Limitation on subcontracting and ostensible subcontractors
Terms for workshare as compliance architecture on — limitation-on- math and affiliation.
1 / 2
Limitation on subcontracting (LOS)
Limitation on subcontracting () is the compliance rule in FAR 52.219-14 that caps how much of contract performance a small-business concern may subcontract, measured against the applicable percentage of the amount paid by the Government for contract performance — including how work and payments move through similarly situated entities and lower tiers. Services and general construction are not identical regimes; model the rule that actually appears in the . Build LOS into solution design, pricing, and subcontract negotiations before the proposal promises a workshare the math cannot support.
Watch for
A simple “ self-performance %” on a first-tier chart is not the whole test. Routing work through a similarly situated entity does not automatically sanitize a large teammate’s downstream share.
2 / 2
Ostensible subcontractor
An ostensible subcontractor is a that SBA treats as affiliated with the small prime because it performs primary and vital requirements or the small prime is unusually reliant on the sub — looking at the totality of the circumstances (key managers, solution ownership, transition knowledge, staffing, and payment flows), not the contract label alone. On covered small-business set-asides, pressure-test teams for both LOS arithmetic and ostensible-sub risk before freezing the org chart. If the small prime cannot explain how it will manage, staff, and perform primary work without the large teammate, the structure needs redesign.
Watch for
Calling a large a “subcontractor” does not insulate a team that leaves the small prime unable to perform independently. Paying the large firm most of the contract dollars while it supplies nearly all key managers and technical staff is a warning pattern, not a footnote.