Subcontractor Agreement Template

PREAMBLE

RECITALS

1. Prime enters into contracts with its customers for construction, installation, professional, technical, field, project management, software, integration, support, and related deliverables and services.
2. Subcontractor represents that it has the skill, personnel, licenses, experience, equipment, and capacity to perform portions of such work in accordance with Prime requirements, customer requirements, and applicable law.
3. The Parties intend this Agreement to set the exclusive master terms governing any subcontracted engagement awarded by Prime to Subcontractor, including the issue of Task Orders, compensation, compliance obligations, ownership of work product, confidentiality, termination rights, and risk allocation.

DEFINITIONS

• "Contract" means Prime’s underlying agreement, purchase order, statement of work, or other binding commitment with a Customer under which Services or Deliverables may be required from Subcontractor.
• "Customer" or "Customers" means the end client or clients of Prime receiving Services or Deliverables under a Task Order.
• "Deliverables" means all products, reports, plans, drawings, software, code, data, specifications, documentation, work product, materials, and other items required to be produced, developed, supplied, or delivered by Subcontractor under a Task Order.
• "Firm Fixed Price (FFP)" means the agreed lump-sum compensation for fully defined Services or Deliverables, subject only to written approved changes.
• "Intellectual Property Rights" means all common-law and statutory rights anywhere in the world arising under patent, copyright, trade secret, trademark, moral rights, database rights, and similar laws.
• "Open Source" means software distributed or licensed under terms that require disclosure of source code, licensing for the purpose of making derivative works, or redistribution without charge.
• "Other Direct Costs (ODCs)" means actual out-of-pocket administrative, operational, shipping, permit, material, or similar costs specifically approved in writing by Prime and directly allocable to the applicable Task Order.

• "Pre-Existing Intellectual Property" means any Intellectual Property Rights, materials, software, methods, know-how, templates, tools, inventions, or other assets created, owned, licensed, or controlled by a Party before the Effective Date or developed independently outside the scope of this Agreement and any Task Order.
• "Services" means all labor, supervision, consulting, construction support, field services, materials supply, coordination, and other work performed or furnished by Subcontractor under a Task Order.
• "Task Order" means a written work authorization executed by both Parties that describes the scope, Deliverables, price structure, and performance terms applicable to a specific engagement.
• "Time and Materials (T&M)" means compensation based on actual approved hours worked at agreed hourly rates plus pre-approved reimbursable material costs and approved ODCs.
• "Retention" means any amount withheld from amounts otherwise due to Subcontractor as security for completion, punch-list closure, defects correction, warranty performance, or other obligations stated in a Task Order or flowed down from the Contract.

FLOW-DOWN CLAUSES

WORK AUTHORIZATION

• Prime has no obligation to award any minimum volume of work, any exclusive territory, or any number of Task Orders under this Agreement.
• Subcontractor shall not begin work, procure long-lead items, mobilize, or incur reimbursable expense unless a Task Order has been signed by both Parties or Prime has issued separate written authorization expressly referencing this Agreement.
• Any proposal, quote, estimate, schedule, or correspondence from Subcontractor is non-binding unless incorporated into an executed Task Order.
• Subcontractor performs at its own risk any work started before written authorization, and Prime has no duty to pay for unauthorized work.

TASK ORDERS

1. Scope of Work and any assumptions, exclusions, site conditions, interfaces, and responsibilities.
2. Required Deliverables, acceptance criteria, submission format, and revision requirements.
3. Start date, completion date, milestones, and any interim schedule obligations.
4. Compensation structure, including T&M hourly rates or FFP amount.
5. Estimated travel, materials, permits, and Other Direct Costs, if any.
6. Retention percentage, release conditions, warranty period, and defect liability period, if applicable.
7. Customer-specific flow-down requirements, safety requirements, compliance requirements, and reporting obligations.

