Subcontracting Program


The Hawai’i PTAC provides an ongoing Subcontracting Education and Opportunity Awareness Program 

Our Focus is in Three main areas:

Overall Awareness & Education

Assisting Companies to become a Subcontractor

Assisting Companies Needing Subcontractors

How to Find Primes

Use Dynamic Small Business Search:  Other small businesses can be primes or partners.

Use filters to select Hawaii, then NAICS codes or keywords.

Profiles include contact information, ownership information, and past performance.

Have prepared a short presentation on your business, core competencies, past performance, differentiators.  Demonstrate your readiness to do business with the government by providing a capability statement.  Capability statement should show core competencies, past performance, contact information, and readiness to do business with the government.

Capability statement review is a service provided by Hi-PTAC.

Flow Down Clauses

  • Clauses in a subcontract which incorporate the general contract by reference, and which bind the subcontractor to the general contractor to the same extent the general contractor is bound to the government, are referred to as “flow down” clauses.
  • The principal purpose of these flow down clauses is to maintain consistency between the obligations the prime owes to the government, and the obligations the sub owes to the prime for its work. This purpose is a practical one because no prime wants to risk liability to the government on account of non-conforming sub’s work without having the right to pass that liability on to the subcontractor responsible.
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Cybersecurity Requirement

  • It is the prime’s responsibility to ensure that any and all subs meet all cybersecurity requirements as outlined in DFARS 252.204-7012 and NIST SP 800-171.

Subcontracting Agreement

Any agreement between a prime and a sub should be in writing, ensuring all terms and expectations are clear beforehand.  Any unexpected situation that arises should be addressed in the terms of the agreement.

Terms to be discussed include but are not limited to:

  • Scope of the project:  Defines the project and work necessary.
  • Timing for completion:  Define a loose timeline to have clear expectations, like a fixed time deadline falling well before the contractor’s final deadline to be sure prime has enough time to assess the subs work.
  • Payment and billing:  Define payments sub will receive.  Details may include, maximum work hours each week or month, subcontractor payment milestones, expected timing of invoices, fixed price or flexible payment options, and what happens if more time is needed or the fixed price doesn’t cover the added time.
  • Independent contractor notice:  Defines responsibilities of sub to handle tax deductions and payments, including but not limited to insurance, IRS tax withholdings, employment benefits, and health insurance.
  • Non-disclosure agreement:  Defines any information that must be kept confidential.
  • Non-compete clause:  Prevents the sub from taking unethical actions to steal clientele or work from the prime.
  • Insurance for accidental damages:  Defines whether the prime has insurance that covers a sub’s mistakes or accidental damage.
  • Second tier subcontractors:  Defines permissions and restrictions the sub has to hire others to do work.  Prime may put limits on the sub hiring a sub (often called second-tier subcontractors) to prevent the line of work responsibility from becoming too thin.
  • Indemnity clause:  Ensures protection for the prime.  When the project is complete, if something goes wrong that is the responsibility of the sub, the contract will have a means of recovering any losses.  If the error falls under the responsibility of the prime, the sub is not held responsible.  State laws must be obeyed.
  • Warranties:  Defines any promises the prime makes to the sub and vice versa.  Typically included on the sub side are a guarantee of work quality, professional work behavior, possession of tools, ability, knowledge, and skill to complete the project, and ability to repair any issues with deliverables, inconsistent work, or project defects.
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