Adapted by Ariana Billingsley, PTAC counselor, SBTDC @ East Carolina University
Source: FDIC’s Subcontracting 101
The federal government directs a fair percentage of its procurement to small businesses, but some contracts are just too large for a small business to handle alone. When this happens, the small businesses can team up to collectively perform the contract. Subcontracting is a great way for small businesses to gain experience, build past performance and demonstrate their capabilities to the government and other contractors. Prime contractors need small businesses as much as small businesses need them. The reality is that prime contractors, even large businesses, cannot do everything in-house. The primes require products or services that in many cases only qualified small businesses can fulfill. Therefore, they must find capable subcontractors to help get the work done.
Large prime contractors are required to develop subcontracting plans on contracts of $650,000 for products and services, or $1,500,000 for construction of a public facility. These plans need to include goals for subcontracting to different types of certified small businesses including: small disadvantaged businesses (SDB), women-owned small businesses (WOSB), historically underutilized business zone (HUBZone) small businesses, and service-disabled veteran-owned small businesses (SDVOSB).
Becoming a subcontractor and selling your products or services to a prime takes dedication and hard work. Keys to success include: knowing your customer, knowing your competition, and knowing your capabilities.
- Knowing Your Customer: Get to know your customer—the prime contractor. Learn everything you can about each prime contractor that might offer some opportunity for you, including how they do business, what it needs, and what it doesn’t need.
- Knowing Your Capabilities: Decide whether your business and the prime are a possible match. Unless you can provide products or services that are an integral part of what the prime contractor needs, you will not be seen as a valuable member of the team. If your capabilities are compatible with what the prime needs, you are a potential fit. If not, move on to the next prime contractor.
- Knowing Your Competition: Gather as much intelligence as you can about your competitors, including the type of work they are doing for prime contractors, how much work they are getting, how they work with a particular prime, what they do best, etc. Determine whether you are competitively priced in the marketplace. Unless you know what your business’ true costs are and how your competitors are positioned, you cannot really control those costs and determine whether you are actually competitive.
Once you have a clear idea of your business’ infrastructure and goals, here are some good ways to find prime contractors:
- Contact government agencies that may benefit from your product: Agencies often maintain lists of their prime contractors, sometimes even posting them on the Internet.
- Look at your own industry’s resources: Here are some ways to find prime contractors (or help them find you) and develop relationships:
- Trade associations
- Business development organizations
- Industry conferences
- Trade shows such as SBTDC’s Marketplace coming up on May 27th
- Networking events and conferences
- Business associations and publications
- Online message boards and forums
- Become active on the Internet: Often contractors, agencies, and other entities post details about government subcontracts online, including current contract awards, sample contracts, subcontracting plans, contact information, and other valuable data. To build an Internet presence:
- Register in SAM and create an SBA profile
- Create a website
- Build your contact list: Sign up for social networking sites, such as LinkedIn, Facebook, Twitter, Teaming USA, and OPENForum.
Contact your local Procurement Technical Assistance Center Counselor: The NC PTAC can be a great resource not only in helping research primes in your selected industry, but also provide guidance on best strategies to market your business.