What Are the Basics of Subcontracting
If you’re a minority or woman-owned small business and are looking to get into the world of government contracts, a great gateway can be to maneuver your way into subcontracting.
Every year, the City of New York has a subcontracting goal of 30% for M/WBEs. This means that there are millions of dollars on the table for businesses just like yours. You only need to know how to connect with companies that are looking to develop subcontracting partnerships.
Typically, prime contractors that are bidding on government projects do outreach to M/WBEs asking them for quotes for specific projects. They take your information, look for the lowest prices, put your quote into their bid, and submit it. While this kind of situation could potentially be an opportunity for your small business, in my experience, it doesn’t work.
Waiting around for someone else to contact your business looking for a subcontracting relationship just isn’t a good idea. There is too much competition out there. To land subcontracting contracts, you need to be more proactive about it, getting your name out there to maximize your opportunities.
Here are five essential tips you can use to land more subcontracting contracts:
Identify Projects that Could be a Good Fit
You need to know exactly what your small business’ capabilities are if you’re going to start reaching out to land subcontracting projects.
Take a look at your core company, core competencies, and capacity, then consider how a relationship might work where you add your strength to that of another company. By being strategic about how you could work with another company, you will be able to better target businesses and contacts that are compatible with your own. This will help you better see how you can combine your strengths to create a formidable presentation.
Develop Relationships
There is so much that you should do before you start exchanging quotes with a business. If you want to work with a company, you should start by developing a relationship with them.
I suggest several meetings where you talk about things like your respective core values, mission, reputation, and expectations. Once you come to an understanding that there is a good fit between your two companies, then it’s time to exchange non-disclosure agreements, not before.
Do a Background Check
Just because you get along well with an organization doesn’t mean that you shouldn’t also do your homework.
Before you sign on the dotted line, always do a background check on the other business (or whatever is appropriate in your industry). This is to confirm your good feelings about the company. It’s just common sense to make sure that the things they told you are, in fact, true!
Contribute Throughout the Bidding Process
Once you’ve come to a subcontracting agreement, the bidding process is entirely up to the prime contractor, right? Wrong.
I suggest that once you identify a project that is a good fit, you also contribute throughout the bidding process. This means reviewing RFPs and solicitation documents in detail, helping to the best of your ability.
All of the terms that you agree to with the prime contractor should be in writing before the bid is submitted. This is often called a Teaming Agreement, or a letter of intent. It should clearly speak to what your responsibilities will be if a contract is awarded.
Negotiate Terms
Some people wrongly think that the prime is always in the driver’s seat. Personally, I think this is why you need to build a relationship with the prime contractor. You aren’t merely in the passenger seat; you’re a partner in this endeavor.
I see building these kinds of relationships more as an opportunity to come to terms that are favorable to everyone. Even if you are working on landing your very first subcontracting job, don’t just accept a “take it or leave it” offer. Instead, try negotiating terms.
I realize that this is a lot to keep straight and there is much more I can say on the subject of subcontracting. That’s why, on March 20th, we are holding a completely free Basics of Subcontracting workshop at the NYC Department of Small Business Services from 10:00 AM to 12:00 PM. There, I will go into further details about all the things that you need to know. These workshops tend to fill up very quickly, so sign up as soon as you can!
It’s time to start growing your small business through subcontracting!
