Intro to Subcontracting

You’ve registered your business at the System for Award Management (SAM.gov or SAM) website and are looking to tap into the billions that the federal government awards in recession-proof spending. As a business owner, that’s a smart move; in Fiscal Year 2023 alone, the Federal Government Spent more than $745B in Government Contracts to Private Entities. [1] Getting just a tiny percentage of that can ensure your business will thrive, even in lean economic times.

Of that $745B, $72B went to Subcontractors, working for the Principal Awardees, The Prime Contractors. Many businesses just like yours begin their long, prosperous journey in working for the  Federal Government as a Subcontractor to a larger Prime. To best understand how this works, let’s start by defining the terms.

“… work directly with the government. They manage any subcontractors and are responsible for ensuring that the work is completed as defined in the contract.” [3]

Prime Contractors are the main players responsible for fulfilling contract obligations. They benefit the most from partnering with government agencies. However, according to Federal Law, Prime Contractors classified as “Other Than Small Business” must subcontract some of their work to Small Businesses. They also have to follow a detailed process to show they’re meeting this requirement. In this training, we’ll discuss these responsibilities briefly. Understanding them will help you grasp why the government is keen on subcontracting and how it benefits companies like yours.

“a business or organization that offers specialized expertise to prime government contractors.

 Since subcontractors are considered specialists in the federal government contracting industry, their responsibilities revolve around completing a specific area of the federal project given to them by their prime contractor. Suppose the prime contractor is awarded a federal contract requiring them to construct a new office for a government agency. The federal subcontractor may be assigned to supply the necessary materials, plan its interior design, or prepare the wiring and electrical diagrams. The job of the government subcontractor depends on their advertised expertise.” [4]

Per the Federal Acquisition Regulations (FAR) 19.702(a), any Prime Contractor designated “Other than Small Business” awarded a contractor greater than $750,000 in value ($1.5MM in Construction) must:

“Submit an acceptable subcontracting plan. If the apparently successful <prime contractor> fails to negotiate a subcontracting plan acceptable to the contracting officer within the time limit prescribed by the contracting officer, the <prime contractor> will be ineligible for award.”[5]

If your company fits neatly into the NAICS Code’s Small Business Guidelines, then you are a perfect candidate to be an in-demand Subcontractor.

You will receive preferential treatment in Subcontracting Opportunities. Even if you took the time to self-certify as one of these when filling out your SAM registration, you’ll still need to get the SBA Certification. Select GCR has a department that focuses solely on these Certifications with a 97% first time, quick approval rating. Contact your SGCR Federal Business Development Representative for more information on how we can help with this.

Subcontracting is a terrific way to get your feet wet in Federal Contracting. Rather than reporting directly to a Contracting Officer, you can work directly with the Prime Contractor who may not be bound by the strict letter of the Regulatory Requirements.