TERM

COMPENSATION

• For T&M Task Orders, Prime shall pay only for actual approved hours worked by properly qualified personnel at the hourly rates stated in the applicable Task Order.
• For FFP Task Orders, Subcontractor shall perform the full defined scope for the fixed amount stated in the applicable Task Order, subject only to written approved changes.
• Subcontractor is solely responsible for wages, salaries, bonuses, overtime premiums, payroll burdens, per diems, benefits, and similar labor costs for its personnel unless a Task Order expressly states otherwise.
• Any overtime, shift premium, weekend premium, or holiday premium is included in Subcontractor’s stated rates unless Prime approves the premium in writing before the work is performed.
• Subcontractor represents that the rates charged to Prime are not greater than the lowest rates charged by Subcontractor for substantially similar services of comparable scope, skill level, and risk during the same period.

TRAVEL, ODCS, AND TAXES

• Travel, lodging, meals, freight, equipment rental, permits, printing, courier costs, and other ODCs are reimbursable only if specifically pre-approved in writing by Prime and incurred at actual cost without markup.
• Travel time is non-reimbursable unless a Task Order expressly states otherwise.
• Subcontractor shall maintain complete receipts and supporting documentation for all reimbursable expenses and submit them with the invoice for the applicable billing period.
• Prime shall reimburse applicable transaction, sales, use, GST, HST, or VAT taxes that are properly invoiced and legally chargeable on the Services or Deliverables. Subcontractor remains solely responsible for all income taxes, franchise taxes, payroll taxes, withholding obligations, employment taxes, and similar taxes arising from its business and personnel.

INVOICING & PAYMENT TERMS

• Payment is due within 30 days after Prime receives an accurate and approved invoice.
• Prime may withhold payment for defective work, unsupported charges, disputed amounts, non-compliance with Contract requirements, missing lien waivers, missing insurance certificates, or other material default by Subcontractor.
• Final payment is conditioned on Subcontractor’s delivery of all Deliverables, closeout documents, releases, warranties, as-built information if required, and any other documentation specified in the Task Order or Contract.
• Acceptance, review, processing, or payment of an invoice does not waive Prime’s rights to later dispute charges, reject non-conforming work, assert set-off, or recover overpayments.

SET-OFF

CHANGES

1. Subcontractor shall continue performance during the change review process unless Prime directs otherwise in writing.
2. Subcontractor shall not proceed with changed work on a reimbursable basis without written authorization from Prime.
3. Any unauthorized work, acceleration, or procurement undertaken before approval is at Subcontractor’s sole risk and expense.

EXCLUSIVITY

• During the term of this Agreement and for 12 months after its termination or expiration, Subcontractor shall not directly or indirectly solicit, contract with, or accept work from any Customer introduced through Prime if that work is competitive with or substantially related to the Services or Deliverables performed or proposed under this Agreement, unless Prime gives prior written consent.
• Subcontractor shall promptly refer to Prime any Customer inquiry involving pricing, scope expansion, change requests, disputes, claims, or future opportunities outside day-to-day execution.
• Subcontractor shall not make public statements regarding any Customer project without Prime’s prior written consent.

INTELLECTUAL PROPERTY RIGHTS

• Each Party retains ownership of its Pre-Existing Intellectual Property.
• To the extent Subcontractor incorporates any Pre-Existing Intellectual Property into a Deliverable, Subcontractor grants to Prime, and to the extent necessary for Prime to perform or exploit the Deliverable grants through Prime to the applicable Customer, a perpetual, irrevocable, worldwide, transferable, sublicensable, fully paid-up license to use, reproduce, modify, display, distribute, perform, import, make, have made, sell, offer to sell, and otherwise exploit that embedded Pre-Existing Intellectual Property as part of, or in connection with, the Deliverable.
• Subcontractor shall not include any Open Source in a Deliverable without Prime’s prior written approval identifying the applicable license terms and confirming that no source code disclosure, reciprocal licensing, or other adverse obligation will apply to Prime, the Customer, or the Deliverables.
• All Deliverables and all inventions, works of authorship, code, documentation, designs, data, discoveries, developments, improvements, and other work product first conceived, created, developed, or reduced to practice by Subcontractor in connection with a Task Order are specially commissioned by Prime to the maximum extent permitted by law as works made for hire for Prime. To the extent any such item does not qualify as a work made for hire, Subcontractor hereby irrevocably assigns to Prime all right, title, and interest in and to such item and all related Intellectual Property Rights.
• Subcontractor shall execute further documents and provide reasonable assistance to evidence, perfect, record, or enforce Prime’s ownership rights.

