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What Is a Subcontract?

By Wyatt Cooper · Published · 3 min read

Key takeaways

  • A subcontract hands part of the prime contract's work to another company, on terms that usually flow down from the prime contract.
  • It carries the scope, price and schedule of values, schedule, insurance, retainage and payment terms.
  • The owner has no contract with the subcontractor; the GC stays responsible to the owner for the sub's work.

A subcontract is the contract between a general contractor and a subcontractor for part of the prime contract's work. It sets the scope, the price and schedule of values, the schedule, insurance, retainage and payment terms, and usually binds the sub to the prime contract's terms for its work, so the owner's requirements flow down.

What a subcontract holds

The usual parts of a construction subcontract
PartWhat it says
AgreementParties, price, payment terms, retainage, flow-down of the prime contract
Scope exhibitThe trade's inclusions, exclusions and the documents they rest on
Schedule of valuesThe price split into lines the sub will bill against
ScheduleStart, durations and milestones for the trade
Insurance and bondsCoverages, limits, additional insureds, any bond required

AIA's standard form is A401, the Standard Form of Agreement Between Contractor and Subcontractor, whose terms AIA describes as paralleling its A201 general conditions (AIA). The scope exhibit is the scope of work, and the billing lines are the schedule of values.

Subcontract vs. purchase order

In federal usage the word is broad: a subcontract is "any contract" a subcontractor enters to furnish supplies or services for a prime contract, and "it includes but is not limited to purchase orders" (FAR 44.101). On a job site, people split them: a subcontract buys work installed on site, with labor, insurance and retainage; a purchase order buys material delivered. When the subcontract is signed is part of buyout; a letter of intent sometimes comes first.

How it works in Conflo

In Conflo's commitments, a subcontract carries its scope, a schedule of values by cost code and a retainage percentage. You send it for signature, the sub's signer signs by typing their full name, and the contract shows original value, change orders, revised value, billed to date and retainage held.

The Commitments list in Conflo: subcontracts and purchase orders with company and scope, payment holds, status, original and revised value, approved change orders, billed to date with percent, and retainage held.
The Commitments list in Conflo: subcontracts and purchase orders with original and revised value, billed to date and retainage held.

The bottom line

A subcontract is the GC's contract with a trade: its scope, price, billing lines and the terms that flow down from the owner.

Sign it before the sub mobilizes, with the same scope the sub bid.

See how commitments work

Sources

  1. FAR 44.101, Definitions (subcontract, subcontractor) — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
  2. List of document synopses by family (A401, A201) — AIA Contract Documents. Read October 22, 2026.

Questions

What is a flow-down clause?

A subcontract clause that binds the sub to the prime contract's terms for its part of the work, so the GC can meet what it owes the owner.

Can a subcontractor subcontract its work?

Usually yes, to a lower-tier sub, unless the subcontract forbids it or requires the GC's approval. The first-tier sub stays responsible for that work.

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