Which of the following is true regarding Subcontracting?

Subcontracting can involve both large and small businesses because it is a common practice in federal contracting that allows prime contractors to delegate portions of work to other entities. This enables prime contractors to leverage specialized expertise, fulfill capacity requirements, and promote competition by engaging small businesses, which can bring innovation and efficiency to projects.

In many federal acquisition scenarios, there are provisions and goals aimed at encouraging prime contractors to utilize small businesses, ensuring that diverse types of organizations can participate in federal contracting opportunities. This aligns with federal policy goals to support small business participation in government contracting.

The other statements do not accurately reflect the principles and regulations surrounding subcontracting. For instance, prime contractors retain ultimate responsibility for subcontractor performance as they are accountable for fulfilling the terms of the prime contract. Additionally, subcontracting is not illegal under federal law; it is a recognized and regulated practice designed to facilitate efficient contract execution. Lastly, it is not accurate to say that subcontractors bear all risks associated with the prime contract, as the prime contractor typically assumes primary responsibility.