# Subcontractor evidence exception, worked example | SourceX

Canonical: https://refer.sourcex.si/guides/subcontractor-evidence-reconciliation-exception-examples
Last updated: 2026-10-19

The records that explain a subcontractor evidence exception are, in order: the clause list in force after a contract change, the evidence package that did not match it, the reviewer's note naming the gap, the letter asking for more, the decision that let work continue or stopped it, and the follow-up attestation that closed the condition. Read together, they show the problem, who decided, and the checked result. The worked case below walks through one such chain.

This page is part of the [subcontractor evidence reconciliation guide](/guides/workflow-subcontractor-evidence-reconciliation), which covers what to inventory before a subcontractor transition. Here the job is narrower: follow one hard case from start to finish so a contract compliance consultant can recognize the same pattern at a client.

## The case: evidence that answered last revision's question

Illustrative. The companies, dates and identifiers are fictional.

A 340-person federal facilities contractor holds a base-operations contract and uses a 70-person mechanical subcontractor. In March, subcontract modification 04 moves the statement of work from revision B to revision C. Under the new scope, the subcontractor will handle building-controls data, so the prime adds the basic safeguarding clause to the clauses the subcontract must carry. FAR 52.204-21 requires its substance to flow down where a subcontractor may have Federal contract information on its information system, which is exactly what changed.

In April, the subcontractor uploads its annual compliance package to the prime's supplier portal. The package is thorough. Every attestation, though, cites revision B. Nothing in it addresses the clause that revision C added.

Nobody did anything wrong in bad faith. The subcontractor reused last year's template; the scope changed underneath it. That is what makes it a hard case rather than a simple rejection.

## Step by step: seven moves from modification to closeout

1. **March 3. Contract change issued.** The subcontracts manager issues modification 04 and updates the required-clause list, now carrying one added clause and a pointer to SOW revision C.
2. **April 11. Evidence submitted.** Package EV-2291 arrives in the supplier portal with attestations for the existing requirements, all referencing revision B.
3. **April 15. Gap found.** The compliance analyst compares the package to the current list. Three requirements match. The added clause has no matching evidence because the package was written for the earlier scope. The analyst records this as a comment on EV-2291.
4. **April 16. Gap raised formally.** The supplier compliance director emails the subcontractor asking for a further attestation within 30 days.
5. **April 22. Risk decision.** Work under revision C is already scheduled. The director grants a conditional approval in the portal workflow: work may proceed on the subcontractor's existing controls while the missing attestation is prepared.
6. **May 9. Gap closed.** The subcontractor submits EV-2340, an attestation for the added clause that cites revision C.
7. **May 13. Condition lifted.** The analyst links EV-2340 to EV-2291, the director closes the condition, and the quality log records it against the original request.

## Who decided what, and where it was written down

Each step involved a different person and left a record in a different place. That spread is normal, and it is why the case is hard to rebuild later.

| Step | Decision or action | Made by | Record | Held in |
|---|---|---|---|---|
| 1 | Add clause; move scope to rev C | Subcontracts manager | Modification 04 and updated clause list | Contract files |
| 2 | Submit annual evidence | Subcontractor's compliance lead | EV-2291 | Supplier portal |
| 3 | Find that the package covers the old scope | Compliance analyst | Reviewer comment on EV-2291 | Supplier portal |
| 4 | Ask for a further attestation in 30 days | Supplier compliance director | Request letter | Email |
| 5 | Let work proceed under a condition | Supplier compliance director | Conditional approval with reason | Portal workflow |
| 6 | Provide evidence for the added clause | Subcontractor's compliance lead | EV-2340 citing rev C | Supplier portal |
| 7 | Close the condition | Compliance analyst and director | Linked packages and log entry | Portal and quality log |

Notice that steps 3 and 5 are the only judgment calls, and both depend on context the package itself does not carry: which scope revision applied, and why letting work continue was acceptable. If the comment had said only "incomplete" or the conditional approval had been agreed in a meeting with no note, the chain would show a rejection and an approval with nothing to connect them. The keys that join these records across systems are mapped in the [system map for reconciliation records](/guides/subcontractor-evidence-reconciliation-records-across-systems).

## Why this sequence is useful evidence

A clean approval teaches very little. A file that says "requirement met, approved" records an outcome with no reasoning. This case records a reasoning path: a requirement changed, a package was measured against the right version, a gap was named precisely, a risk was accepted on stated terms, and the result was verified.

That pattern of problem, authorized action and checked result is what makes operational exception records interesting for AI training and evaluation. The same argument appears for finance breaks in the [reconciliation exceptions data type](/data-types/reconciliation-exceptions-ai-agent-training-data) and more generally in [exception handling as agent data](/guides/exception-handling-ai-agents-data). SourceX licenses approved business data directly from companies for these uses and manages the agreement, rights review, data preparation, delivery and payout. Whether any given chain is licensable depends on the company's contracts, the subcontractor's confidentiality terms and any controlled information, all reviewed after an authorized introduction.

The retention side is separate. FAR 4.703 generally requires contractors to keep records and supporting evidence available for 3 years after final payment, longer if a contract clause says so. That is an audit floor. It does not make the records available for reuse.

## Recognizing similar cases at a client

The pattern is not specific to safeguarding clauses. Any contract change that alters the required clauses or the scope can strand evidence written for the previous version: a new site, a new data type, a new labor category. Listen for these signals in an ordinary conversation, without asking to see a file:

- **"We had to send it back because it was for the old scope."** The organization handles scope-mismatch exceptions and probably has notes on them.
- **"We let them start on a conditional."** Conditional approvals mean someone documented a risk decision, or should have.
- **"Our clause list changes with every contract change."** A versioned list is the anchor record for any reconstruction.
- **"Our request letters go out from the compliance mailbox."** A shared mailbox is easier to preserve than personal inboxes.
- **"We link the follow-up to the original."** Linked submissions are what let a later reader follow the case end to end.

When you hear two or three of these, describe the pattern to the supplier compliance director and ask at metadata level: how many such exceptions a year, over how many years, held in which systems. Then find out who can authorize a licensing discussion; the [decision tree for these records](/questions/who-can-license-subcontractor-evidence-reconciliation-records) sets out the usual roles, and the page on [government contractor data and CUI restrictions](/industries/government-contractor-data-licensing-cui-restrictions) covers controlled information. Consultants placed through another firm should first read the [subcontractor agreement guide](/guides/fractional-cfo-subcontractor-agreement).

The introduced company needs 50+ full-time employees at peak (contractors excluded), a documented operating history, rights to license and an authorized contact. Companies in the U.S., Canada and the EU qualify, as do companies in the UK, Australia, New Zealand, India, Singapore, South Africa, Latin America, the UAE and Saudi Arabia when at least 90% of the data is in English. Partners sign the Channel Partner Agreement before submitting introductions.

## Next step

> **Refer a company. Earn up to $100,000.** Default reward: 25% of Actual Supplier Payout, capped at $100,000 cumulatively per referred company. Eligibility and payment conditions apply, and a signed Schedule A or addendum can differ. A lead, meeting or signature alone does not trigger payment.

If a client's compliance team can follow cases like this from contract change to close, [register as a partner](/register), check the company against [who qualifies](/who-qualifies), and read the [program terms](/terms) before you introduce the supplier compliance director.

## Sources

- https://www.acquisition.gov/far/52.204-21
- https://www.acquisition.gov/far/4.703
- https://refer.sourcex.si/terms