DFARS clause 252.204-7012 flows down to subcontractors without alteration, except to identify the parties, when performance will involve operationally critical support or covered defense information. Per 252.204-7012(m)(1), the prime contractor shall determine if the information required for subcontractor performance retains its identity as covered defense information, thus necessitating the flow-down of the clause. The contractor should consult with the contracting office if clarification is required. The Department's emphasis is on the deliberate management of information requiring protection. Prime contractors should minimize the flow down of information requiring protection. April 2, 2018 rev 1.16 Flow down is a requirement of the terms of the contract with the Government, which should be enforced by the prime contractor as a result of compliance with these terms. If a subcontractor does not agree to comply with the terms of DFARS Clause 252.204–7012, then covered defense information shall not be on that subcontractor's information system.
Source: Frequently Asked Questions (FAQs) regarding the implementation of DFARS Subpart 204.73 and PGI Subpart 204.73 DFARS Subpart 239.76, and PGI Subpart 239.76 FAQ REVISION, April 2, 2018 rev 1 1