officer (usually at least 12%).
- Exclusion of Specialty Subcontracting
- Specialty trades (e.g., plumbing, heating, electrical) are typically excluded from the self-performance calculation.
- Clause Inclusion
- Clause 52.236-1 must be included in fixed-price construction contracts over $1.5 million, except for certain set-aside programs; it is optional for contracts at or below $1.5 million.
Responsibilities
- Contracting Officers: Set the minimum self-performance percentage, determine exclusions, and ensure the correct clause is included in solicitations and contracts.
- Contractors: Ensure compliance with the self-performance requirement and track the percentage of work performed with their own forces.
- Agencies: Oversee compliance and enforce requirements as per law or agency regulation.
Practical Implications
- This rule prevents excessive subcontracting, ensuring contractors remain actively engaged in project execution.
- Contractors must carefully plan workforce allocation and monitor compliance with the self-performance threshold.
- Failure to meet the requirement can result in contract disputes or penalties.