Federal DoD Agency as a subcontractor

It is theoretically possible, in some cases.  Some agencies are authorized to sell goods or services under certain circumstances.  These authorities are statute dependent, agency particular, and purpose driven.  You must ask the agency directly if it is willing to enter into a business relationship.  

A complication:  When a prime contractor relies on a Government agency as a subcontractor supplier of goods or services, it is contracting with the sovereign.  The prime contractor may be unable to force or enforce its will on the Government agency, and will not be able to enforce its subcontract in state court.

Contractor said:

Can a Federal DoD Agency perform as a subcontractor to a small business on a DoD procurement?

If so, what possible complications do you foresee?

I have found complications in flowing down mandatory terms and conditions required by the prime contract and business terms and conditions important to the contractor included in its general terms and conditions. Also, at times the Agency itself had its own terms and conditions on top of the foregoing complications, which further complicated the deal.