What Is A Government Subcontractor?

A Powerful Client

The United States government is one of the most powerful consumers of goods and services in the world. This is a 500 hundred billion dollar industry that is required to set aside at least 23 percent of these contracts specifically for small businesses.

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. 

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 enter into an agreement 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 in order 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 in order 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.”

How Does A Small Business Become A Subcontractor?

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 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.

Do Your research

Search on the internet to see if the agency that your business is interested in has a subcontracting opportunity directory. Some agencies, such as the Department of Defense, has a directory that is specifically intended for small business.

Outreach Events

There is nothing better than good old fashioned networking to make the connections needed in order to get subcontracting opportunities. There are many outreach events across the country in which contractors solicit contracting work.

Here is a listing of events:

  • International Contracting Week – Las Vegas 2020

Attendees will be exposed to a wide range of legal and compliance issues that impact their businesses and ultimately affect their organizations’ bottom lines. Courses offered during International Contracting Week are relevant to personnel in a wide range of functions, including contracts, procurement, compliance, legal and risk management. This weeklong conference is:

  • Federal Subcontracting for Primes and Subs200

Attendees will understand the rights and obligations relating to subcontracting performance and management that result from government contract terms and conditions and the FAR and will develop the skills necessary to use and maintain these rights during subcontract performance and management, beginning with the development of technical, quality and delivery requirements through a clear and mutually agreeable statement of work.

  • Earned Value Management & EVM System Fundamentals

The EVM and EVMS Fundamentals Workshop is designed for professionals and organizations who are new to earned value management (EVM) concepts and requirements. It will also be useful for those who are considering bidding on contracts that will have an EVM reporting and system requirement. Attendees will gain a better understanding of the requirements as well as the level of resources and effort required to implement a system.

 Does Your Business Qualify For Set-Asides?

If at least 51% of your business is owned by a minority, woman, or veteran then your business might be eligible for set-asides reserved for underrepresented groups.

Does your business meet the following criteria:

  • A business must meet small business size standards.
  • At least 51 percent of a business must be owned by U.S. citizens.
  • The business officers must show good character.
  • The business must demonstrate the potential for success.
  • There are separate eligibility requirements for businesses owned by American Indians, Native Alaskans, Native Hawaiians, Woman, Veteran or Certified Development Companies. 
  • At least 51 percent of a business must be owned, controlled, and managed by one or more person(s) who meet the SBA requirements for being socially disadvantaged and economically disadvantaged.

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.