What Should a Subcontract Agreement Include?

The scope of work says what the sub builds. The subcontract agreement says everything else: what you pay, when, on what conditions, what happens when the work changes, and what happens when either side fails. It is signed during buyout, after you have leveled the bids and selected a sub, and before the sub mobilizes.

Most general contractors start from a standard form or their own. The AIA's A401–2017 is one widely used standard form of agreement between contractor and subcontractor; AIA's instructions describe it as written to parallel the A201–2017 general conditions, which it incorporates by reference, and walk through the parts you fill in: the scope of work including work excluded, the commencement date and subcontract time, the subcontract sum and alternates, progress payments and retainage, insurance and bonds, and the choice of binding dispute resolution (AIA Contract Documents). Whatever form you use, the same topics need an answer.

The safest subcontract gives the sub the same obligations toward you that you have toward the owner for the sub's work: the same quality standards, the same warranties, and notice periods short enough that you can pass a claim up the chain in time. Where the prime contract requires something of subcontracts, the subcontract must carry it.

Federal work shows how specific those requirements are. A prime contractor under the federal prompt payment clause must put a payment clause in each subcontract obligating it to pay the subcontractor for satisfactory performance "not later than 7 days from receipt of payment out of such amounts as are paid to the Contractor under this contract", plus an interest penalty clause for late payment, and each subcontractor must put similar clauses in its own lower-tier subcontracts (FAR 52.232-27). The same clause sets out how a prime may withhold from a sub for deficient performance, with written notice. On federal construction contracts over $150,000, performance and payment bonds are required of the prime (FAR 28.102-1); whether you require them of a sub is your decision, and belongs in the subcontract.

The lines add up: $96,000 + $214,500 + $388,200 + $121,400 + $286,000 + $156,000 = $1,262,100, the leveled bid, and + $22,500 = $1,284,600. If Voltline's first pay application bills $142,000 of work, 5% retainage is $7,100 and the payment due is $134,900. The schedule of values is what the sub's pay applications bill against, so agree it before the subcontract is signed, not with the first pay application.

• Writing the base bid as the subcontract sum when the award was made on a leveled number with added scope.
• Attaching the sub's proposal as the scope, with its exclusions and qualifications inside the contract.
• Claim notice periods in the subcontract longer than the prime contract's.
• Retainage and payment dates that do not match the owner's cycle.
• Letting the sub mobilize before the subcontract is signed and its compliance documents are in.

In Conflo, a subcontract is a commitment. You write its scope (the form's hint: what is included and excluded; the sub signs against it), set the retainage percentage, and build the schedule of values in lines, each with a budget cost code, a description and an amount. Save it as a draft or send it for signature. The sub's authorized signer signs in Conflo by typing their full name as it appears on their profile, or declines with a reason; a contract signed on paper or elsewhere can be marked executed by an approver on your team. If the sub has missing or expired compliance documents, signing shows a warning that needs a reason to go ahead.

From a trade bid you have awarded, Buyout issues the subcontract to the winner at the leveled amount. After that, each commitment shows its original value, approved and pending change orders, revised value, billed to date, retainage held and balance. Conflo holds the commercial terms; the legal clauses stay in your own subcontract form.

A subcontract agreement is the scope plus the terms that make it enforceable: the sum, the schedule, payment, changes, insurance and bonds, warranty, default and disputes, each flowing down from the prime contract.

Get the sum and the schedule of values right before signing, keep notice periods shorter than your own, and have counsel in the project's state review the form.

See how commitments work in Conflo

1. Instructions: A401–2017, Standard Form of Agreement Between Contractor and Subcontractor — AIA Contract Documents. Read October 22, 2026.
2. FAR 52.232-27, Prompt Payment for Construction Contracts — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
3. FAR 28.102-1, General (bonds for construction contracts) — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.