FedSubK Feature: Prime or Subcontractor? What to Know About Each Role
Updated: Jun 18, 2024
Embarking on the journey of Federal contracting can be overwhelming. FOMO (Fear of Missing Out) can push you into going after prime contract opportunities before your business may be ready for the litany of reporting and other administrative contractual requirements that must be completed during performance of the work. Being a subcontractor does not sound glamorous but, in the Federal marketplace, it can be a lucrative role without all the headaches and hassles of being a prime. Understanding the roles of prime contractors and subcontractors is essential for success in the complex Federal acquisition process.
Prime Contractor: The Responsible Company
When a federal agency contracts with a business to provide products and/or perform services to the Government, that entity is known as the “prime contractor” (or “Prime,” for short). Primes are the party ultimately responsible for the performance of all work under contract and management of the project budget, regardless of what entity (prime, subcontractor, or supplier) performs work as part of the Prime’s team. Being a prime contractor establishes direct privity of contract with the Government (FAR 9.104-1). This legal relationship distinguishes prime contractors in their direct engagement with federal agencies. Primes direct and control all engagements and communications with the Government client. This level of responsibility and control also results in:
- Increased Government scrutiny during performance.
- Increased administrative burden due to
- communications timelines,
- timely and accurate reporting requirements, and
- general compliance procedures for Federal contracts found in the Prime contract from the Federal Acquisition Regulation (FAR) and the agency’s FAR supplement (as applicable).
- Oversight responsibility and the requirement to flow down these same contract provisions and clauses to subcontractors and suppliers for compliance, when applicable.
- Subcontracting reporting (applicable to large businesses only).
Part of the reporting and compliance required by a Prime is covered by the Representations and Certifications your business completed as part of its System for Award Management (SAM.gov) registration. These would be (among others):
- Representation of business size by NAICS, and
- Executive Compensation.
Other reporting and compliance required by the Prime is dictated by clauses found in the contract. These would be (among others):
- Submissions of invoices.
- Whistleblower protections.
- Government property.
- Prohibitions on–
- Contracting for hardware, software, and services developed or provided by Kaspersky Lab and other covered entities,
- Contracting for certain telecommunications and video surveillance services or equipment,
- Certain internal confidentiality agreements or statements,
- Contracting with inverted domestic corporations,
- Use of ByteDance covered applications during performance (aka “No Tik Tok”),
- Segregated facilities,
- Banning text messaging while driving, and
- Certain foreign purchases.
- Reporting on first-tier subcontract awards, employment of veterans, and service employees.
- Limitations on subcontracting (applicable to small business primes).
- Making accelerated payments to small business subcontractors.
- Equal opportunity, to include veterans, workers with disabilities, and employee notification of rights.
- Employment eligibility verification.
- Minimum wage and Department of Labor wage requirements (e.g., Service Contract Labor Standards (SCLS) or Davis-Bacon and other Related Acts (DBRA) prevailing wages).
- Privacy training.
Subcontractor: The Team Player
Primes routinely collaborate with other entities and suppliers to enhance project capabilities. The Prime contracts with these entities, called “Subcontractors,” to provide a portion of the product and/or service required by the Government under the Prime’s contract. Subcontractors must remember that in this role they:
- Have no privity of contract with the Government under this relationship; only with the Prime. Prime contractors communicate and negotiate with the Government, while subcontractors communicate and negotiate with Primes.
- Should not directly engage the Government in any manner and all requests from the subcontractor should go through the Prime for review and discussion.
- Take their sole direction from the Prime, not the Government (Contracting Officer (CO or KO) or Contracting Officer’s Representative (COR)).
While Subcontractors may have reporting requirements that flow down to them under Federal contracts, that reporting is most often to the Prime contractor with few exceptions where reporting is done as part of the Subcontractor’s System for Award Management (SAM.gov) registration (i.e., Executive Compensation).
Being a subcontractor on a federal contract has definite benefits:
- Less reporting requirements (though compliance may still be required).
- Learning about the Federal contracting process through the Prime’s actions (i.e., client needs, communications with the Government, modifications and change order process, etc.).
- Gaining valuable project and past performance experience on a federal contract that you can use on future opportunities when you decide to quote or propose as a Prime yourself.
