52.203-6 Restrictions on Subcontractor Sales to the Government
Source: FAR 52.203-6 on acquisition.gov
Prime contractors cannot restrict subcontractors from selling directly to the government, and must flow down this requirement to qualifying subcontracts.
Overview
FAR 52.203-6, "Restrictions on Subcontractor Sales to the Government," prohibits prime contractors from entering into agreements with subcontractors that restrict the subcontractor's ability to sell directly to the government any items or processes provided under the contract or follow-on production contracts. The clause must be included in all subcontracts exceeding the simplified acquisition threshold. There is an exception for rights authorized by law or regulation. Alternate I modifies the restriction for commercial products or services, limiting the prohibition to cases where the government is treated differently from other buyers.
Key Rules
- Prohibition on Restricting Subcontractor Sales
- Contractors cannot restrict subcontractors from selling directly to the government items or processes provided under the contract.
- Exception for Legal Rights
- Contractors may assert rights otherwise authorized by law or regulation.
- Flowdown Requirement
- The clause must be included in all subcontracts exceeding the simplified acquisition threshold.
- Alternate I for Commercial Items/Services
- For commercial products/services, the restriction applies only if the government is treated differently than other buyers.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts and subcontracts.
- Contractors: Must not restrict subcontractor sales to the government and must flow down the clause to qualifying subcontracts.
- Agencies: Oversee compliance and address violations.
Practical Implications
- Ensures open competition and prevents anti-competitive practices in government procurement.
- Contractors must carefully review subcontract agreements to avoid prohibited restrictions.
- Failure to comply can result in contractual remedies or penalties.
As prescribed in 3.503-2 , insert the following clause:
Restrictions on Subcontractor Sales to the Government (Jun 2020)
(a) Except as provided in (b) of this clause, the Contractor shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow-on production contract.
(b) The prohibition in (a) of this clause does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation.
(c) The Contractor agrees to incorporate the substance of this clause, including this paragraph (c), in all subcontracts under this contract which exceed the simplified acquisition threshold, as defined in Federal Acquisition Regulation 2.101 on the date of subcontract award.
(End of clause)
Alternate I (Nov 2021). As prescribed in 3.503-2 , substitute the following paragraph in place of paragraph (b) of the basic clause:
(b) The prohibition in paragraph (a) of this clause does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation. For acquisitions of commercial products or commercial services). the prohibition in paragraph (a) applies only to the extent that any agreement restricting sales by subcontractors results in the Federal Government being treated differently from any other prospective purchaser for the sale of the commercial product(s) and commercial service(s).