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 included 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.”
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.
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.
Do Research On The Company That You Have Chosen
The prime contractor’s website is a great source of information. This will help you understand their company better which always makes a great impression.
After you learn about the prime, determine the product or service you can provide to fulfill their needs for the government contract. Clearly articulate what you offer and how you are the most cost-effective option for the prime contractor.
Develop A Strategy
Do not be too broad about what your company can do. This will make you seem unfocused. Specifically, outline to the prime contractor how you are the best choice for the job. Make sure you clearly define your niche.
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.
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 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.
Closing The Deal
Request a visit with the prime contractor. Make sure that you prepare a presentation that will highlight why you are the right fit for the project. This is also time to meet the administrative people that you might be closely working with in the future. Ask them for overviews of past contracts and give them an audit for how your company can help them improve their bottom line.
Make sure you keep the presentation short and simple. Prove to the prime contractors of your reliability by showing them the following:
- Financial stability
- How you stand out in a competitive marketplace
- Following up and being proactive.
These are the methods that will help you land the subcontracting opportunities you need to take your business to the next level.