- Gaining valuable name recognition and earning capital to expand business opportunities in both the Federal and private sectors.
Primes and Subcontractors During the Proposal Process. It is crucial that Primes create and communicate a clear and streamlined proposal process to their subcontractors and suppliers to ensure the development of a viable and timely quote or offer meeting the Government’s performance requirements, price, and schedule needs. The Prime should clearly delineate roles in this process and establish a timeline for subcontractors and suppliers to provide personnel and price information early.
!!!A Word of Caution on “bait and switch” tactics!!!
What is it? When a Prime includes a desirable Subcontractor (or personnel) in a proposal for the purpose of winning the quote or offer then after winning the award, the Prime changes out Subcontractors (or personnel) for a different company (or individual). That's "bait and switch". The Government is getting wise to these tactics and has been adding language to classify Subcontractors as “Key Subcontractors” or their personnel as “Key Personnel” which requires the Prime to replace the subcontractors or personnel with companies or employees with equal or better experience, education, performance history, and skills. Put simply, don't do it (or you'll be remembered, and not in a good way).
Prime / Subcontractor Agreements.
Written agreements between the Prime and any subcontractors are important to ensure not only the Prime’s terms and conditions are met, but the required flowdown provisions and clauses from the Government are met by subcontractors at all tiers (or as indicated) under a federal contract. The requirement to comply for subcontractors is usually based on statute, type of work, types of employees, or dollar threshold of the subcontract agreement.
The Prime is typically responsible for drafting the agreement between the Prime and Subcontractor and it should contain, as a minimum,
- Identification of the Prime’s Federal contract, by number, order number (as applicable), and Federal agency.
- Scope of work or services that clearly defines the Subcontractor's role and scope of work on the contract.
- Terms related to deliverables, timelines, and compensation.
- Flow down provisions and clauses from the Federal contract.
- Compliance with prime contract requirements and how compliance is assured.
- Clear lines of communication between the parties to include the Prime’s communication of project needs and expectations to the Subcontractor.
- Define the roles and responsibilities of both parties during performance.
- Recordkeeping requirements and document control.
- Modifications and change order processes and pricing of the same.
- Resolution of disagreements, use of Alternative Dispute Resolution (ADR), and legal authority for disagreements.
FAR and agency provisions and clauses typically state at the end of the provision or clause language when the compliance or reporting requirement flows down to subcontractors, at what tier, and any instructions for the Prime for wording or language to be used or substituted in the flowdown.
Subcontractors must further flow down any Federal contract provision or clause that requires applicable at lower subcontract tiers. Agreements between first tier and lower-tier subcontractors are the responsibility of the parties in question, not the Prime. The first-tier subcontractor may also be responsible for upwards reporting and ensuring compliance of lower-tier subcontractors. This adds an administrative burden to the Subcontractor, but not near that required of the Prime.
Know Your Readiness.
Before diving in to win a Prime contract, be real and ask yourself–
- Is my company financially stable enough and has enough available capital that it can wait 30 or 60 days, or more, to get paid? Waiting for payments is not uncommon, unfortunately.
- Do you have the breadth of experience needed to perform successfully?
- Are you known or proven in your industry, particularly under the NAICS code that classifies the products and/or services you wish to sell to the Government?
- Do you have knowledge of the Federal marketplace for your industry or NAICS?
- Do you have existing relationships with agency personnel (i.e., buyers, program personnel, small business specialists, etc.)?
- What is the extent of our experience and successful performance on Federal contracts as a subcontractor?
- Does the company have the internal administrative infrastructure (i.e., resources, time, management, and operations structure) such that the offer, compliance, and reporting requirements of a Prime can be met timely?
- Can we meet any bonding requirements?
- Can we self-perform, or do we need a team, and what will that team look like?
- For bid/proposal preparation?
- For performance?
- For any specialized requirements?
- For administrative support?
- Has the Prime and its team performed together?
If you answer any of these questions in the negative, consider if proposing as a Prime on a Federal contract is the best avenue to participate in the opportunity. These questions merely expose gaps your business may have that need filled in order to participate as a Prime. Get those gaps filled before you propose!
