1. Major Subcontractor

Comment: Two respondents expressed concerns that the definition of "major subcontractor" was arbitrary. The proposed clause at 252.203-70WW (now 252.209-7009) defined a major subcontractor as a subcontractor awardee with a subcontract totaling 10 percent or more of the value of the contract. One of the respondents was concerned that a subcontractor with millions of dollars in subcontracts may not be covered, but others with less than $1 million would be covered.

Response: As the clause relates to subcontractors for major defense acquisition programs which, generally, are programs that exceed $1.8 billion (Fiscal Year 1990 constant dollars) in eventual total expenditure (10 U.S.C. 2430), a prime contract would not likely be issued with a value of only $10 million, which would be the prime contract threshold for a $1 million subcontract to meet the 10 percent subcontract threshold to be a major subcontract. However, DoD agrees with the need to enhance the definition. The final rule contains--

A lower end exclusion of any subcontract that is less than the cost or pricing data threshold; and

An upper bound, such that any subcontract that equals or exceeds $50 million will be considered a major subcontract, regardless of whether it meets the 10 percent criterion.

This is modeled after--

15.404-3(c)(1), which specifies thresholds for requiring cost or pricing data on subcontracts; and

DODI 5000.02 Table 4, which addresses major contracts and subcontracts.