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What Is A Subcontractor: A Guide

Subcontractor

With the nation increasing its mobilization rate of government contractors to aid America’s recovery from the pandemic, more and more government projects are now up for grabs. And as the government contractors scrambled to stake their claim into the deep pool of available government contracts, the need for more competent and reliable subcontractors rose as well.

The Biden administration has recently announced its plans to encourage more government contractors to join the field by implementing policies to level the playing field further. And that is why there is no better time than now to enter the government contracting industry.A sub contractor, namely an individual who is hired for contract work for a larger project, is a specialist in their chosen field.

What is a subcontractor?

A subcontractor is a specialist. They offer their specialized skill set to prime contractors. When a primary contractor is faced with a complex government project that requires diverse skills that they do not possess, they outsource the talents of subcontractors to help them finish the job.

Subcontracting is common in the government contracting industry, especially in fields where the projects are usually complex such as healthcaredefenseconstruction, and ITPrimary contractors look for subcontracting companies who can complete projects to the highest standards.

What classifies someone as a subcontractor?

To become a successful subcontractor, you must possess these qualities that primary contractors look out for:

Reputable

When a primary contractor outsources subcontracting work, they look for specialists who have a proven track record in the field. They want a subcontractor who has repeatedly demonstrated their skills in completing related projects flawlessly.

Building a solid reputation in this industry is a difficult feat. But if your goal is to be one of the most sought-after subcontractors in this industry, you have to strive to do your best whenever an opportunity presents itself. Establish a portfolio with all your notable works and publish it somewhere your potential clients can easily see.

Skilled and Certified

Another way you can build your reputation is by getting your business properly licensed and certified in your specialization. Aside from having a solid portfolio of previous works, gaining certifications and licenses to prove you are an expert in your field can help boost your chances of winning a contract.

Detail-oriented

To thrive in the subcontracting industry, you have to pay attention to every detail. From scrutinizing your contract so you can properly assess your scope of work and responsibilities to employing strict quality control over your work—having a careful eye for detail is essential.

Commendable work ethic

Being a subcontractor who is challenging to work with will spell your downfall. As an outsourced talent, a contractor values someone they can synergize with. They want someone disciplined, committed to delivering their services on time, and skilled in communicating. Demonstrating a good work ethic to your contractor can encourage them to repeat their business with you.

Innovative

We live during these unpredictable times where everything can change in a snap. And to ensure that you last longer in this industry, you have to be someone who can quickly adapt to changes, recognize the new opportunities it presents, and innovate as you see fit.A general contractor hires the services of independent contractors to help them complete government contracts.

What is the difference between a contractor and a subcontractor?

The difference between a contractor and a subcontractor is pretty easy to define.

Contractor is a company directly working with a federal agency under a government contract. Their prime responsibility is to ensure that the project is fulfilled according to the standards specified in the contract. As the contractor, they are also in charge of outsourcing and overseeing subcontractors. A contractor is also known as a general contractor in the construction industry.

Meanwhile, a Subcontractor is a company who works under a contractor instead of the federal agency itself. In other fields, they can be known as independent contractors, but it is often used on individuals who offer their freelance services to a company in place of a full-time employee.A subcontractor offers their expert services on a contractual basis to primary contractors.

What is the role of a subcontractor?

The primary role of a subcontractor is to use their specialized skills to complete one specific area of the project.

For example, a federal agency has asked the contractor to renovate their office. To do so, a contractor can outsource the talents of several subcontractors to help them accomplish the task. They can hire subcontractors to lay out the electricals for the new building, design the interiors, rework the plumbing, and more.Companies who want to become subcontractors should keep these requirements into mind.

How to become a subcontractor?

Compared to becoming a full-fledged government contractor, the things you need to do to become a subcontractor are less restrictive.

1. Establish your presence in your chosen specialty 

Your specialty in your chosen field is what will set you apart from the competition. So as a subcontractor, you should aim to establish dominance in your field and accumulate experience from doing projects that are right up your alley. It does not matter whether the project is under a private contractor or government contractor.

2. Obtain licenses and certifications

To further solidify your position in the industry, you should try earning licenses and certifications related to your specialty. Make it a priority to invest in this area for your business. You can try to seek licensed professionals to join your team and train your existing employees to increase your company’s overall value.You should also ensure that your business follows the federal mandates. Know more about the tax law and your tax obligations by checking the Internal Revenue Service.

3. Learn about the subcontracting rules and policies

Once you have decided to enter the government subcontracting field, you must familiarize yourself with the federal rules and regulations that concern subcontractors, especially if you are a small business owner since the government has special provisions for business leaders like you.

For starters, you have to be well-versed in the Code of Federal Regulations and the Federal Acquisition Regulations. And if you are a small business owner, you can check out the most critical clauses you should take note of here.

4. Keep tabs on available subcontracting opportunities

Contractors publish notices and subcontracting opportunities on different platforms to seek competent and compatible subcontractors for their government projects. Fortunately, these platforms are easily accessible through the internet so that you can check for subcontracting opportunities daily.

Subcontracting Network (SubNet)

Managed by the Small Business Administration (SBA), SubNet is a free database where subcontractors can seek subcontracting opportunities in the form of solicitations, sources sought, and outreach events.

Directory of federal government prime contractors with subcontracting plans

Also handled by SBA, small business subcontractors can use this directory to see which prime contractors have a requirement to subcontract small businesses.

Subcontracting Directory for Small Businesses

The General Services Administration (GSA) also has its subcontracting directory for small business owners. Simply use the website’s built-in search tool to look up prime contractors seeking subcontractors.

Subcontracting Opportunity Directory

Handled by the Department of Defense, America’s largest federal agency, you can look up subcontracting opportunities under prime contractors who are currently involved in projects concerning DoD. The website also includes relevant links to help you track the federal government’s spending trends and to assist you in learning about its subcontracting programs.

5. Participate in networking events 

Subcontracting opportunities can come from anywhere, especially if you are well connected. As much as possible, attend networking events relevant to your chosen field of interest. Stay tuned for upcoming networking events and learn how you can network effectively with industry movers so you can make the most out of it.

6. Write your bid proposal

After you have exposed your business to a wide array of subcontracting opportunities, you should now start crafting a bid proposal. Having a carefully written proposal that is curated to suit the prime contractor’s subcontracting requirements will boost your chances of landing a contract with them.

Templates can help you get a feel of what a bid proposal should look like, but you shouldn’t rely on it entirely to avoid having a generic, bland, and forgettable proposal. Instead, look for ways to highlight the following things creatively:

  • Your business identity.
  • Your experience.
  • The gist of how you plan to use your expertise in their specific requirements.
  • Your competitive rates.

7. Be wary of your subcontracting contract

The contractor-subcontractor relationship works best if you have a well-written contract to mediate your deal. Here are some of the most overlooked clauses in a subcontracting agreement that you have to carefully review:

  • Compensation: subcontractor rates for the project, payment scheme, business expenses reimbursement allowances, and what will happen if the client is delayed in paying the contractor 
  • Flow-through: a clause in the contract that requires you to acknowledge the terms stated in the contract between the prime contractor and federal agency.
  • Indemnification: a clause in the contract that discusses your liabilities and obligation to compensate for damages.

8. Know different insurance policies

Before starting a project, you have to get yourself insured if your prime contractor will not cover it during the project duration. The Commercial General Liability (CGL) is an insurance plan that is most suitable for subcontractors.

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Written by Cielo Cinco

She is an advertising copywriter and content creator who writes about the federal government contracting industry and its key players who make waves across the GovCon field.

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