FAR 9.405-2—Restrictions on subcontracting.
Plain-English Summary
FAR 9.405-2 implements the Government’s policy that excluded contractors should not be used in subcontracting unless there is a compelling, documented reason. This section covers two related situations: first, when a debarred, suspended, proposed-for-debarment, or voluntarily excluded contractor is proposed as a subcontractor on a subcontract that requires Government consent under FAR Part 44; and second, when a prime contractor wants to place a subcontract above the $45,000 threshold with an excluded party under the clause at FAR 52.209-6. It also distinguishes between commercial products contracts and other contracts by limiting the notification requirement for commercial products to first-tier subcontracts, while applying it to all tiers for other contracts. The section requires written notice to the contracting officer before entering into the subcontract, identifies the information that must be included in that notice, and ties compliance to Contractor Purchasing System Reviews. In practice, this rule is meant to protect the Government’s interests by preventing excluded firms from continuing to participate in federal work without scrutiny, while still allowing exceptions when the agency can justify them and the contractor can show adequate safeguards.
Key Rules
No consent without compelling reasons
If an excluded contractor is proposed as a subcontractor on a subcontract that requires Government consent, the contracting officer must not consent unless the agency head provides a written statement of compelling reasons for approving the subcontract. This creates a high-level exception process rather than a routine approval.
Subcontracting ban above threshold
A contractor generally may not enter into a subcontract over $45,000 with a debarred, suspended, proposed-for-debarment, or voluntarily excluded contractor unless there is a compelling reason. The only express exception in this section is for subcontracts for commercially available off-the-shelf items.
Written notice before award
Before entering into a covered subcontract, the contractor must notify the contracting officer in writing when the subcontractor has an active exclusion record in SAM. This notice requirement is triggered by the clause at FAR 52.209-6 and is a condition of proceeding with the subcontract.
Different tier rules by contract type
For contracts to acquire commercial products, the notice requirement applies only to first-tier subcontracts. For all other contracts, the notice requirement applies to subcontracts at any tier, so the contractor must look beyond direct subcontractors when the prime contract is not for commercial products.
Required content of notice
The notice must identify the subcontractor, explain the contractor’s knowledge of why the subcontractor is excluded, state the compelling reason for doing business with that subcontractor, and describe the systems and procedures used to protect the Government’s interests in light of the exclusion basis.
Compliance is reviewable
The contractor’s compliance with FAR 52.209-6 is subject to review during Contractor Purchasing System Reviews. This means failures can affect purchasing system findings, corrective actions, and overall procurement system acceptability.
Responsibilities
Contracting Officer
Do not consent to a covered subcontract involving an excluded subcontractor unless the agency head has provided a written statement of compelling reasons. Review contractor notices under FAR 52.209-6 and consider the exclusion basis, the stated justification, and the contractor’s proposed protections before allowing the subcontract to proceed.
Agency Head
Provide a written statement of compelling reasons when approval of a subcontract with an excluded contractor is sought in a situation requiring Government consent. This written determination is the basis for any exception to the general prohibition.
Prime Contractor
Do not enter into a subcontract over $45,000 with an excluded contractor unless a compelling reason exists and the subcontract is otherwise permitted. Before award, send written notice to the contracting officer when required by FAR 52.209-6, and ensure the notice includes the subcontractor’s name, the known exclusion basis, the compelling reason for the relationship, and the protective systems and procedures in place.
Corporate Officer or Designee
Prepare and submit the required written notice to the contracting officer before entering into the subcontract when the subcontractor has an active exclusion record in SAM. This person is responsible for ensuring the notice is complete and timely under the clause.
Subcontractor with Active Exclusion Record
Although not assigned duties in this section, the subcontractor’s exclusion status triggers the restrictions, notice requirements, and heightened scrutiny that govern whether the subcontract may proceed.
Government/Review Officials
Evaluate contractor purchasing systems during Contractor Purchasing System Reviews to verify compliance with FAR 52.209-6 and identify weaknesses in screening, notification, and subcontract oversight.
Practical Implications
Contractors must screen proposed subcontractors against SAM before award, not after, because the notice obligation is triggered before entering into the subcontract.
The $45,000 threshold and the COTS exception matter operationally; teams should know when the rule applies and when a subcontract is outside the prohibition.
For commercial products contracts, only first-tier subcontracts are covered by the notice requirement, but for other contracts the contractor must track excluded parties at every tier.
A vague justification is not enough; the notice must explain the compelling reason and the safeguards protecting the Government’s interests, so contractors should document this early.
Noncompliance can surface in a Contractor Purchasing System Review, creating broader procurement-system risk beyond the individual subcontract at issue.
Official Regulatory Text
(a) When a contractor debarred, suspended, proposed for debarment, or voluntarily excluded, is proposed as a subcontractor for any subcontract subject to Government consent (see subpart 44.2 ), contracting officers shall not consent to subcontracts with such contractors unless the agency head states in writing the compelling reasons for this approval action. (See 9.405 concerning declarations of ineligibility affecting sub-contracting.) (b) The Government suspends or debars contractors to protect the Government’s interests. Contractors are prohibited from entering into any subcontract in excess of $45,000, other than a subcontract for a commercially available off-the-shelf item, with a contractor that has been debarred, suspended, proposed for debarment, or voluntarily excluded, unless there is a compelling reason to do so. If a contractor intends to enter into a subcontract in excess of $45,000, other than a subcontract for a commercially available off-the-shelf item, with a party that is debarred, suspended, proposed for debarment, or voluntarily excluded, as evidenced by the party's having an active exclusion record in SAM (see 9.404 ), a corporate officer or designee of the contractor is required by operation of the clause at 52.209-6 , Protecting the Government’s Interest when Subcontracting with Contractors Debarred, Suspended, Proposed for Debarment, or Voluntarily Excluded, to notify the contracting officer, in writing, before entering into such subcontract. For contracts for the acquisition of commercial products, the notification requirement applies only for first-tier subcontracts. For all other contracts, the notification requirement applies to subcontracts at any tier. The notice must provide the following: (1) The name of the subcontractor; (2) The contractor’s knowledge of the reasons for the subcontractor having an active exclusion record in SAM; (3) The compelling reason(s) for doing business with the subcontractor notwithstanding its having an active exclusion record in SAM; and (4) The systems and procedures the contractor has established to ensure that it is fully protecting the Government’s interests when dealing with such subcontractor in view of the specific basis for the party’s debarment, suspension, proposed debarment, or voluntary exclusion. (c) The contractor’s compliance with the requirements of 52.209-6 will be reviewed during Contractor Purchasing System Reviews (see subpart 44.3 ).