Can a General Contractor Subcontract All the Work?

Yes, a general contractor can subcontract all the physical work on a private construction project. There is no law requiring the GC to pick up a tool or run a crew of their own on private work - the legal obligations that stay with you are the contractor license, the insurance, and full accountability to the client. The model of winning the prime contract and subbing out 100% of the delivery is standard practice.

I have run this for years with 1,400+ subcontractors in the database. The whole point of construction arbitrage is exactly this: you act as the main contractor, price the job, build the sub stack, manage the coordination, and keep the spread. Not a single hour of your time goes on the tools.

Can a general contractor subcontract all the work - what the law actually says#

On private construction, the answer is clean. No jurisdiction in any English-speaking market sets a minimum percentage of physical work the GC must self-perform on a private contract. The legal framework says: hold the right license, carry the right insurance, be the accountable party. It says nothing about your personal shovel time.

This is not a loophole. It is how the construction industry has always worked. Every large commercial developer, every tier-one main contractor, every national housebuilder runs some version of this model. They win prime contracts and build the project through a stack of specialist trades. The GC's value is coordination, accountability, and commercial management - not labour.

The practical result is that many GCs do zero physical work on a given project. They manage programmes, handle client relationships, oversee quality control, and run payment schedules. Every trade - groundworks, concrete, steel, cladding, fit-out - is subcontracted to the specialist that does it best.

Where a self-performance requirement does apply#

There are two places where you cannot sub out 100% and stay compliant.

US federal government construction contracts. Federal contracts have historically imposed self-performance minimums on the prime contractor. Under the old FAR 36.501 (removed in the 2025 FAR overhaul), the standard clause required the prime to perform ordinarily not less than 12% of the work with its own forces - excluding specialist trades like plumbing, electrical, and HVAC which are routinely subcontracted. That specific clause no longer applies to new federal contracts following the 2025 reform, but the principle of minimum self-performance still lives in individual agency rules and contract terms, so read the specific contract.

For small business set-aside contracts, FAR 52.219-14 still applies: a prime contractor cannot pay more than 85% of the contract value (excluding materials) to subcontractors that are not similarly situated entities. That is effectively a 15% self-performance floor on small business set-aside work.

None of this applies to private work, which is where construction arbitrage operates.

Your prime contract itself. This is the more common practical constraint. Many client contracts - particularly commercial clients using standard-form agreements or legal advisors - include a subcontracting clause that requires the client's written consent before you subcontract significant portions of the work. Some specify that certain trades must be listed and pre-approved. Some require subcontractors to meet minimum insurance thresholds or hold specific certifications.

Read the prime contract before you sign it. The restriction, if there is one, will be in the subcontracting clause. In residential and smaller commercial work, it is often absent entirely. In larger commercial, institutional, or public sector work, it tends to be more detailed.

What you cannot hand off even when you sub everything#

Subcontracting the physical work is one thing. There are obligations that stay with you no matter how complete your sub stack is.

The contractor license. This does not transfer to your subs. If the state or jurisdiction requires a contractor license to enter the prime contract, you need that license regardless of who is physically on site. The licensing obligation attaches to the entity signing the prime contract, not to who holds the trowel. I cover this in full in do you need a contractor license for construction arbitrage - the short answer is yes in most US states, and yes via CIS registration in the UK.

Primary liability to the client. The client's contract is with you. When a sub does bad work, the first call comes to you. You remain primarily liable for quality, defects, delays, and safety on the project. You can pursue the sub for indemnity through the subcontract - and a well-drafted subcontract will give you that right - but that does not remove your obligation to the client. The buck stops with the GC.

Your subs' own licensing. Where the law requires a trade license for specialist work - electrical, plumbing, gas, structural, HVAC - your sub must hold that license. You cannot sub regulated specialist work to an unlicensed tradesperson and claim ignorance. In California, hiring an unlicensed sub on regulated work is a CSLB violation that can jeopardise your own license. The same logic applies in most licensing states and in Australia, where as the prime contractor you are responsible for ensuring each sub holds their required trade licence.

Insurance. Your general liability policy needs to cover your operations as the prime contractor, including the work of your subcontractors. Most GC policies do this, but confirm with your broker that the policy covers the scope you are contracting. Require subs to carry their own liability insurance and name you as additional insured - this is a standard clause in any sub agreement worth using.

How this works in the UK#

In the UK, there is no contractor license equivalent to the US system. The main contractor can lawfully subcontract every trade on a project without any self-performance minimum, and the law does not require the client's consent to subcontract unless the prime contract says otherwise.

What the UK does require is CIS compliance. As the main contractor, you must register with HMRC as a CIS contractor before paying your first sub. You then verify each sub against HMRC's database and apply the correct deduction rate to the labour element of every payment - 20% for registered subs, 30% for unregistered ones, 0% for those holding gross payment status. Monthly returns to HMRC are required from the point of registration, including nil returns.

The main contractor remains fully liable to the client for the quality and standard of all subcontracted work - the same principle as everywhere else. Liability cannot be offloaded simply by subcontracting. Register at GOV.UK before you pay your first sub.

Why this is the construction arbitrage model#

The ability to subcontract all the physical work is not a grey area or a workaround - it is the legal and commercial basis for the GC model everywhere in the world. Construction arbitrage is just the name for running that model deliberately and systematically: building a sub database, pricing the spread, winning the prime contract, and letting the trades do their work.

The compliance side is not complicated. Get the license in your jurisdiction, get the insurance, draft proper subcontracts, and be across CIS if you are working in the UK. Those are one-time setup costs. After that, you are running a clean operation with no legal exposure from the subcontracting structure itself.

For the full setup sequence, how to start a construction arbitrage business runs through entity, license, insurance, first clients, and first subs in the right order. For the contracts layer that protects you when a sub goes wrong, construction arbitrage vs general contracting covers where the model differs from traditional GC work in practice.

The GC model - subbing out every trade and managing the spread - is standard practice across the whole industry. The difference is whether you run it as a system or fall back to doing the work yourself. The law gives you the option. Use it.

The next step#

If you are building this from scratch, the community where people are actually running the model is Construction Arbitrage Players on Skool - real operators, real deals, real questions. That is the room where this gets done.

The complete system is documented in THE FAMILY SECRET - How Construction Arbitrage Really Works, coming soon.

This is general information, not legal advice. Licensing rules, self-performance requirements, and contract law vary by jurisdiction and change over time. Verify current requirements with your licensing board or a qualified construction attorney before you enter a prime contract.

Last checked: 12 June 2026.