FAR 36.501—Performance of work by the contractor.
Plain-English Summary
FAR 36.501 addresses the "performance of work by the contractor" requirement for construction contracts, especially larger projects. It requires the contractor to self-perform a significant portion of the work with its own forces, and it tells the contracting officer to state that requirement as a minimum percentage in the contract. The rule also explains how that percentage should be set: high enough to ensure real contractor involvement and supervision, but balanced against the need for customary specialty subcontracting and the size and complexity of the project. It specifically notes that specialty trades such as plumbing, heating, and electrical work are usually subcontracted and generally should not be counted when determining the contractor’s required self-performance share. Finally, the section tells contracting officers when to include the clause at 52.236-1, Performance of Work by the Contractor, including a general requirement to insert it and a limited exception for certain set-aside or special program awards involving fixed-price construction contracts expected to exceed $2 million. In practice, this section is about preventing pass-through performance on construction jobs, preserving contractor accountability, and ensuring the prime contractor has enough direct involvement to manage quality, schedule, and supervision.
Key Rules
Significant self-performance required
For larger projects, the contractor must perform a significant part of the work with its own forces. The contract must state this as a minimum percentage of work the contractor must self-perform.
Percentage set by project needs
The contracting officer sets the percentage as high as appropriate for the project, taking into account customary specialty subcontracting and the complexity and magnitude of the work. The percentage should ordinarily be at least 12 percent unless a law or agency regulation requires more.
Specialty trades usually excluded
Plumbing, heating, electrical, and similar specialty work are usually subcontracted and should not normally be counted when determining the amount of work the contractor must perform itself.
Clause generally required
The contracting officer must insert FAR 52.236-1, Performance of Work by the Contractor, in solicitations and contracts unless a specific exception applies.
Exception for certain programs over $2 million
The clause is not required for fixed-price construction contracts expected to exceed $2 million when awarded under subparts 19.5, 19.8, 19.13, 19.14, or 19.15. For fixed-price construction contracts expected to be $2 million or less, the contracting officer may still include the clause.
Responsibilities
Contracting Officer
Determine the minimum self-performance percentage for the project, ensuring it is high enough to require meaningful contractor involvement while accounting for specialty subcontracting and project complexity. Insert FAR 52.236-1 in solicitations and contracts unless an exception applies, and decide whether to include it for fixed-price construction contracts expected to be $2 million or less.
Contractor
Perform at least the required percentage of the contract work with its own forces and ensure the contract work is not structured so that the prime merely passes through performance to subcontractors. Manage specialty subcontracting within the limits of the clause and the stated self-performance requirement.
Agency
Apply any higher percentage requirement established by law or agency regulation and ensure acquisition policies align with the clause-insertion rules for covered construction contracts.
Practical Implications
This rule is a direct check on pass-through construction contracting: the prime must do real work, not just manage subcontractors from a distance.
Contracting officers need to think carefully about what counts toward self-performance, especially when specialty trades are a major part of the job.
A common pitfall is setting the percentage without considering the actual scope of specialty subcontracting, which can make the requirement unrealistic or distort competition.
Contractors should review the solicitation early to confirm whether the clause applies and whether the required self-performance percentage is feasible with their own labor and equipment.
For set-aside and other covered program awards, the clause-insertion exception for fixed-price construction contracts over $2 million can materially affect solicitation terms, so both sides should verify the applicable award authority and contract value before relying on the default rule.
Official Regulatory Text
(a) To assure adequate interest in and supervision of all work involved in larger projects, the contractor shall be required to perform a significant part of the contract work with its own forces. The contract shall express this requirement in terms of a percentage that reflects the minimum amount of work the contractor must perform with its own forces. This percentage is (1) as high as the contracting officer considers appropriate for the project, consistent with customary or necessary specialty subcontracting and the complexity and magnitude of the work, and (2) ordinarily not less than 12 percent unless a greater percentage is required by law or agency regulation. Specialties such as plumbing, heating, and electrical work are usually subcontracted, and should not normally be considered in establishing the amount of work required to be performed by the contractor. (b) The contracting officer shall insert the clause at 52.236-1 , Performance of Work by the Contractor, in solicitations and contracts, except those awarded pursuant to subparts 19.5 , 19.8 , 19.13 , 19.14 , or 19.15 when a fixed-price construction contract is contemplated and the contract amount is expected to exceed $2 million. The contracting officer may insert the clause in solicitations and contracts when a fixed-price construction contract is contemplated and the contract amount is expected to be $2 million or less.