Government Subcontracting: Complete Guide to Federal Subcontract Opportunities
Learn how to find and win government subcontracts, understand subcontracting requirements, build prime contractor relationships, and grow your federal business.
Quick Overview: Government Subcontracting
Government subcontracting offers small and mid-sized businesses a strategic path into federal contracting without the complexity of prime contracts. Large prime contractors are required to subcontract billions of dollars annually to small businesses, creating significant opportunities for companies building their federal experience.
Why Start with Subcontracting?
Subcontracting provides numerous advantages for businesses entering the federal marketplace or expanding their capabilities.
Gain Experience
Build past performance on federal work without the risk and complexity of managing a prime contract directly with the government.
Build Relationships
Develop working relationships with large prime contractors who may include you on future opportunities or provide mentor support.
Lower Barriers
Avoid extensive proposal requirements, certifications, and bonding often required for prime contracts while still gaining federal revenue.
Learn the Ropes
Understand federal contracting requirements, compliance, and processes with guidance from experienced prime contractors.
Steady Revenue
Subcontracts often provide consistent work over contract periods, helping stabilize cash flow while building your federal portfolio.
Path to Prime
Successful subcontracting builds the past performance and relationships needed to eventually win prime contracts.
Finding Subcontracting Opportunities
Unlike prime contracts posted on SAM.gov, subcontracting opportunities require more proactive outreach and relationship building.
Key Resources for Finding Subcontracts
SBA SubNet
Free database where prime contractors post subcontracting opportunities
Prime Contractor Websites
Most large contractors have supplier diversity portals for subcontractor registration
PTACs
Procurement Technical Assistance Centers often connect small businesses with primes
Industry Events
Matchmaking events, conferences, and supplier fairs connect subs with primes
Track Prime Contract Awards
Monitor FPDS and USASpending to identify primes winning contracts in your area
Pro Tip: Use BidFinds to Track Prime Awards
Monitor contract awards in your NAICS codes to identify prime contractors who may need subcontractors. Reach out promptly after award announcements when primes are actively building their teams.
Understanding Subcontracting Plans
Federal regulations require large businesses with contracts over $750,000 ($1.5 million for construction) to submit subcontracting plans with specific goals for small business participation.
Plan Requirements
- ✓Dollar and percentage goals for each category
- ✓Description of efforts to meet goals
- ✓Identification of administrator
- ✓Record-keeping procedures
- ✓Reporting commitments
Small Business Categories
- •SB - Small Business
- •SDB - Small Disadvantaged Business
- •WOSB - Women-Owned Small Business
- •HUBZone - HUBZone Small Business
- •SDVOSB - Service-Disabled Veteran-Owned
| Category | Typical Goal Range | Notes |
|---|---|---|
| Small Business (total) | 23-30% | All small business categories combined |
| SDB | 5-10% | Subset of small business |
| WOSB | 5% | Subset of small business |
| HUBZone | 3% | Subset of small business |
| SDVOSB | 3% | Subset of small business |
Building Prime Contractor Relationships
Success in subcontracting depends heavily on developing strong relationships with prime contractors who can include you on their teams.
Steps to Connect with Primes
Research Target Primes
Identify companies winning contracts in your industry. Focus on primes with contracts requiring capabilities you offer.
Register in Supplier Portals
Complete profiles in major contractors' supplier diversity databases. Keep your information current and capability statements updated.
Attend Networking Events
Join industry associations, attend matchmaking events, and participate in procurement conferences where primes seek subcontractors.
Prepare Your Pitch
Develop a clear capability statement highlighting what you bring, your differentiators, and your certifications.
Deliver Excellence
Once engaged, perform exceptionally. Repeat business and referrals from satisfied primes are your best source of future work.
Teaming Arrangements
Formal teaming arrangements can strengthen your position and formalize relationships with prime contractors.
Teaming Agreement
A pre-award agreement to pursue specific opportunities together.
- • Non-binding commitment to team
- • Defines roles and responsibilities
- • Usually leads to subcontract if awarded
- • Protects proprietary information
Joint Venture
A formal business entity created to pursue contracts together.
- • Separate legal entity
- • Shared management and risk
- • Can combine capabilities
- • May retain small business status
SBA Mentor-Protégé Program
This program allows approved mentor-protégé relationships to form joint ventures that are treated as small businesses for contracting purposes. The mentor provides guidance while both firms benefit from small business set-asides.
Common Subcontracting Challenges
Payment Delays
Subcontractors often wait for the prime to be paid before receiving payment. Understand payment terms upfront and negotiate reasonable timeframes. The Prompt Payment Act protects subs on construction contracts.
Lack of Direct Agency Relationship
As a subcontractor, you don't have privity with the government. Any issues or changes must flow through the prime contractor, limiting your visibility and direct communication with the customer.
Scope Creep
Primes may request work beyond your subcontract scope. Document all work carefully and address scope changes formally through written modifications to your subcontract.
Limited Past Performance Credit
Subcontract past performance may carry less weight than prime contract experience when bidding for prime contracts. Plan your transition to prime contracting strategically.
Best Practices for Successful Subcontracting
1. Get Everything in Writing
Ensure you have a formal subcontract before starting work. The agreement should clearly define scope, pricing, payment terms, deliverables, and flow-down provisions from the prime contract.
2. Understand Flow-Down Clauses
Many prime contract clauses flow down to subcontractors. Review these carefully—they may include reporting requirements, security obligations, and compliance standards you must meet.
3. Maintain Open Communication
Keep the prime contractor informed of progress, challenges, and potential issues. Proactive communication builds trust and helps address problems before they escalate.
4. Document Your Performance
Keep detailed records of your work, deliverables, and positive feedback. Request performance letters from satisfied primes to build your past performance portfolio.
5. Diversify Your Prime Relationships
Don't become dependent on a single prime contractor. Build relationships with multiple primes to reduce risk and expand your opportunities.
Frequently Asked Questions
Do I need to be registered in SAM.gov to subcontract?
While not always required, SAM.gov registration is recommended. Some prime contractors require it, and registration demonstrates you're prepared for federal work. Certain subcontracts may require registration.
How do I find out which primes have subcontracting opportunities?
Monitor contract awards in your industry through FPDS, USASpending, and BidFinds. Large contract awards often require subcontracting plans, creating opportunities for small business participation.
Can subcontract experience count as past performance?
Yes, subcontract experience can be cited as past performance on proposals. However, evaluators may weight it differently than prime contract experience. Ensure you can document your specific role and performance.
What happens if the prime doesn't pay me?
If a prime fails to pay, you may have recourse through the prime contract's subcontracting plan provisions or state law. On construction contracts over $150,000, the Miller Act provides payment bond protections.
How do I transition from subcontractor to prime contractor?
Build past performance on progressively larger subcontracts, develop agency relationships, obtain necessary certifications, and start bidding on smaller prime contracts while maintaining subcontract work for steady revenue.
Find Prime Contracts to Target
BidFinds helps you identify contract awards and opportunities in your industry. Track prime contractors winning work and position yourself for subcontracting opportunities.
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