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Contracts & Legal

Subcontract

In Plain English

A contract between the general contractor and a specialty contractor for a specific portion of the project.

Definition

A subcontract is a contract between a general contractor and a specialty contractor (subcontractor) for performance of a defined portion of the construction work. The general contractor remains responsible to the owner for the subcontractor's work. Subcontracts typically incorporate the prime contract by attachment or citation, binding subcontractors to the same terms as the GC.

Why It Matters in Bidding

Because the GC stays liable to the owner for every sub's work, flow-down terms in the subcontract are how risk gets pushed to the party actually performing the scope. During bidding, the price a sub quotes is only as solid as the subcontract that will later bind it, so estimators must confirm that quoted scope, schedule, and exclusions will survive once prime-contract terms flow down.

Example

Before awarding the framing package, a GC's project manager issues a subcontract that incorporates the prime contract by reference and attaches the approved scope, schedule milestones, and a $480,000 lump-sum price the sub quoted at bid.

Related Terms

ContractorSubcontractor BidPay-If-PaidPay-When-Paid

Frequently Asked Questions

Flow-down means the subcontractor is bound to the same obligations the GC owes the owner under the prime contract, such as insurance limits, indemnity, schedule, and dispute procedures. Estimators should price for these obligations, because a sub who quotes without seeing flow-down language may later seek extras or refuse to sign.
A subcontract covers installed work involving labor and means-and-methods on site, carrying performance, schedule, and safety obligations. A purchase order generally covers material or equipment supply only. The distinction affects retainage, bonding, insurance requirements, and lien rights, so estimators should categorize each package correctly before bid leveling.
No. Because most subcontracts incorporate the prime contract by reference, the sub assumes terms it has not read if it signs blind. Request the prime conditions, review notice, indemnity, and pay-when-paid clauses, and confirm the quoted scope matches the attached exhibits before executing the agreement.

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