When I first entered the world of government contracting in the 1990s, my understanding of prime and subcontractor relationships was overly simplistic. Primes were the “big guys,” responsible for bidding and winning contracts, while subs were the “little guys” brought in to help meet MWBE (Minority- and Women-Owned Business Enterprise) goals. This dynamic often felt transactional primes reached out because they had to, not because they wanted to, and it frequently led to resentment and mistrust.
In those early days, I learned hard lessons. There was no real partnership—just an exercise in checking boxes—and it often resulted in poor outcomes for everyone involved. Worse, I didn’t fully understand the risks of working with primes who weren’t the right fit. Payment delays, compliance issues, and misaligned expectations were all-too-common challenges that I faced.
These experiences taught me the importance of due diligence and informed decision-making in selecting the right prime contractors to work with. Today, I approach these relationships with a clear focus on risk mitigation, building trust, and ensuring that both parties succeed.
The Power of Mastering Prime-Subcontractor Relationships
What I didn’t realize back then is that mastering the intricacies of prime and subcontractor relationships can open doors to incredible opportunities. These relationships are not just about compliance or meeting MWBE goals—they’re about creating pathways to access billions of dollars in government contracts.
By understanding how to build smarter partnerships, you position your business as a valuable player in the government contracting ecosystem. This approach has been the cornerstone of how JKA operates today. By focusing on strategic partnerships, we’ve been able to enter new markets, work on larger projects, and build the necessary experience to secure major contracts with government agencies and prime contractors.
The same opportunity exists for you. With the right strategies, you can transform your small business into a trusted partner capable of competing for—and winning—larger contracts.
The Importance of Due Diligence
One of the biggest lessons I’ve learned is the need to thoroughly vet potential prime contractors before entering into any agreement. Just because a prime reaches out with an opportunity doesn’t mean it’s the right one for your business.
Due diligence starts with understanding the prime’s track record. Are they known for paying their subcontractors on time? Do they have a history of meeting compliance requirements? Have they worked successfully with MWBEs in the past? These are critical questions to ask before committing to a partnership.
A prime contractor’s reputation can often predict your experience working with them. Researching their payment history, reviewing references, and speaking with other subcontractors who’ve worked with them can provide invaluable insights.
Avoiding Risk in Prime-Subcontractor Relationships
Risk management is a cornerstone of any successful subcontractor-prime relationship. Here are key steps you can take to protect your business:
- Understand the Contract Terms: Carefully review the contract to ensure that payment schedules, deliverables, and roles are clearly defined. Ambiguities in these areas can lead to disputes down the road.
- Document Everything: Keep detailed records of communications, invoices, and work performed. This documentation can protect you if disputes arise and is often required for compliance audits.
- Negotiate Payment Terms: Advocate for fair payment terms that align with your cash flow needs. For example, avoid contracts where payment is contingent on the prime being paid by the agency—a practice known as “pay-when-paid.”
- Ensure Compliance: Verify that the prime contractor has a solid understanding of and commitment to meeting all compliance requirements. Noncompliance can result in penalties that impact both the prime and their subs.
- Evaluate Risk on the Project: Consider whether the scope of work and timeline are realistic. Be wary of primes that take on overly ambitious projects with tight margins or unclear plans.
Getting Paid: Protecting Your Bottom Line
One of the biggest risks for subcontractors is not getting paid on time—or at all. Late payments can create serious cash flow challenges for small businesses. To mitigate this risk:
- Establish Clear Payment Schedules: Ensure the contract outlines when and how payments will be made, including deadlines for submitting invoices.
- Use Progress Payments: For long-term projects, negotiate progress payments tied to specific milestones rather than waiting for a single payment at the end.
- Monitor Payment Terms: Stay proactive in tracking when payments are due and follow up promptly if there are delays.
- Leverage Lien Rights: In some cases, subcontractors can file liens to secure payment, but this should be a last resort and done with legal guidance.
Building Smarter Partnerships
Moving beyond the transactional nature of traditional prime-subcontractor relationships requires a mindset shift. Rather than waiting for opportunities to come to you, focus on building strategic partnerships with primes who value collaboration and trust.
One of the most significant shifts in my own business came when I started saying no to random requests for quotes and instead focused on aligning myself with prime contractors who shared my values. By positioning myself as a trusted resource—someone who could help primes meet supplier diversity goals while bringing expertise and innovation to the table—I built relationships that benefited both parties.
This strategic approach even allowed me to take on prime roles in certain projects, leveraging my team’s experience and past performance to lead engagements.
Learn More About Smarter Partnerships
Prime and subcontractor relationships are about more than meeting MWBE goals—they’re about collaboration, trust, and shared success. By doing your due diligence, mitigating risks, and ensuring you get paid, you can turn these relationships into powerful opportunities for growth.
If you’re ready to learn more about navigating these partnerships, join us for our Contract Management Series with the NYC Department of Small Business Services. Click here for information about upcoming workshops that will help you build smarter, more effective partnerships.
Mastering this process can open the door to new markets, larger projects, and billions of dollars in government contracts. Don’t let risk or mistrust hold you back—equip yourself with the knowledge and strategies you need to thrive.
