Contract Paper Template: Sub-of-Prime and CHN-Direct Routes

Two contract structures with annotated CLIN patterns, key clauses, and decision criteria for choosing between flowing through a prime and contracting direct via CHN's GSA Schedule.

2.1 · First-SKU Launch · artifact id: contract-paper-template-v0.html · 2026-05-28 · v0

Route selection: sub-of-prime vs CHN-direct

Ch 13 of Shrink-Wrap It is precise: "Not every pricing model works in federal acquisition. The ones that do share common characteristics: they're predictable, auditable, and fit within how agencies budget and obligate funds." The contract structure is the delivery mechanism for that predictability. NorthAI has two viable routes at this stage, each with distinct tradeoffs.

Dimension	Route A: Sub-of-prime	Route B: CHN-direct via GSA MAS
Speed to first award	Fastest. Prime's existing contract vehicle used. NorthAI revenue can flow within weeks of teaming agreement.	Requires GSA MAS approval (6-12 months). Not available until application clears.
Revenue share	Prime takes a pass-through fee (typically 5-12%). NorthAI nets less per dollar billed.	NorthAI invoices the government directly. Full margin retained (minus GSA IFF ~0.75%).
ATO inheritance	Prime's authorization posture may carry some inheritance. Depends on prime's ATO status and boundary.	NorthAI's own ATO required for direct procurement. No inheritance from CHN for NorthAI's system boundary.
Price visibility	Price is the prime's CLIN rate, not NorthAI's. NorthAI's pricing is internal to the teaming agreement.	NorthAI's GSA price is public on the Schedule. Agencies can order directly at the negotiated rate.
Recommended for Phase 1	Yes. Sub-of-prime is the fastest path to first revenue before GSA MAS clears.	File in parallel. Target CHN-direct as the primary channel by Month 12.

Route A: Sub-of-prime CLIN structure

The structure below flows through the prime's existing task order. NorthAI appears as a named subcontractor in the prime's proposal and teaming agreement. The government contracts with the prime; the prime flows down to NorthAI under the teaming agreement terms.

Attorney review required

This template is illustrative. All CLINs, flowdown clauses, and pricing must be reviewed by a federal contracts attorney before any proposal submission. NorthAI's ISSO must confirm ATO inheritance scope before signing.

CLIN Structure (illustrative)

CLIN	Description	Type	Unit	Quantity	Unit price (placeholder)
0001	Annual subscription: [Product Name] authentication and federal-posture dashboard	FFP	User / year	[TBD: agency user count]	$[TBD]/user/year
0002	Standard deployment and onboarding (one-time)	FFP	Lot	1	$[TBD]
0003	Custom control implementation and agency-specific configuration (as-ordered)	T&M NTE	Hour	[NTE hours TBD]	$[TBD]/hour
1001	Option Year 1: Annual subscription renewal	FFP	User / year	[same as 0001 or adjusted]	$[TBD]/user/year
1002	Option Year 1: Custom development (as-ordered)	T&M NTE	Hour	[NTE hours TBD]	$[TBD]/hour

Key flowdown clauses to confirm with prime

Clause area	What to confirm	Annotation
ATO inheritance	Does the prime's ATO cover NorthAI's product boundary? Which controls are inherited vs customer-owned?	Do not assume inheritance. Get written confirmation from prime's ISSO and map to NorthAI's SSP.
Data residency	Where does agency data reside? GovCloud region? Prime-managed or NorthAI-managed?	Federal data residency requirements vary by agency and classification. Confirm before deployment.
IP carve-out	Does NorthAI retain ownership of all product IP developed under the contract? No work-for-hire clauses on core product code.	Critical. Without explicit IP carve-out, product development under a federal contract can transfer IP to the government. Attorney must confirm FAR 52.227-14 alternatives.
Small business reporting	If prime has small business subcontracting plan, confirm NorthAI's spend category and reporting requirements.	Affects prime's compliance reporting. Not usually a blocker but must be logged.
Price reduction	Does the teaming agreement bind NorthAI to any most-favored-nation pricing for the prime?	Can constrain NorthAI's ability to price differently across customers. Negotiate limits on this clause.

Route B: CHN-direct GSA MAS structure

Once NorthAI's GSA MAS 54151S application is approved, the government can order directly at the Schedule price. CHN remains a channel relationship (referral, integration support, co-selling) rather than the prime contractor. NorthAI invoices the government directly.

CLIN Structure for GSA MAS order (illustrative)

CLIN	SIN	Description	Type	GSA Schedule price (placeholder)
0001	54151S	Annual subscription: [Product Name], per user per year, Standard tier	FFP	$[TBD]/user/year
0002	54151S	Annual subscription: [Product Name], per user per year, Enterprise tier (volume discount applies)	FFP	$[TBD]/user/year
0003	54151S	Standard deployment and onboarding (one-time, per agency)	FFP	$[TBD] per deployment
0004	54151S	Professional services: custom configuration and integration support (T&M)	T&M	$[TBD]/hour (labor category: [TBD])

GSA MAS-specific notes

Simplified acquisition threshold: Orders at or below $350K can be placed without formal competition (as of FY2026). Structure CLIN 0001 and CLIN 0003 to stay under this threshold for initial deployments where possible.
IFF: GSA charges the Industrial Funding Fee (currently ~0.75% of order value). Build this into pricing so it is not a margin surprise.
Price transparency: GSA Advantage! lists Schedule prices publicly. Discipline price reductions: once a price is reduced on the Schedule, the most-favored-nation clause may require reducing it for all existing orders.
Refresh cycles: MAS contracts are available for 20 years with annual modifications. Add new products under SIN 54151S via contract modification; no new application required.