Clauses · FAR · Payment and financing
FAR 52.216-12 Cost-Sharing Contract-No Fee
Does the regulation require it to flow down?
No
No mandate — the clause text contains no subcontracts paragraph. It is a prime-level pricing clause that reaches the sub only when the prime issues a cost-sharing subcontract and copies the fee prohibition and the reserve down. Three corpus documents carry it (BAE, CACI's executed labor-hour subcontract table, Raytheon TC002), in each case inside a conditional list keyed to subcontract type rather than as an unconditional flow-down
A clause can reach your subcontract without a mandate. Once it is in your document, it is a contract term all the same. The missing mandate is a fact about the regulation. It is not a ruling on your order.
Checked against acquisition.gov on 2026-08-05 · edition APR 1984 (Basic; Alt I APR 1984) · base v0.9.3 Read the text ↗
What it makes you produce
One item for your checklist.
Nothing to send now
It does not hold the order. It decides what money moves later — what you can claim, what can be claimed from you, and what can be held back — and none of that changes after signature.
Nothing goes out now — paragraph (a) says no fee is paid, and only the Government's agreed share of allowable cost is reimbursed, so the remaining share is money spent and never recovered on this contract; paragraph (b) adds a reserve after 80 percent of that share has been paid, capped at one percent of it or $100,000, whichever is less
FAR 52.216-12(a) and (b)
When it is used
FAR 16.307(f)(1): the contracting officer inserts 52.216-12 in solicitations and contracts when a cost-sharing contract is contemplated — that is, a cost-reimbursement contract under which the contractor is reimbursed only an agreed portion of allowable cost and receives no fee, absorbing the rest in exchange for the expected benefit of the work (FAR 16.303). No dollar threshold. Alternate I (APR 1984), prescribed at 16.307(f)(2), deletes paragraph (b) for a cost-sharing research and development contract with an educational institution or a nonprofit organization where the contracting officer determines withholding is not required. Almost always research or development work, which is why the rdWork field carries it.
Read closely
The unreimbursed share belongs in the budget before signature: it is the consideration being given for the work. The accounting still has to track total allowable cost and hold up in an incurred-cost audit for the portion nobody is paying for, because the shared base is what the ratio is applied to.
Source: acquisition.gov, FAR 52.216-12, FAR 16.307(f) and FAR 16.303, plus the FAR Overhaul part 16 deviation guide 16.305(f)(1) (verified 2026-08-05)
This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.