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For Small Businesses, Subcontracting May Be the Best Way to Win More Contracts

For Small Businesses, Subcontracting May Be the Best Way to Win More Contracts

As a business owner, if you have ever thought about pursuing government contracts but made the decision that you just don’t have the resources to be a prime vendor, there is still a way you can participate in the federal contracting market - you can become a subcontractor. Subcontracting offers many great opportunities for vendors of all sizes, but is especially suited to small businesses that are looking to try their hand at government contracting.

Subcontracting allows small companies to work on large projects, and to receive a fair portion of the contract award in return without having to manage the considerable responsibilities that come with being the lead vendor.  By becoming a subcontractor, small businesses partner with a prime vendor; this arrangement may improve everyone’s chances at winning a particular bid because subcontracting helps to lower costs by spreading out work among several parties, while also taking pressure off of the prime vendor to supply all of the resources and labor needed for the project.

The Advantages of Being a Subcontractor

One advantage associated with subcontracting is that it allows a company to work on multiple contracts within a short timeframe. This is a great way for a business to build a reputation while learning the ins and outs of working with the government, particularly the rules, regulations and requirements that come with being a government contractor. As a subcontractor, the prime vendor that hires you is primarily responsible for enforcing a project’s regulatory requirements, a relationship that shields you from having to deal with the government directly.

The General Services Administration Subcontracting Directory

Prime contractors that receive federal contracts for goods and services worth over $650,000 and construction contracts worth over $1.5 million are listed on the GSA subcontracting directory, which can be found on the General Services Administration website. These vendors are required to establish work plans and goals for the subcontractors that they hire to assist with projects. This directory is a great tool for vendors that are looking for subcontract work; the directory currently lists more than 300 open contracts with the federal government, all of which are available for bid. The directory includes descriptions of services, product types, NAICS and product codes, expected timeframes and work locations for projects, as well as action obligation amounts. There are more than 180 unique vendors currently on the list and subcontractors are encouraged to contact these prime vendors directly to see what kind of deals they can make with them.

Small Businesses and Subcontracting

For small businesses, subcontracting provides a variety of great opportunities for work: similar to how the government is obligated to award 23 percent of all contracts to small businesses; the government is also obligated to award a certain percentage of contracts to companies who hire subcontractors. The statutory goals for subcontracting as part of a larger project are: 5 percent for Women-Owned businesses, 5 percent for Small Disadvantaged-Owned businesses, 3 percent for HubZone small businesses and 3 percent for Service-Disabled Veteran-Owned small businesses. The Small Business Association (SBA) website has plenty of tools and resources for small businesses to learn about subcontracting and how larger organizations can meet the government’s statutory goals.

If you operate a small business and are interested in entering the government contracting sector, it would be a great idea to check out the subcontracting opportunities in your region today.

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