FAR 3.502-1—Definitions.
Plain-English Summary
FAR 3.502-1 defines the core terms used in the FAR’s kickback prohibition and enforcement framework. It covers what counts as a “kickback,” who is a “person,” what a “prime contract” is, who qualifies as a “prime contractor” and a “prime contractor employee,” what a “subcontract” is, and who is a “subcontractor,” including suppliers of general supplies to the prime contractor or a higher-tier subcontractor. The purpose of these definitions is to establish the scope of conduct and relationships covered by the anti-kickback rules, so agencies can identify prohibited payments or favors and contractors can recognize when their supply chain relationships fall within the rule. In practice, these definitions are broad on purpose: they reach beyond direct cash payments to include gifts, credits, commissions, and other things of value, and they apply across both prime contracts and related subcontracts. This section matters because whether a transaction is a “kickback” or whether a party is a covered “prime contractor” or “subcontractor” determines whether the anti-kickback restrictions and related remedies may apply.
Key Rules
Kickback is broadly defined
A kickback includes money, fees, commissions, credits, gifts, gratuities, things of value, or any other compensation provided to a prime contractor, prime contractor employee, subcontractor, or subcontractor employee. The payment or benefit must be given for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or related subcontract.
Person includes many entities
For this section, a person is not limited to an individual. It also includes corporations, partnerships, business associations, trusts, joint-stock companies, and individuals, so the rule applies to a wide range of business forms.
Prime contract is a federal contract
A prime contract means a contract or contractual action entered into by the United States to obtain supplies, materials, equipment, or services of any kind. This definition is broad and covers the federal government’s direct contracting relationship.
Prime contractor is the direct federal contractor
A prime contractor is any person who has entered into a prime contract with the United States. This is the entity in direct privity with the government and the starting point for the subcontract chain covered by the rule.
Prime contractor employee is broadly covered
A prime contractor employee includes any officer, partner, employee, or agent of the prime contractor. This means the definition reaches both formal employees and other representatives acting for the prime contractor.
Subcontract covers lower-tier purchasing
A subcontract is any contract or contractual action entered into by a prime contractor or subcontractor to obtain supplies, materials, equipment, or services under a prime contract. The definition includes both first-tier and lower-tier subcontracting arrangements tied to the prime contract.
Subcontractor includes suppliers
A subcontractor is any person other than the prime contractor who offers to furnish or furnishes supplies, materials, equipment, or services under a prime contract or subcontract connected to that prime contract. It also expressly includes persons who provide general supplies to the prime contractor or a higher-tier subcontractor.
Responsibilities
Contracting Officer
Use these definitions to determine whether conduct, parties, or transactions fall within the anti-kickback framework. Apply the broad coverage of the terms when assessing allegations, disclosures, remedies, or enforcement actions.
Prime Contractor
Recognize that the anti-kickback rules apply to the company, its officers, partners, employees, and agents, and to its subcontracting relationships. Prevent, detect, and report improper offers or receipt of things of value intended to secure favorable treatment.
Prime Contractor Employee
Avoid soliciting, accepting, or passing along anything of value that is intended to improperly influence contract-related decisions. Understand that officers, partners, employees, and agents are all covered.
Subcontractor
Ensure that lower-tier subcontracting and supply arrangements do not involve improper payments or favors tied to the prime contract. Monitor dealings with suppliers and higher-tier subcontractors because the definition reaches general supply arrangements as well.
Government Contractor Supply Chain Participants
Treat the definitions as applying throughout the contract chain, not just at the prime level. Screen business practices for gifts, commissions, credits, or other benefits that could be viewed as intended to obtain or reward favorable treatment.
Practical Implications
The definition of kickback is intentionally broad, so even non-cash benefits like gifts, credits, or gratuities can create risk if they are tied to favorable treatment.
Because subcontractor includes suppliers of general supplies, companies cannot assume ordinary vendor relationships are outside the rule; supply-chain transactions may still be covered if connected to the prime contract.
The rule reaches agents and other representatives, so contractors should train not only employees but also officers, partners, and authorized agents on anti-kickback compliance.
Whether a party is a prime contractor, subcontractor, or higher-tier supplier matters because the definitions determine who is inside the enforcement net and where liability may arise.
A common pitfall is focusing only on direct payments to the prime contractor; the definition also covers benefits given to subcontractors and their employees when the purpose is improper favoritism.
Official Regulatory Text
As used in this section— Kickback means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided to any prime contractor, prime contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract. Person means a corporation, partnership, business association of any kind, trust, joint-stock company, or individual. Prime contract means a contract or contractual action entered into by the United States for the purpose of obtaining supplies, materials, equipment, or services of any kind. Prime Contractor means a person who has entered into a prime contract with the United States. Prime Contractor employee , as used in this section, means any officer, partner, employee, or agent of a prime contractor. Subcontract means a contract or contractual action entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. Subcontractor — (1) Means any person, other than the prime contractor, who offers to furnish or furnishes any supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract; and (2) Includes any person who offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor.