"Flow-down clauses are especially common in government and construction subcontracts. The government, recognizing the need to assure that important federal policies are followed throughout performance, sometimes will require specific prime contract requirements to flow down to subcontractors and be incorporated into their subcontracts.

"
see more at
http://www.toolkit.cch.com/text/P09_1310.asp

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Note added at 2002-07-04 11:40:54 (GMT)
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example :
\"i) Flow down of terms and conditions.



(ii) Verification that the Euro-Canadian subcontract has been priced in accordance

with national pricing regulations as defined by the applicable National Audit Authority.



(iii) Verification that the audit findings of the applicable National Audit Authority

have been utilized in the negotiated agreement.\"
http://www.boeing.com/companyoffices/doingbiz/terms/exhibits...