How to Get Government Contracts

Part 5: Profiting as a Subcontractor

If you've tried to land government contracts and haven't succeeded, or don't feel you're quite ready yet, a great way to get started is by subcontracting.

Subcontracting lets you learn the ins and outs of government contracts from someone who's already familiar with the rules. And there's an incentive for the prime contractor to hire you. In many cases, the government requires the prime contractor to hire small business subs in order to win the contract.

There is a huge market available to you as a subcontractor for a government prime. For example, in FY 2001, about 3,700 Department of Defense prime contractors awarded $60.5 billion in subcontracts. Of that amount, $23.5 billion (or 38.8 percent) was awarded to small businesses.

Advantages of being a subcontractor

Dealing with a prime contractor is usually more straightforward, less complicated and less burdensome than dealing directly with the government.

You'll have fewer administrative requirements. And, with federal government contracts, the rules offer more protection to subs when it's time to be paid. Why? Because the subcontractors are required to get their money before the prime does, and the prime has to show proof of payment.

To find good subcontracting opportunities in your area, try using the tool on this website.

Effort and reward

It may seem like extra work, but don't let the requirements discourage you. Once you learn the system and know what to do, government contracts can be very good for your business.

"Lockheed used to have a saying," recalls Nelson Colvin. " 'If the weight of the paper [contract documentation] didn't equal the weight of the plane, it would never get off the ground.'

"You have to meet some strict rules, but there are also benefits. And there are always opportunities."

Take full advantage of your opportunities now!

More info: 5 Basic Steps for Getting Government Contracts

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