FAR 52.244-5—Competition in Subcontracting.
Plain-English Summary
FAR 52.244-5, Competition in Subcontracting, tells contractors how they must choose subcontractors and suppliers when performing a federal contract. It requires the contractor to use competition to the maximum practical extent, but only to the extent that doing so is consistent with the contract’s objectives and requirements. The clause also creates a specific exception for contractors that are approved mentors under the Department of Defense Mentor-Protégé Program, allowing those contractors to award subcontracts noncompetitively to their protégés. In practice, this clause is about promoting fair subcontracting opportunities, controlling costs, and encouraging broad participation in the supply chain while still preserving flexibility where competition would conflict with mission needs or contract performance. It matters because subcontracting choices can affect price, quality, schedule, small business participation, and compliance risk, and because the clause gives the Government a basis to expect competitive subcontracting unless a valid exception applies.
Key Rules
Compete to the maximum practical extent
The contractor must select subcontractors and suppliers competitively whenever practical. This is not an absolute requirement to compete every purchase, but it does require the contractor to use competition as the default approach unless contract needs or practical limits make it unreasonable.
Consistency with contract objectives
Competition is required only to the extent it does not conflict with the contract’s objectives and requirements. If a sole-source or limited-source award is necessary to meet technical, schedule, security, compatibility, or performance needs, the contractor may depart from competition to that extent.
Applies to subcontractors and suppliers
The clause covers both subcontractors and suppliers, so it reaches the contractor’s broader purchasing and supply chain decisions. Contractors should treat material purchases and lower-tier subcontract awards as part of the same competition policy unless a justified exception applies.
Mentor-protégé exception for DoD
An approved mentor under the DoD Mentor-Protégé Program may award subcontracts noncompetitively to its protégés under this contract. This is a specific regulatory exception, and it applies only when the contractor has approved mentor status under 10 U.S.C. 4902.
Exception is limited to protégés
The noncompetitive award permission does not create a general exemption from competition. It only allows noncompetitive subcontract awards to protégés, not to unrelated firms, and it does not eliminate other applicable procurement, ethics, or subcontracting requirements.
Responsibilities
Contractor
Use competitive procedures for subcontractor and supplier selection to the maximum practical extent, document the basis for any noncompetitive awards, and ensure any noncompetitive awards under the DoD Mentor-Protégé Program are limited to approved protégés.
Approved DoD Mentor
If operating under the DoD Mentor-Protégé Program, verify mentor approval status and ensure noncompetitive subcontract awards are made only to protégés and only within the scope allowed by the program and the contract.
Contracting Officer
Include the clause when prescribed, understand that it sets a subcontracting competition expectation rather than a detailed source-selection process, and monitor contractor compliance when subcontracting practices affect contract performance or other contractual obligations.
Agency
Apply the clause where required by the prescription, and oversee broader acquisition and subcontracting policy objectives such as competition, cost control, and support for authorized mentor-protégé arrangements.
Practical Implications
Contractors should have a written subcontracting policy or internal controls showing how they seek competition and when they allow exceptions.
A common pitfall is treating “maximum practical extent” as optional; contractors should be able to explain why a sole-source or limited-source subcontract was necessary.
If the contractor relies on the mentor-protégé exception, it should confirm that the mentor status is approved and that the recipient is actually a protégé under the DoD program.
This clause can affect pricing and audit scrutiny because noncompetitive subcontracting may draw questions about reasonableness, market research, and file documentation.
Contracting officers should not read this clause as requiring the Government to approve each subcontract, but they should watch for patterns of noncompetitive awards that appear inconsistent with the contract or with the contractor’s stated subcontracting approach.
Official Regulatory Text
As prescribed in 44.204 (c) , insert the following clause: Competition in Subcontracting (Aug 2024) (a) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. (b) If the Contractor is an approved mentor under the DoD Mentor-Protégé Program ( 10 U.S.C. 4902 ), the Contractor may award subcontracts under this contract on a noncompetitive basis to its protégés. (End of clause)