Subcontracting could be your starting point into the government market

When considering how to enter the government marketplace, most business people first think about doing business directly with federal, state or local government agencies.

Contracting directly with a government entity involves many steps, and likely involves the requirement that you have years of established experience.  In fact, there are many major considerations for doing government business as a prime contractor, including:

• Thorough knowledge of all applicable procurement regulations and laws.
• Registration in numerous vendor databases and keeping them up-to-date.
• Comprehensive market research to identify upcoming work.
• Skills necessary to analyze government solicitations, and then prepare detailed and responsive offers.
• Ability to secure bid, performance and payment bonds, if required.
• Ability to finance what may be a multi-million dollar job for at least 60-90 days until the first payment arrives.
• Established relationships with agency, including buyers and end-users.
• Track record of relevant experience.

If your business lacks the wherewithal to support all this, you may want to consider an alternative.

The Alternative to Doing Business Directly with the Government

For less experienced and smaller businesses, there may be a simpler, faster, and less burdensome way to break into the government market — subcontracting.  The subcontracting route allows a company to do business with the government indirectly — through a prime contractor — on smaller pieces of work and involving fewer requirements.  A subcontractor is answerable to a prime contractor, not the government, and the prime contractor is held responsible by the government for overall work performance.

Prime contractors are responsible for meeting all government contracting requirements.  Primes must be able to finance the job, bond the job, and complete the job on schedule.

Primes also are held accountable for meeting any socio-economic small business goals associated with the contract.  Because of this requirement, prime contractors working on government contracts are always looking for talented small businesses to meet their needs.  For federal contracting, this involves small businesses that are owned and controlled by women, minorities and other disadvantaged groups, and veterans, including service disabled veterans.  Small businesses located in historically underutilized business zones (HUBZones) also are preferred by prime contractors.  Individual state and local governments also may have preference programs involving particular small business categories.

Relationships always matter, and relationships with prime contractors are no exception.  Small firms seeking to do business with a large prime must develop a strategy to introduce themselves and inspire the large firm to award them a small job in order to establish a reputation.  Most small firms who have satisfactorily performed work for a government prime contractor report that they have received repeat business.

Preparing To Be a Subcontractor

So, what are the starting points for pursuing the subcontracting path?  Here are a few suggestions:

1. Gain at least a general knowledge of the government marketplace.
2. Identify any areas of the government market where you have particular insights.
3. Look for work areas where you may fulfill a specialty requirement or a niche.
4. Familiarize yourself with the government’s various small business preference programs and how you can qualify.
5. Create and polish a presentation about your firm’s capabilities and strengths.
6. Pitch your credentials to prime contractors.

The Georgia Tech Procurement Assistance Center (GTPAC) can help you with most of these steps.  By attending GTPAC classes regularly, you’ll learn lots of details about the government market, how it works, and who the players are.  We can identify all the small business preference programs and how you might qualify.  GTPAC also can provide you with templates for presenting your experience and expertise.  We also can identify successful government prime contractors and trade shows where you can meet them.

Help That’s Available

If subcontracting is the route for you, and you want to receive GTPAC’s assistance, we suggest you take the following steps:

1. Attend our “Introduction to Government Contracting” class or our “Fundamentals to Working with the Government” briefing. By attending either one, you’ll learn the essentials of the government marketplace.  Sign up for these at http://gtpac.ecenterdirect.com/Conferences.action.
2. Sign-up and become a GTPAC client. You’ll learn how to do this by attending either of the seminars listed in step #1.
3. Attend our class entitled “Subcontracting with Large Prime Contractors.” You’ll gain insights into the various types of partnering arrangements possible in government contracting and how to best position yourself.
4. Make a commitment to continuous learning. Even subcontracting requires keeping yourself up-to-date with developments in the government marketplace.  Attend GTPAC classes regularly, and consider professional education such as the courses available through The Contracting Education Academy at Georgia Tech.
5. Request a template from a GTPAC Counselor for putting together a “capabilities statement” on your company. Use this as a way for putting together an impressive presentation of your credentials.  While you’re at it, ask for an “elevator speech” template so you can practice how to make an impressive introductory statement about yourself.
6. Learn about small business preferences that may apply to you, by either attending periodic briefings GTPAC puts on about this subject or by attending instructional workshops conducted by the Small Business Administration and by state and local governments.  Once you identify your potential qualifications, apply for appropriate certifications.  GTPAC will not prepare certification applications, but our Counselors will be glad to offer you advice and counsel along the way.
7. Stay alert to upcoming government-sponsored expos, trade shows, and other forums where you can meet and impress prime contractors. An ideal way to learn about such events is by regularly visiting the GTPAC website; our home page lists many upcoming government vendor events.
8. Familiarize yourself with government small business specialists. These officials are housed inside each federal agency’s major offices, and there are many small business advocates with state and local government units, too.  If a small business specialist is impressed with your capabilities, chances are they can arrange for a presentation of your credentials to prime contractors.  You can learn more about small business specialists, their role, and how to identify them by clicking here.
9. Research who’s winning government contracts. You can find tips for doing this at: http://gtpac.org/2010/06/three-tips-for-researching-contract-awardees-and-probable-bidders.  Also, you’ll want to obtain lists of government prime contractors to contact.  Each month, GTPAC compiles a list of all Georgia businesses that have been awarded federal contracts, and we publish various other government contract lists on our web site.  (For example, details on the largest 2011 federal awardees appears here.) These are the the businesses you want to target for subcontracting possibilities.

GTPAC can help you become a successful government subcontractor.  You may find that subcontracting is just the spot you want in the overall government marketplace.  Or, you may find that subcontracting represents the “foot in the door” to moving on to prime contracting with the government.

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