whatbindsCheck your order

Clauses · FAR · Payment and financing

FAR 52.232-20 Limitation of Cost

Does the regulation require it to flow down?

No

The prime includes it for self-protection in cost-type subs: without it, the sub overruns and the bill climbs without warning — with it, the ceiling and the duty to notify flow down together

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 2026-08-04 · edition APR 1984 · base v0.9.3 Read the text ↗

What it makes you produce

2 items for your checklist, slowest first.

  1. Something you write

    Days to weeks, and nobody outside your company has to agree to it.

    • Written notice when the cost expected over the next 60 days, added to everything already incurred, will pass 75 percent of the estimated cost — carrying, under paragraph (c), a revised estimate of the total cost of performance

      FAR 52.232-20(b) and (c)

  2. 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.

    • Cost above the estimated cost is not reimbursable without a written increase, so work past the ceiling is at your own risk and expense until that authorization arrives

      FAR 52.232-20(d)

When it is used

The clause of fully funded cost-reimbursement contracts: the government owes nothing above the Schedule's estimated cost. There is no flowdown mandate; the prime mirrors it (adapted, with itself in the government's place) in cost-type subs to get the same ceiling and the same right to advance overrun notice.

Read closely

The contract may set the trigger anywhere in a 75 to 85 percent band with a 30 to 90 day window, so the figures in the copy you hold are the operative ones. Paragraph (e) rules out notice in any other form, and paragraph (g) says a change order on its own is not authorization to exceed the estimate.

The 7 templates that name it, with the line
155CORPDOC 4A — FAR/DFARS Flowdown Provisions for Cost-Reimbursement/T&M Subcontracts under a DoD Prime ContractLockheed Martinline 274233RTX Flowdown of U.S. Government Contract Clauses Under U.S. Government ContractsRTXline 1168105Raytheon TC-002 — Supplement 1: Government Contract Provisions from the FARRTXline 25112Boeing GP4 — General Provisions, Cost Reimbursement Contract under U.S. Government Prime ContractBoeingline 662168Northrop Grumman CTM-P-ST-004 — U.S. Government Cost Reimbursement Order (Not for Commercial Products and Services)Northrop Grummanline 2360240L3Harris LGL-50.F1 — General T&C and Flowdown Clauses for Other Than Commercial Products/Services under a U.S. Government ContractL3Harrisline 1877273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 870

Source: acquisition.gov, FAR 52.232-20 (verified 2026-08-04)

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.