Subcontracting · The legal line

Can I hand the work off?

The ad version goes: win the contract, subcontract everything, keep the difference for finding it. The contract clauses draw a line through that plan — percentages by contract type, a pass-through rule, and a rule that can treat you and your sub as one firm. Describe the structure you are planning, and see which side of the published line it lands on.

Your planned structure

Answer for the plan as you actually intend to run it — the percentages are judged on real dollars paid, so describe the money, not the story.

What kind of contract is it?

The percentage caps live in set-aside contracts. The pass-through rule and fraud law live everywhere.

Do the subcontractors you would use hold the same program status as you (for example, another 8(a) firm on your 8(a) contract)?

Similarly situated subcontractors don't count against the cap — their work counts as your own performance.

Who performs the contract's primary and vital work — the main thing the government is buying?

Do you add real management value yourself — managing the subs, ordering, holding inventory, coordinating delivery, checking quality?

FAR 52.215-23 defines the government's view: value is a function, not a finder's fee.

Why this page exists. The bestselling book in this lane teaches the pass-through as the whole method and never mentions the limitations on subcontracting once. A $995 course sells "the legal middleman method" as the correction. The correction is a published clause — so here it is, free, with the legal shapes named: do your percentage with your own people and manage the rest; team with firms that share your status; joint-venture with the small partner performing at least 40%; or start as a subcontractor under an existing prime, where no set-aside math applies to you at all.

The paid kit

The GovDoor Kit

The kit carries The Middleman Line in full: the percentages card, the added-value functions list, the ostensible-subcontractor red-flag checklist, and the four legal shapes with a sample teaming work-share table that stays inside the line.

$49 one-time payment

See what's in the kit

Questions about the line

What are the limitations on subcontracting, in plain numbers?

On a set-aside or socioeconomic sole-source contract, FAR 52.219-14 caps what you may pay subcontractors that do not hold your same program status: 50% for services, 50% for supplies (not counting materials), 85% for general construction, and 75% for special trade construction (both excluding materials). Work by subcontractors with the same status as you — another 8(a) firm on your 8(a) award — counts as your own performance and does not eat the cap.

What happens if I go over the limit?

The regulation's penalty runs to $500,000 or the amount paid over the limit, whichever is greater, and debarment is possible. Beyond the percentage itself, a prime that performs almost none of the work risks the ostensible-subcontractor rule (your firm and the sub get treated as one — and if the combined firm isn't small, the award was never valid) and pass-through charge recoupment under FAR 52.215-23. An October 2026 SBA OIG report cites a $21.3 million False Claims Act settlement built on exactly this shape.

Is being a middleman on government contracts illegal?

Subcontracting is legal and normal — primes manage subs on most large work. What the rules forbid is the universal version sold in the ads: win it, hand over all of it, keep a cut for finding it, on set-aside contracts whose clauses cap exactly that. The legal shapes are real management of real work, teaming with similarly situated firms, a joint venture where the small partner performs at least 40%, or starting as a subcontractor yourself under an existing prime. This page's checker tests your structure against the published line; it never certifies a structure as legal — only the contracting officer and SBA judge a real contract.

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