This chapter discusses subcontracting opportunities in federal contracting. It explains that subcontracting is often the best way for new businesses to get into federal contracting, as the big contracts typically go to larger, more established companies. Subcontracting allows new vendors to build relationships with existing prime contractors while learning the ropes of working with the federal government.

The chapter explains that a company’s contract with the government is referred to as the prime contract, while its contracts with suppliers are referred to as subcontracts. The Small Business Administration (SBA) helps promote subcontracting opportunities for small businesses by referring them to prime contractors. In fiscal year 2010, the Department of Defense (DoD) prime contractors awarded over $139.5 billion in subcontracts, with over 36% going to small businesses. Subcontracting also allows businesses to take advantage of contracts that are only available through prime contractors.

The chapter then discusses subcontracting plans, which are required for large businesses receiving contracts valued over $650,000 ($1.5 million for construction). These plans include a statement of the total amount of subcontracting planned, as well as percentage goals for awarding subcontracts to small businesses. The prime contractor is responsible for designating a small business liaison who works with subcontractors. If a prime contractor fails to submit an acceptable subcontracting plan, it becomes ineligible for the contract and may be assessed “liquidated damages”.

The chapter also explains that subcontracting agreements should be carefully reviewed before signing to ensure that the subcontractor understands and can comply with the terms and conditions. The government has no contractual relationship with subcontractors and any disputes must be settled with the prime contractor.

The chapter provides information on how to find subcontracting opportunities, including using the Electronic Subcontracting Reporting System (eSRS), contacting prime contractors directly, and using resources like the DoD Subcontracting Directory and the General Services Administration’s Subcontracting Directory.

Lastly, the chapter discusses the DoD Mentor-Protégé Program, which provides incentives to major contractors to help small disadvantaged businesses (SDBs) enhance their capabilities for performing DoD contracts. The mentor assists the protégé by sharing management expertise and technical skills. To qualify as a protégé, a firm must be a small disadvantaged business and must be certified by the SBA. The program requires a formal mentor-protégé agreement and DoD approval.

Overall, subcontracting opportunities can be a valuable way for small businesses to gain experience and build relationships in federal contracting. By working with prime contractors, small businesses can access larger contracts and expand their capabilities. The DoD Mentor-Protégé Program is an additional option for small disadvantaged businesses to receive assistance and mentorship from larger contractors.

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