FAR 17.403—Procedures.
Plain-English Summary
FAR 17.403 explains the basic award procedures for a leader-follower contracting arrangement. It covers three permissible ways a contracting officer may structure the award: a prime contract to the leader company that requires it to subcontract part of the work to a specified follower and provide production assistance; a split arrangement where the leader receives a prime contract for assistance and the follower receives the prime contract for production; or a prime contract to the follower that requires it to subcontract with a designated leader for assistance. The section also requires the contracting officer to make sure the contract includes a firm agreement on whether, and how, contractor trade secrets, technical designs or concepts, specific proprietary data, and proprietary software may be disclosed. In practice, this section is about setting up the contractual relationship correctly so the production partner gets the needed support while protecting sensitive proprietary information. It matters because these arrangements can involve unusual subcontracting obligations, coordination between competitors or partners, and significant intellectual property and data-rights sensitivities.
Key Rules
Three award structures allowed
The contracting officer may use only one of three award patterns: a prime to the leader with a required subcontract to the follower, a split award with one contract for assistance and one for production, or a prime to the follower with a required subcontract to the leader. The chosen structure must match the intended leader-follower relationship and the agency’s acquisition strategy.
Leader must provide assistance
Where the leader company is part of the arrangement, the contract must obligate it to assist the follower in producing the required end items. This assistance is not optional; it is a contractual requirement tied to the award structure.
Designated subcontracting required
The arrangement must identify the specific counterpart company and require subcontracting between the designated parties as described in the award structure. The contracting officer cannot leave the leader-follower relationship vague or open-ended.
Firm disclosure agreement required
Any contract awarded under this arrangement must contain a firm agreement on disclosure, if any, of trade secrets, technical designs or concepts, specific proprietary data, and proprietary software. The agreement must clearly address what may be shared and under what conditions.
Proprietary information must be protected
The disclosure clause must account for proprietary rights and limit or define access to sensitive technical and business information. This is intended to prevent disputes over misuse or unauthorized disclosure during performance.
Responsibilities
Contracting Officer
Select one of the three authorized award structures, ensure the contract clearly identifies the leader and follower roles, and include a firm agreement governing disclosure of proprietary information, trade secrets, technical designs or concepts, specific data, and software.
Leader Company
If awarded the prime contract in a leader role, subcontract the designated portion of the end items to the specified follower company and provide the required assistance to help the follower produce the items.
Follower Company
If awarded the prime contract in a follower role, enter into the required subcontract with the designated leader company for the necessary assistance and perform production as required under the contract.
Agency/Program Office
Support the acquisition strategy and ensure the arrangement aligns with program needs, including production support, industrial base considerations, and protection of sensitive technical information.
Practical Implications
This section is mainly about getting the contract structure right up front; if the award pattern is unclear, performance problems and disputes are likely later.
The disclosure agreement is critical because leader-follower arrangements often require sharing technical know-how, but the parties may also have strong incentives to limit what is disclosed.
Contracting officers should be careful to spell out exactly which company is the leader, which is the follower, what assistance is required, and what portion of the work must be subcontracted.
A common pitfall is assuming the parties will work out proprietary data sharing informally; FAR 17.403 requires a firm contractual agreement instead.
These arrangements can create coordination and IP issues similar to teaming or licensing relationships, so the contract should be reviewed closely for consistency with data rights, confidentiality, and subcontract terms.
Official Regulatory Text
(a) The contracting officer may award a prime contract to a- (1) Leader company, obligating it to subcontract a designated portion of the required end items to a specified follower company and to assist it to produce the required end items; (2) Leader company, for the required assistance to a follower company, and a prime contract to the follower for production of the items; or (3) Follower company, obligating it to subcontract with a designated leader company for the required assistance. (b) The contracting officer shall ensure that any contract awarded under this arrangement contains a firm agreement regarding disclosure, if any, of contractor trade secrets, technical designs or concepts, and specific data, or software, of a proprietary nature.