Navigating Federal contracting, whether a prime or a subcontractor, is a business decision. Know before you jump in the deep end; starting in the shallow end is always a safe bet and, before long, you will be swimming with the big fishes. It is a time-consuming and complex business to report and comply with all the Federal Government’s requirements and that complexity grows every day (aka, look at the new cybersecurity rules forthcoming). Better understanding the roles of Primes and Subcontractors is a crucial first step to growing a lucrative and successful relationship with the Federal Government. Being realistic about the role that best fits your business now and as it grows is key for a successful Federal contracting journey.
#federalcontracting #subcontractor #prime #rolesincontracting
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FedSubK Feature: Be Seen! Why Your SBS Profile is So Important
UPDATED November 2025 to incorporate changes from the SBA Dynamic Small Business Search (DSBS) to the new SBA Small Business Search (SBS)
I’ve posted on LinkedIn a lot recently about ways to be seen as a little fish in the big pond that is the Federal marketplace. Every GovCon consultant has a take on the best entry points with agencies. My take is there is only one place small businesses MUST put their best foot forward to be quickly and easily seen by Federal buyers for potential opportunities and influence small business set-asides.
The Small Business Administration (SBA) Small Business Search (SBS) is THE PLACE you must be on your A-game.
The Small Business Search (SBS) is a database in which SBA houses information on the current pool of certificated small businesses. Presently, small businesses that do not have certifications or are self-certified, may also create a profile in this database. The SBS is used by contracting officers, small business specialists, large prime contractors, and other small businesses looking for teaming partners to find small businesses that can help meet Federal requirements and identify businesses that can help the Government (or a prime contractor) meet its small business goals. SBS is one of the first--and often only--sources used in market research by agencies to determine the numbers of small businesses able to provide products or services by North American Industry Classification System (NAICS) code.
You can see why this might be an important place to pay attention to, eh?
Businesses have forgotten about the SBS in the last few years because SAM.gov no longer sends small business registrants directly to SBS at the end of their registration to complete the profile like it used to. I HUGE bummer. Businesses now must wait for their SAM.gov registration to be activated, then they can establish an SBA SBS account, claim their entity record, and fill in their company profile in the SBS system. Federal buyers are looking for detailed information from SBS to use as part of their market research efforts.
SBS isn’t only for market research.
Even more importantly, the SBS shows Federal buyers the status of any pending certification applications for the purpose of determining whether you are eligible to compete for a set-aside action. For example, an Economically Disadvantaged Woman Owned Small Business (EDWOSB) can still submit an offer for an WOSB set-aside even with a pending application for certification showing in the SBS. Contracting Officers often use SBS as a source to confirm the socioeconomic certification status and 8(a) program participation along with SAM.gov.
While MySBA Certifications automatically sends socioeconomic certification status to SAM.gov and updates the requisite reps and certs to reflect the correct socioeconomic status, recently it has taken weeks for that migration to occur. WOSBs and EDWOSBs have reported not seeing their correct socioeconomic status reflected in their SAM entity record.
Businesses should always check their SAM entity record to ensure that the proper status is shown within a reasonable time after receipt of an active certification status; usually within 14 business days. If the record is not accurately reflected, you can contact answerdesk@sba.gov or the SBA socioeconomic program under which your business was certified for assistance. If a Contracting Officer says that your SAM record does not reflect the status claimed, ask the Contracting Officer to check SBS for the more accurate information because of these delays.
So now let’s talk about BEING SEEN in SBS and walk through each part of the registration.
Understanding how to maximize the fields in SBS is how you can make the best possible first impression so that Federal buyers want to learn more about YOU!
The Key Words
Often businesses pluck these from thin air and over-generalized based on what they think the Government wants to see. Key words need to reflect and incorporate aspects of your primary NAICS, secondary NAICS, and what you can provide under those NAICS. If you use key words that don’t reflect your primary NAICS, you’ll leave the Government scratching their head about you. They won’t understand the message you’re sending about your company. Be consistent and specific with key words while tying into your NAICS codes in order to leave the best impression. You have 500 characters -- use them wisely.
