FAR 52.203-6—Restrictions on Subcontractor Sales to the Government.
Plain-English Summary
FAR 52.203-6, Restrictions on Subcontractor Sales to the Government, is an anti-restriction clause designed to preserve the Government’s ability to buy directly from subcontractors when the subcontractor’s item or process is being used under the prime contract or a follow-on production contract. It prohibits prime contractors from entering into agreements or taking actions that restrict a subcontractor’s direct sales to the Government, while still allowing the prime to assert rights that are otherwise authorized by law or regulation, such as valid intellectual property or proprietary rights. The clause also requires flowdown of the substance of the clause to subcontracts above the simplified acquisition threshold. For commercial products and commercial services, Alternate I narrows the rule so it applies only when the restriction causes the Federal Government to be treated differently from other prospective purchasers. In practice, this clause protects competition, prevents “lock-up” of sources, and helps agencies avoid unnecessary sole-source dependence on a prime contractor’s supply chain.
Key Rules
No anti-sales restrictions
The contractor may not make agreements with actual or prospective subcontractors, or otherwise act in a way, that restricts those subcontractors from selling directly to the Government items or processes they make or furnish under the contract or a follow-on production contract. The prohibition is broad and covers both express agreements and conduct that has the same practical effect.
Rights allowed by law
The contractor is not barred from asserting rights that are otherwise authorized by law or regulation. This preserves legitimate protections such as patent rights, trade secret protections, data rights, or other legally recognized restrictions, so long as the contractor is not using them to impose an unlawful blanket restriction on Government sales.
Mandatory subcontract flowdown
The contractor must include the substance of the clause, including the flowdown paragraph, in all subcontracts that exceed the simplified acquisition threshold. This ensures subcontractors are on notice that they may not be restricted from selling directly to the Government in the covered circumstances.
Applies to follow-on production
The restriction reaches items or processes made or furnished under the contract and under any follow-on production contract. This prevents a prime from using its position on an initial award to block future direct Government purchases from the subcontractor.
Commercial item limitation under Alternate I
For commercial products and commercial services, the prohibition applies only to the extent that the restriction causes the Federal Government to be treated differently from any other prospective purchaser. This alternate narrows the clause for commercial buying environments and avoids imposing a Government-only rule where the same restriction applies equally to all buyers.
Responsibilities
Contracting Officer
Include the clause when prescribed by FAR 3.503-2 and determine whether the basic clause or Alternate I applies based on the acquisition type. The contracting officer should also monitor whether the contractor’s proposed subcontract terms or supply-chain practices appear to restrict direct Government sales.
Prime Contractor
Avoid agreements or conduct that restrict subcontractors from selling directly to the Government, except to the extent permitted by law or regulation. The prime must also flow the clause down to subcontracts exceeding the simplified acquisition threshold and ensure subcontract language is consistent with the clause.
Subcontractor
Understand that, absent a lawful exception, it should not be prevented from selling directly to the Government items or processes it provides under the contract or a follow-on production contract. The subcontractor should review proposed restrictions carefully and preserve any rights it has under law or regulation.
Agency
Use the clause to protect competition and direct sourcing opportunities, especially where a subcontractor may be a viable direct supplier. The agency should also evaluate whether commercial-item acquisitions warrant use of Alternate I.
Practical Implications
This clause is mainly about preventing supply-chain “lock-in,” where a prime contractor tries to control a subcontractor’s ability to sell directly to the Government. Contractors should be careful with teaming agreements, exclusivity provisions, non-compete language, and consent requirements that could be read as restricting Government sales.
The biggest compliance risk is drafting subcontract terms that go beyond legitimate protection of intellectual property or proprietary information and instead function as a blanket ban on direct Government sales. A clause can be unlawful even if it is indirect or embedded in broader commercial terms.
Flowdown matters: if the subcontract exceeds the simplified acquisition threshold, the substance of the clause must be included. Failing to flow it down can create contractual noncompliance and complicate later direct-buy opportunities.
For commercial products and services, Alternate I materially narrows the rule. Contractors should not assume the basic clause applies identically in commercial buying; they need to check whether the Government is being treated differently from other customers before concluding a restriction is prohibited.
In practice, this clause often intersects with data rights, patent rights, and proprietary technology issues. Contractors should separate legitimate rights assertions from improper sales restrictions, because the former may be allowed while the latter can violate the clause.
Official Regulatory Text
As prescribed in 3.503-2 , insert the following clause: Restrictions on Subcontractor Sales to the Government (Jun 2020) (a) Except as provided in (b) of this clause, the Contractor shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow-on production contract. (b) The prohibition in (a) of this clause does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation. (c) The Contractor agrees to incorporate the substance of this clause, including this paragraph (c), in all subcontracts under this contract which exceed the simplified acquisition threshold, as defined in Federal Acquisition Regulation 2.101 on the date of subcontract award. (End of clause) Alternate I (Nov 2021) . As prescribed in 3.503-2 , substitute the following paragraph in place of paragraph (b) of the basic clause: (b) The prohibition in paragraph (a) of this clause does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation. For acquisitions of commercial products or commercial services). the prohibition in paragraph (a) applies only to the extent that any agreement restricting sales by subcontractors results in the Federal Government being treated differently from any other prospective purchaser for the sale of the commercial product(s) and commercial service(s).