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elaws - employment laws assistance for workers and small businesses - Federal Contractor Compliance Advisor

Subcontractor Test

OFCCP jurisdiction extends to subcontractors. Subcontractors are businesses and organizations that perform work for a Federal contractor that is related to and necessary for the performance of a Federal contract.

Under Executive Order 11246, a subcontract is “any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee):

  1. For the purchase, sale or use of personal property or nonpersonal services which, in whole or in part, is necessary to the performance of any one or more contracts; or
  2. Under which any portion of the contractor’s obligation under any one or more contracts is performed, undertaken or assumed.” (See 41 CFR Sec. 60-1.3.)

OFCCP regulations implementing Section 503 and VEVRAA have a similar definition for the term subcontract. Both 41 CFR Sec. 60-250.2 and 41 CFR Sec. 60-741.2 define a subcontract as “any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee):

  1. For the purchase, sale or use of personal property or nonpersonal services (including construction) which, in whole or in part, is necessary to the performance of any one or more contracts; or
  2. Under which any portion of the contractor’s obligation under any one or more contracts is performed, undertaken or assumed.”

Based upon the above: