Subcontracting Is An Excellent Way To Get Started
Perhaps you are a little intimidated by the prospect of working with the government. You would like an ideal scenario where you can ease into the lucrative business of government contracting and be able to pick things up at your own pace.
Subcontracting is a fantastic way for you to ease into government contracting at your own pace but still take part in the multi-billion dollar marketplace.
Subcontracting Can Be A Great Opportunity To Get Into Working With The Government
We have already discussed how the United States government is one of the most powerful consumers on the planet and government contracting is a lucrative billion-dollar marketplace.
However, if you are a fairly new business, it might be wiser to begin as a government subcontractor.
This means that you are working with a Prime Contractor that is working directly with the government, instead of the government itself. A good working relationship with a prime contractor can help you gain experience and knowledge that is always valuable to young companies. It helps you assess how ready your business is to take on the challenge of government contracting.
Subcontracting Has Many Advantages For Less Experienced Businesses
Subcontracting with a prime contractor rather than the government means that you do not have to worry about the strict rules and regulations that are part of working directly with the government. This is because the subcontractor is actually answerable to the prime contractor, not the government. Luckily, prime contractors are always on the lookout for companies that can help them complete these important government projects.
Federal Contracting Also Makes Prime Contractors Want To Seek Out Traditionally Disadvantaged Businesses
This means that prime contractors are on the lookout for talented businesses that are owned by women, minorities, and veterans. This provides opportunities for these groups in federal contracting that might not be available in other markets. Also, it is not unusual for prime contractors to be very loyal to their subcontractors and give them several avenues for repeat business. These are incredibly valuable relationships and firms should develop a strategy for how to approach these types of potential partners.
What Is A subcontractor?
A government subcontractor is defined by Federal Acquisition Regulation (FAR) 3.502-1 as:
Any person, other than the prime contractor, who offers to furnish or furnishes any supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract and includes any person who offers to furnish or furnishes general supplies to the prime contract or a higher tier subcontractor.
A prime contractor contracts directly with the client, which in this case is the federal government. The subcontractor would agree with the prime contractor (prime) to provide goods and /or services to the prime for them to be able to fulfill the requirements of the original government contract. This is an excellent opportunity for the subcontractor to gain valuable experience with government contracting and build their reputation with various government agencies.
Useful Definitions
Prime contractor — The business wins to bid for a contract with the government.
Higher-tier subcontractor — a subcontractor that also contracts other subcontractors to perform services or provide supplies to complete work for the contracts they have entered into with prime contractors.
Consultants — It is easy to confuse consultants with subcontractors. Consultant services are defined by Federal Acquisition Regulation (FAR) as “rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the contractor. Examples include those services acquired by a contractor or subcontractor to enhance their legal, economic, financial, or technical positions. Professional and consultant services are generally acquired to obtain information, advice, opinions, alternatives, conclusions, recommendations, training, or direct assistance, such as studies, analyses, evaluations, liaison with Government officials, or other forms of representation.”
So, How Does A Small Business Successfully Start Relationships With Key Government Contractors?
The first step is to become familiar with the government marketplace. Do your research and become familiar with the terms that are commonly used in that industry. Then study the different regulations and become certified with the government, if necessary. You could also attend government trade shows to better understand the needs of particular government and state agencies. This will help you identify the needs of prime contractors and any niches that your business could fill.
Locate Key Prime Contractors
Federal prime contractors can be found at this Small Business Administration site at this site:
https://www.sba.gov/document/support–directory-federal-government-prime-contractors-subcontracting-plans. This directory is a great place for small businesses to find prime contractors who are looking to fill subcontracting requirements for government contracts. Companies can also go to http://web.sba.gov/subnet/ to find prime contractors who directly announce what their needs are for their current jobs for the government. This is a great tool for you to identify a prime contractor that will make a good match for your business.
Make Sure You Have The Proper Documentation
It is important to make sure that all of your licenses and liability insurance paperwork is in order. Prime contractors favor subs that are organized and run on precision. Also, prepare a Capability Statement. This is the marketing one-pager you need as a government contractor or subcontractor to describe your services.
Subcontracting is an excellent way to begin working with the government and a lucrative avenue for profitability for any small business.
Remember nothing happens until you register with SAM.
One of the first things that one needs to do is to be registered with SAM.
SAM stands for System Award Management.
To do any business with the federal government, you must register your business in the System for Award Management directory. The government will not hire any type of business (large or small) that has not registered in the SAM directory.
Please read one of the helpful blog articles on our site like Everything You Need to Know About SAM for Small Businesses. These blogs will help give you all the information you need to understand how we can help make the process very easy for you. Sam Directory will happily guide you through this often confusing process. With our help, you will be able to be on the path to government subcontracting quickly and efficiently.