41 U.S.C. § 4710: Limitations on tiering of subcontractors

In this section, the term “executive agency” has the same meaning given in section 133 of this title . require contractors to minimize the excessive use of subcontractors, or of tiers of subcontractors, that add no or negligible value; and ensure that neither a contractor nor a subcontractor receives indirect costs or profit on work performed by a lower-tier subcontractor to which the higher-tier contractor or subcontractor adds no or negligible value (but not to limit charges for indirect costs and profit based on the direct costs of managing lower-tier subcontracts). This section applies to any cost-reimbursement type contract or task or delivery order in an amount greater than the simplified acquisition threshold (as defined by section 134 of this title ). Nothing in this section shall be construed as limiting the ability of the Department of Defense to implement more restrictive limitations on the tiering of subcontractors. The Department of Defense shall continue to be subject to guidance on limitations on tiering of subcontractors issued by the Department of Defense pursuant to section 852 of the John Warner National Defense Authorization Act for Fiscal Year 2007 ( Public Law 109–364 , 10 U.S.C. 2324 note).