CONFIDENTIALITY

• Confidential Information does not include information that Subcontractor can prove by contemporaneous records was publicly available without breach, lawfully known to Subcontractor before disclosure without duty of confidentiality, lawfully received from a third party without restriction, or independently developed without use of Confidential Information.
• If Subcontractor is required by law, subpoena, or court order to disclose Confidential Information, it shall, to the extent legally permitted, give Prime prompt written notice and reasonable cooperation so Prime may seek protective treatment.
• Subcontractor shall not use Prime’s name, any Customer name, or any logo, mark, photo, project image, or identity in marketing, references, proposals, resumes, case studies, or publicity without Prime’s prior written consent.

WARRANTIES

• Subcontractor warrants that all Services will be performed in a professional and workmanlike manner consistent with industry standards, the Task Order, the Contract, and applicable law.
• Subcontractor warrants that Deliverables will conform to the specifications, drawings, acceptance criteria, and other requirements stated in the applicable Task Order and flowed-down Contract requirements.
• Subcontractor warrants that the Deliverables and Services, excluding materials or instructions supplied in writing by Prime, are original to Subcontractor or lawfully provided, and do not infringe, misappropriate, or otherwise violate any third-party Intellectual Property Rights.
• Subcontractor warrants that no Harmful Code, including viruses, worms, Trojan horses, disabling devices, time bombs, or malicious routines, will be knowingly introduced into any Deliverable, system, or Customer environment.
• Subcontractor warrants compliance with all applicable federal, state, provincial, local, and municipal laws, regulations, codes, permits, labor requirements, safety requirements, and licensing obligations relevant to the Services.

TERMINATION

• Prime may terminate this Agreement or any Task Order, in whole or in part, for convenience at any time upon written notice to Subcontractor.
• Subcontractor may terminate this Agreement upon not less than 30 days' prior written notice if no Task Orders are active when the notice is given and none become active during the notice period.
• Prime may terminate immediately, or on the date stated in its notice, if Subcontractor breaches this Agreement or a Task Order and fails to cure the breach within 10 days after written notice, or if the breach is incapable of cure.
• Prime may also terminate immediately for insolvency, assignment for the benefit of creditors, bankruptcy filing, license suspension, debarment, repeated safety violations, unlawful conduct, abandonment, or material Customer-driven removal of Subcontractor from a project.
• Upon termination, Prime shall pay Subcontractor only for Services properly performed and accepted, and approved non-cancelable commitments reasonably incurred before termination, less previous payments, retention, set-off, back-charges, and completion costs. Subcontractor shall promptly stop work, mitigate costs, preserve Deliverables, assign approved purchase commitments if requested, and deliver all work in progress to Prime.

INDEMNIFICATION

INSURANCE

• Subcontractor shall maintain, at its own expense, Workers’ Compensation insurance as required by applicable law and Employers’ Liability insurance with limits customary for the jurisdiction and the Services.
• Subcontractor shall maintain Commercial General Liability insurance, including contractual liability coverage, with limits adequate for the Services and not less than any minimum required by the Task Order or Contract.
• If the Services involve vehicles, professional services, cyber exposure, pollution exposure, or installation risk, Prime may require automobile liability, professional liability, cyber liability, inland marine, builder’s risk participation, or pollution liability coverage as a condition of award.

MISCELLANEOUS

• Independent contractor. Subcontractor is an independent contractor and has no authority to bind Prime except as expressly stated in writing.
• Dispute resolution. The Parties shall first attempt in good faith to resolve disputes through executive negotiation. If not resolved, the dispute shall be handled in the forum and manner stated in the applicable Task Order or, if none is stated, in a court of competent jurisdiction selected by Prime, subject to applicable law.
• Force majeure. Neither Party is liable for delay caused by events beyond its reasonable control, excluding payment obligations. If such event continues for more than 30 days and materially prevents performance, Prime may terminate the affected Task Order or this Agreement upon written notice.
• Severability. If any provision is held unenforceable, the remaining provisions remain in effect, and the invalid provision shall be enforced to the maximum extent permitted by law.
• Governing law. This Agreement and all Task Orders are governed by the laws of New York, without regard to conflict-of-laws rules.

EXECUTION