Subcontracting as a Stepping Stone to Federal Marketing Success

Posted by Robert Kelly on Feb 2, 2011 3:24:00 PM

Subcontracting is an excellent way for businesses to break into the government market.  If your firm is ready to market and sell its product or service to the government and all of its agencies, subcontracting might be the perfect fit.  Subcontracting offers a blend of sales opportunity and learning experience that makes it an ideal solution for any firm looking to grow into a sizable government contract of its own.

Much like the construction company that built your home or office likely hired smaller, specialized companies to perform the plumbing or electrical installations, many recipients of government contracts subcontract a portion of the work to other firms.  In fact, all large businesses that receive contracts worth $500,000 or more ($1 million for construction projects) are required to submit written subcontracting plans detailing their efforts to find suitable subcontractors.

GSA SubcontractingSuch a firm, known as a Prime Contractor, forms a conventional contract with the government through the usual processes.  The Prime Contractor then creates distinct subcontracts with one or more subcontractors for any of the work described in the original contract it is unable or unwilling to perform.  In this sense, the subcontractor is not actually contracting with the government.  However, because many Prime Contractors ‘flow-through’ the clauses contained in their original contract, many government specific rules on pricing, termination, changes, etc., apply to the subcontractor. 

This contractual ‘flow-through’ can help a firm adjust to some of the contractual requirements unique to the government contracting market.  Familiarity with these clauses will smooth the transition for a business looking to make the jump from Sub to Prime Contractor.  Subcontractors should be aware, however that not all clauses can or should flow through.  Many Prime Contractors blindly ‘flow through’ clauses that do not pertain to any party other than the Prime.  Therefore, Subcontractors should carefully review any Subcontracting agreements before contracting.

A subcontract can also help a firm gain the experience and/or capacity necessary to bid competitively for a direct government contract.  Subcontracting represents a phenomenal growth opportunity.  In fact, many GSA and SBA policies favor small and disadvantaged businesses.  Subcontracting can help put your small firm on a path towards steady growth and expansion.

If you are interested in the prospects of subcontracting to either enter the federal market for the first time, or to expand your existing business with the government, I suggest you check out the SBA’s SUB-Net.  SUB-Net is a database of prime contractor’s solicitations for subcontractors and it can help you find an ideal contract or project in which to participate.  Furthermore, I recommend you take a look at the GSA’s directory of subcontractors by region

Subcontracting is but one way for a small business to break into Federal contracting.  Another key tool is to obtain a GSA Schedule contract.  These contracts allow you to be in control of your own destiny by being the Prime Contractor. Learn more about Getting on the GSA Schedule

Topics: Government Contracts, Government Sales

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