North Dakota Procurement Technical Assistance Center

A resource for assisting North Dakota businesses in obtaining federal, state, and local government contracts.

December 2020: Money Can Be Found

Subcontracting. Really… who wants to do that? Most want a government contractor. But it’s important to remember that a subcontract is still a perfectly viable contract and option for business owners. In fact, sometimes it’s the best option for small businesses.

First, let’s go over the basics of contracting and subcontracting. A prime contractor works directly with the government agency. The prime contractor is responsible for the subcontractors. A subcontract is a company that works for the prime contractor and does not deal directly with the government agency. There are thousands of companies that only subcontract; they never are a prime contractor.

Some government contracts require a large prime contractor to subcontract to small businesses. In some cases, the prime contractor can be required to create a small business subcontracting plan that states how they will find and hire these businesses. This subcontracting plan creates opportunity for small businesses and provides them with the ability to expand their market, grow their business, hire more employees, and increase their revenue.

Federal government agencies are not keen on contracting with a brand-new company or companies with no experience. Therefore, starting with a subcontract is an excellent way for a business to enter the government sector and build their resume of work. Subcontracting is great for niche companies as well; their specialized product or services can be used in one small segment of a contract. The U.S. General Service Administration (GSA) allows subcontracting and their website states, “Subcontracting allows small businesses to sell to the government by partnering with a business that is already on schedule.”  Translation… less work for a subcontractor.

Subcontracting opportunities are always available, one just needs to take the time to search for them. Beth White, Iowa PTAC, provides ideas on finding subcontracts in this post. Other available resources are the GSA’s Subcontracting Directory (you must contract the prime contractor directly) and the GSA’s eLibrary to find potential prime business contractors. The Department of Defense’s Office of Small Business Programs provides subcontracting opportunity sites along with a list of some their large prime contractors.

What does it take to be a subcontractor? You need to have your company contract ready. Contract ready means your registrations are current and actuate. GSA provides companies, also referred to as vendors, tips on being a subcontractor. And this article by Nancy Byerly also provides tips on getting your company ready for subcontracting.

As always, if you are not sure where to start or how to get organized, connect with the North Dakota Procurement Technical Assistance Center (ND PTAC). Our services are at no cost to businesses registered in the state of North Dakota; just register to schedule an appointment.