Why Government Contracting Is Advantageous For Small Businesses

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, it might be wiser to begin as a government subcontractor if you are a reasonably new business. 

This means that you are working with a Prime Contractor who works 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. In addition, it enables you to assess how ready your business is to take on the challenge of government contracting. 

What Is A Government Contractor?

The United States Government is made up of several agencies that require a variety of services. These agencies then offer contacts to private companies across several industries to fulfill these needs. Private contractors are vital in helping the government provide services for the welfare and protection of United States citizens. Private government contractors provide goods and services for the following: 

  • Medical Services
  • Utilities
  • Construction
  • Supplies for various projects
  • Engineering
  • Defense
  • Intellectual Technology
  • Energy

These are just a few of the categories that are often contracted out to private independent companies through the awarding of government contracts.

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 of working directly with the government. This is because the subcontractor is answerable to the prime contractor, not the government. Luckily, prime contractors are always looking for companies that can help them complete these critical government projects.

Federal Contracting Also Makes Prime Contractors Want To Seek Out Traditionally Disadvantaged Businesses

This means that prime contractors are looking for qualified businesses that women, minorities, and veterans own. This provides these groups with federal contracting opportunities 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 unique relationships, and firms should develop a strategy for approaching these potential partners.

Useful Definitions

Prime contractor — The business wins to bid for a contract with the government.

Higher-tier subcontractor — a subcontractor that 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.”

How Does A Small Business Become A Subcontractor?

One of the first things one needs to do is register with  SAM.

SAM stands for System Award Management.

To do 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 been written in the SAM directory.

Please read one of the helpful blog articles on our site, 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 easy for you. In addition, Sam Directory will happily guide you through this often confusing process.

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 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 better to understand the needs of particular government and state agencies. This will help you identify prime contractors’ needs and any niches 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 an excellent 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 an excellent tool for identifying a prime contractor that will make a good match for your business.

Develop A strategy

Do not be too broad about what your company can do. Outline to the prime contractor how you are the best choice for the job. Define your niche.

This Is Not The Time To Be Shy About Your Company’s Accomplishments

Inform them about any awards or certifications that you have received. Tell them how you have a strong reputation and reference any contracts that you helped complete. This is the time to position yourself as an asset to their project and inform them about your capabilities. These are things that help build credibility as a subcontractor.

Remember That You Are Forming A Long-Term Relationship, And This Is Not Just A One-Time Gig

You want to develop a strong alliance with the prime contractor’s company. It is on you to suggest teaming arrangements that will benefit your businesses. Make sure the understanding helps promote your company to other prime contractors and the government agency that is funding the project.