Does the Fee at the prime flow down to the subcontractor and does that requirement than make the additional fee above 10 percent for the subcontractor unallowable.
The term flow-down relates to contract clauses. These are clauses prescribed by the government that a prime contractor must abide by and also incorporates into its subcontracts. Mandatory flow-down clauses are those prime contract clauses that specifically require the inclusion of their text in all subcontract entered into in support of the prime government contract. There isn’t any FAR requirement that requires the Prime to flow-down its fee limitations to the subcontractors. You should determine the subcontractor’s fee is fair and reasonable in the commercial market but the prime contract limitation doesn’t apply.
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