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Clauses · FAR · Payment and financing

FAR 52.232-7 Payments under Time-and-Materials and Labor-Hour Contracts

Does the regulation require it to flow down?

No

The prime includes it to mirror the main contract's billing regime: qualified hours at the fixed rates, materials at allowable cost, same voucher mechanics and retention — without it, the sub's billing doesn't fit into the prime's

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 NOV 2021 · base v0.9.3 Read the text ↗

What it makes you produce

3 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 running total will pass 85 percent of the ceiling price

      FAR 52.232-7(d)

  2. Something you fill in and send back

    Hours, once you know which one is missing.

    • Vouchers no more often than every two weeks, billing hours by labor category at the contract's fixed hourly rates and materials at allowable cost

      FAR 52.232-7(a) and (b)

  3. 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.

    • An hourly rate is payable only where the person meets the labor category's qualifications, no indirect cost is applied to subcontractor hours paid at hourly rates, and paragraph (a)(7) lets 5 percent of the amounts due be withheld up to $50,000

      FAR 52.232-7(a)(7)

When it is used

The payment clause of the prime's T&M/labor-hour contracts. There is no flowdown mandate: it appears in the subcontract because the prime mirrors the payment mechanism in the T&M sub — not least because the text explicitly addresses how subcontractor labor is paid (at the hourly rates, if the contract so provides) and materials paid to the sub.

Read closely

Your own commercial materials cannot exceed catalog or market price. Paragraph (e) is the ceiling itself, beyond which the buyer is not obligated to pay, and paragraph (f) the audit right behind the vouchers.

Alternates

  • Alt I · MAR 2000 (historical)

    —

    The current 52.232-7 (NOV 2021) carries no alternates. Alternate I belonged to the pre-2007 clause and survives only in documents of that vintage, so there is no alternate text from which a different answer could be read — in a subcontract from 2004 it is archaeology, in a current template it is a defect worth raising.

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 269233RTX Flowdown of U.S. Government Contract Clauses Under U.S. Government ContractsRTXline 1167105Raytheon TC-002 — Supplement 1: Government Contract Provisions from the FARRTXline 24912Boeing GP4 — General Provisions, Cost Reimbursement Contract under U.S. Government Prime ContractBoeingline 1856Boeing GP9 — General Provisions, Labor Hour/T&M Contract under U.S. Government Prime ContractBoeingline 172166Northrop Grumman CTM-P-ST-003 — U.S. Government T&M Order (Not for Commercial Products and Services)Northrop Grummanline 2268273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 866

Source: acquisition.gov, FAR 52.232-7 (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.