By Shawn Rogers, KYPTAC Procurement Consultant
This article was originally published in our monthly KYPTAC Newsletter. If you have any questions about this topic, your KYPTAC consultant is here to help! Not a client? Sign up here.
The U.S. Federal Government is the world’s largest buyer of goods and services, spending $637 billion on contracts in Fiscal Year 2021. If you want to see a snapshot of government-wide contracting, click here. Of the $637 billion spent, a whopping 76.54% went to “Other Than Small Businesses,” also known as prime contractors. When awarded a Federal contract exceeding $750,000 (or $1.5 million for construction contracts) that has subcontracting possibilities, per the Federal Acquisition Regulation (FAR) Section 19.7, these prime contractors are required to submit an acceptable subcontracting plan to the contracting officer, who can include specific subcontracting goals for the prime contractor to try to meet. Within every subcontracting plan, there are established goals for awarding subcontracts to small businesses, including businesses owned by the disadvantaged, women, veterans, service-disabled veterans and businesses located in historically underutilized business zones (HUBZones). Each subcontracting plan describes the prime contractor's small business program, subcontract goals, record-keeping, reporting and administrative responsibilities for subcontract plan performance to meet goals and other objectives. Subcontracting can present a great opportunity to break into government contracting, especially for new businesses. As a subcontractor, you are working for the prime contractor, who is working directly for the Federal Government. The rules and regulations that come with working for the Federal Government are the responsibility of the prime contractor. However, as a subcontractor, it is important to understand there are clauses in the prime contract that can “flow down” to the subcontract agreement. The purpose of these flow-down clauses is to bind the subcontractor to the terms and conditions of the prime contract. By closely examining these clauses, you will fully understand the obligations and risk to your business and can ensure that you are able to comply. You will also be able to determine if the flow-down clauses conflict with any general terms and conditions of the subcontract agreement. So, how do you find subcontract opportunities? These directories will be helpful in your research:
SBA’s Subcontracting Network Database
SBA’s Directory of Federal Government Prime Contractors with Subcontracting Plans
General Services Administration’s Directory for Small Businesses
Department of Defense Subcontracting Opportunity Directory
The directories above are tools to identify which prime contractors you should investigate. Part of your research is to determine the product(s) and/or service(s) that you can provide to fulfill their needs for the government contract. Once you identify a prime contractor with a need that matches your expertise, develop a strategy that outlines why you are the best choice for that subcontract. It is important that you can clearly articulate what you offer and how you are the most cost-effective option for the prime contractor. You want to position your business as an asset and be able to demonstrate that your business has a clearly defined niche. Be prepared to share information about your past performance, as well as any awards or certifications that you possess. 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 the time to meet the administrative points of contact that you might be closely working with in the future. Be prepared to share how your company can help them improve their bottom line. Make sure you keep your presentation short and simple. Prove your reliability to the prime contractor by showing them the following:
Financial stability
How you stand out in a competitive marketplace
How you follow up and take proactive action
These are the methods that will help you land subcontracting opportunities. By gaining valuable experience and knowledge through subcontracting, you will be able to gauge when you are ready to move into the prime contracting arena. For help with every part of the subcontracting process, contact your KYPTAC Regional Procurement Consultant with any questions. If you are not sure how to connect with your consultant, you can request assistance by contacting us at kyptacinfo@kstc.com or by registering on our website.