Subcontracting has become a hot topic in the federal contracting arena, sparking discussions across the industry about its potential benefits and challenges. To provide deeper insight into this pivotal subject, we turned to an expert in the field, Eileen Kent, also known as the “Federal Sales Sherpa”. Eileen brings a wealth of knowledge and experience to the table, guiding companies through the intricacies of federal sales and subcontracting.
In this interview, she shares her invaluable perspectives to help businesses understand when and how to effectively use subcontracting as a strategic tool. Join us as we delve into her expert advice on navigating the complex landscape of government contracting.
Understanding Key Indicators for Subcontracting Decisions
Question: In your experience, what are the key indicators that suggest a company should start considering prime contractors for subcontracting to leverage their federal market presence?
Eileen: Working with a wide variety of companies, from products to services, I would have to say “that depends” on what you sell, how you distribute and deliver, and whether you have the bench strength in sales and proposal writing.
Being a subcontractor allows you to lean on the Prime to break the ice with the federal customers.
If you’re a manufacturer, you may work with dealers who re-sell your products or package them in kits with other products offering their ability to customize every order. If that’s the case, you need to consider finding experienced prime contractors who have contract vehicles like GSA Schedule so your products can be featured on GSAAdvantage and your prime contract holder will handle all the logistics, pricing and risk. There are other product-related contract vehicles like “JETS” the DLA uses to work with a handful of primes who will most likely need subcontractors to fill the orders, but will handle all the government requirements, paperwork, compliance and delivery logistics.
If you’re a service provider, you may be working with companies that look just like you but already have relationships inside the federal government with team members onsite delivering IT, Facility Maintenance, Janitorial, Medical, Security, etc. services already. Your advantage working with them is you offer the ability to fill gaps as a subject matter expert in an area or bench strength for the Primes’ contract expansion or modifications to staff a project.
Here’s where you have to ask yourself to make sense of it:
- How much money will you lose if you offer your products and services through a prime who is going to mark it up to the federal government?
- How much money will you save if you don’t have to hire government sales, back office, compliance, proposal writers, legal, project managers and delivery to win and manage every project?
- How much are you willing to let the Prime keep the relationship at the government level?
Standing Out as a Subcontractor
Question: Thanks for those insights. Many companies ask this question – how do I stand out amongst all the other subcontractors? What is your perspective on this.
Eileen: It takes time to build a trusting relationship with a Prime Contractor. If it’s a large business, they’re going to put you through the “meet with our small business liaison” and fill out some of their subcontracting forms. Large primes are mandated to perform a “good faith effort” to do business with smalls – but that doesn’t guarantee you will actually win business opportunities. Small Business Primes are open to talking to people willing to subcontract to them because it adds to their offerings and their bench strength. Plus, if you’re a large, and you need a small business prime for their certifications, you can really make them look good as long as they do a majority of the work on the contract.
The key to standing out to large or small Prime contractors is your willingness to bring them business through your relationships inside the federal government. So that means you need salespeople out there working the federal customers too. Don’t look for handouts of work from them; bring your hands full of real opportunities to bring to them. That’s the ideal subcontractor in their minds, someone willing to bring something to the table – instead of asking for scraps.
Another issue to consider is to discuss with your Primes that you “Strive to be Exceptional” and show them what makes your organization Exceptional. You see, the feds have a rating system, and the highest rating is Exceptional. Those Primes want those high ratings to win, and win and win again, and if you show them you “get” how important being an exceptional subcontractor could be to them, they may give you a shot. But you have to prove what makes you exceptional amongst the rest of their subcontractors.
Managing Relationships When Venturing into Priming
Question: Excellent points. What happens with the relationship if a company wants to venture out and prime or if the federal customer wants to award the company a contract “around” the prime?
Eileen: This is a tricky question. I would look at your teaming agreements and your non-disclosure agreements. Take a look at how exclusive is the relationship. For example, if you ask a Service-Disabled Veteran Owned Business with a VA/FSS/MAS Contract to carry your manufactured medical supplies on their contract vehicle, they may have put a clause in there that they are the only ones able to sell your products on GSA. Then, you can’t go around them. You must use them for every deal if the client wants to use a GSA schedule.
If you’re a service provider and someone wants to work with you, your relationship HAS to be loyal to the Prime and you need to bring this issue to the prime – for that particular agency where you’re working together. You need to work it out with the prime how to handle the customer’s request together. If you’re a service provider and you want to go after other agencies outside the agency where you’re working with the prime, sit down with the Prime and let them know your intentions. They need to know before you venture out or they’re going to take it as a betrayal and if you’re still onsite at an agency, you don’t want to lose your current contracts. This is how it’s done. You always want to keep your relationships with your Primes healthy.
Many people will tell horror stories about how their primes didn’t do a good job or didn’t pay them, as well as visa versa. You need to head every issue off the moment it arises. That’s what a good sub or teaming partner does in this business.
Dealing with Payment Delays as a Subcontractor
Question: Getting paid can often be a struggle as a sub. What payment timelines should subcontractors expect from primes, and how can they manage their finances during payment delays?
Eileen: Most Primes will pay you when they get paid. It can get sticky when the government holds their money back for some reason and in any federal sales situation, you need to always have finances on hand to hold you over during these dry periods. If you know they got paid and haven’t paid you, you could always talk to the Contracting Officer or Small Business Officer at the agency. But remember, that conversation could greatly hurt your relationship with the prime. It is an option. This is the biggest risk of subcontracting – not getting paid.
Final Thoughts: Hybrid Strategies for Success
Question: Makes sense. Any final thoughts on this topic?
Eileen: Personally, I believe every company should consider a hybrid approach. Have a sales team focused on a handful of agencies who buy what you sell and build relationships inside that agency. Whether you’re the prime or the sub, you want that agency asking for your people or your products. Between you and the agency, you’ll decide whether it makes sense to prime directly with the government agency this time or sub to a current prime to make it easy for them because a contract vehicle is already in place. So I would work the front lines talking to federal customers AND build subcontracting and teaming relationships with other primes, letting those primes know my approach up front so they are not shocked when we go up against one another now and then for the same contract.
Eileen’s insights provide a valuable roadmap for small businesses aiming to carve out a niche in government contracting. Her focus on the critical evaluation of when to pursue subcontracting roles underscores the need for a well-thought-out strategy, especially for those new to the federal market. We appreciate Eileen’s willingness to share her expertise and thank her for her dedication to supporting small businesses as they tackle the complexities of government contracting.
Eileen Kent, President of Custom Keynotes, LLC is known as the “Federal Sales Guide” who Builds Industry Intel & Customized Winning Federal Sales Action Plans for Contractors through her ‘Three-Step Program.’ Over 10,000 people and 350 companies have been trained since 2002.
iQuasar’s Government Contracting Consulting Team specializes in helping new and established businesses refine their subcontracting approaches, develop effective teaming strategies, and identify potential partners. Our seasoned experts guide companies through the complexities of subcontracting arrangements and help them build robust partnerships that enhance their capabilities in the government contracting space. Contact us for specialized support if your business wants to optimize its subcontracting practices or explore strategic alliances. Stay tuned for ongoing updates and professional advice from industry leaders.
