Small-business programs
What are the limitations on subcontracting?
On a set-aside contract, FAR 52.219-14 caps how much of the amount the government pays may go to subcontractors that are not similarly situated entities: 50% for services and for supplies, 85% for general construction and 75% for construction by special trade contractors.
Also written as: FAR 52.219-14, similarly situated entity, 50 percent rule.
The clause exists to stop a set-aside becoming a pass-through. The percentages in FAR 52.219-14(e) are stated as the share of the amount paid by the government for contract performance that the contractor will not pay to subcontractors that are not similarly situated entities. For supplies and both construction categories the cost of materials is excluded from the calculation.
"Similarly situated entity" is the mechanism that makes teaming work: a subcontractor that is itself small and holds the same status the set-aside required does not count against the limit. So a HUBZone prime subcontracting to another HUBZone firm has more room than one subcontracting to a large firm.
The construction figures are the ones people get wrong, because they are expressed from the opposite direction to the services figure and differ between general construction and special trade work. 85% and 75% are ceilings on what may flow out, not floors on what you must perform.
What this means when you bid
Model the subcontracting split against these percentages while you are pricing, and check whether your teammates are similarly situated. Both change what the plan can look like.
Limitations on subcontracting: the published figures
Each figure below was read from the regulation cited beside it on 2026-08-04. Thresholds are adjusted for inflation and changed by statute — follow the citation and confirm the figure in effect on your solicitation's date before you rely on it.
- Services — maximum paid to subcontractors that are not similarly situated
- 50%
- General construction — maximum, excluding the cost of materials
- 85%
- Construction by special trade contractors — maximum, excluding the cost of materials
- 75%
FAR 52.219-14 · verified 2026-08-04
FAR 52.219-14 · verified 2026-08-04
FAR 52.219-14 · verified 2026-08-04
Limitations on subcontracting compared with the terms it gets confused with
Limitations on subcontracting vs Subcontracting plan
Limitations on subcontracting cap how much of a set-aside a prime may push out; a subcontracting plan is the opposite obligation, requiring a large prime to plan how much it will push out to small businesses.
What Subcontracting planmeans →Where this definition comes from
Federal contracting is one of the few fields where the authoritative answer is free, public and one click away. These are the sources this page is built from — go and read them.
- FAR 52.219-14→
Limitations on subcontracting.
- 13 CFR 125→
Government contracting programs, including subcontracting limits.
This page explains a term in plain English and cites the authority it comes from. It is not legal advice, and the regulation governs where this page and the regulation differ.
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Limitations on subcontracting— common questions
- What are the limitations on subcontracting?
- On a set-aside contract, FAR 52.219-14 caps how much of the amount the government pays may go to subcontractors that are not similarly situated entities: 50% for services and for supplies, 85% for general construction and 75% for construction by special trade contractors.
- What is the difference between Limitations on subcontracting and Subcontracting plan?
- Limitations on subcontracting cap how much of a set-aside a prime may push out; a subcontracting plan is the opposite obligation, requiring a large prime to plan how much it will push out to small businesses.
- What is the services — maximum paid to subcontractors that are not similarly situated for Limitations on subcontracting?
- 50%, per FAR 52.219-14 This figure was read from that source on 2026-08-04; thresholds are revised, so check the citation before relying on it in a bid.
- Why does the limitations-on-subcontracting clause matter when you are bidding?
- Model the subcontracting split against these percentages while you are pricing, and check whether your teammates are similarly situated. Both change what the plan can look like.
NAICS industries where this comes up most
An editorial pointer, not a measurement. These are the codes whose work most often involves the limitations-on-subcontracting clause. Each page carries the official Census title, the SBA size standard where one is published for those exact digits, and whatever federal award history the record here holds for the code — which may be none, and says so when it is.