The Website
Be sure that you include the URL for any website you have. Make it be more than a landing page. It needs to tell your story. It needs to include information about your company, what you sell, past customers, and products or solutions you provide. And most of all, it must be polished. Scrub your site hard for formatting, typos, grammatical errors, etc. Acquisition personnel using the SBS will often quickly click on the site to see just how polished it is. When it looks good, they get the impression you know your stuff and pay attention to details.
The Capabilities Narrative
This is the written equivalent of your elevator pitch. This section should include all the things you’d include in that two-minute speech. Hit hard on what your company specialized in and its core product or service areas. Show the business’s focus and avoid being all over the map by overpromising on the breadth of work the business performs.
Near the end of the capabilities narrative, list any socioeconomic certifications Why not lead with it? Because that certification is only part of your business, and it alone does not get you interest from the Contracting Officer. End with that information so the Contracting Officer can easily see it in a quick query and get your business into their market research counts.
Lastly, identify any government contract vehicle or GSA Schedule your company may hold. If you can catch their eye that you have an existing GSA Schedule or your business participates in the 8(a) program, you’ll get counted and likely get a look in terms of the Contracting Officer wanting to know more. If they need to meet a socioeconomic goal, they can see quickly. You’re helping the Contracting Officer do their job. They LOVE that! (And made another great first impression!)
SBS now also includes a field to add a link to your online capabilities statement. Use it!
“Extras” You Should Never Skip
Performance History
I cannot say this enough…if you history doing work for any Government or quasi-Government entity at any level -- Federal, State, or Local level -- list them! Don’t play the “they’ll see that when I propose” game. Showing performance history—even if it is minimal or commercial and not Government--helps. How? It proves the viability of the business and the size and types of projects you’ve completed. Those goes a long way to determining eligibility of the business based on performance on same / similar work of a same / similar dollar value (“Rule of Two” stuff – you can read more about that here).
Review Your Profile
Go out to the SBS site and use the filters for your NAICS, business name, geographic location, and business types. Make sure your show up and see how your profile measures up to your competitors. Look at their records and see what they included that you haven’t. Use the good ideas of others, but don’t plagiarize. Contracting Officers will see that and that won’t look good for either of you.
Keep Evolving
Your SBS isn’t something that you can just set and forget either. Make reviewing your profile in SBS something you do when you renew your SAM.gov registration every year. If something major changes in your business focus, NAICS, or socioeconomic status, make associated changes in SBS.
What GovCon doesn't always talk about -- The SBS Influence
When doing market research and trying to determine if an acquisition should be set-aside for small businesses, the Government is not only counting about the numbers of small businesses that claim they can do the work under a NAICS code in SBS. They are analyzing your SBS profile to see if your business could be one of the "... two or more responsible small business concerns that are competitive in terms of fair market prices, quality, and delivery" and they have “…a reasonable expectation of obtaining an offer…” from you. (There’s that pesky “Rule of Two” again.)
In other words, based on what they see, could you submit a proposal likely to win? And how does a Contracting Officer determine that? Simply put... the your answers to everything we just covered.
Completing your profile helps tip the market research scales toward a small businesses set-aside and possibly a specific socioeconomic set-aside. If you're all over the map in your SBS narrative, the Government will not consider you viable eligible contractor towards that “Rule of Two” and could possible choose to go another way with their acquisition strategy, away from a small business set-aside. Or worse, they set it aside but remember your name from the market research as one of the businesses that didn’t make their initial market analysis cut.
Influence where you can! SBS is the place where you have a lot of influence!
Have I convinced you to get out there and create or update your SBS profile yet?
While the system is no longer got the word "Dynamic" in the title, don't forget its meaning. Life is dynamic, business is dynamic, and your SBS profile should still be dynamic, too. Get it completed ASAP. You can’t afford not to.
Remember again, SBS IS WHERE FEDERAL BUYERS GO TO FIND SMALL BUSINESSES and where other small businesses go to find teaming partners and subcontractors.
Get out there, GET NOTICED, BE SEEN, and STAY DYNAMIC!
(former title: FedSubK Feature: Be A Dynamic Small Business!)
Ask for the Meet and Greet. Make the Phone Calls.
I sat in on a session yesterday where another GovCon was talking about watching SAM for opportunities. But if you are doing that, you are going to be too late, unfortunately. Small businesses must start ahead of any opportunity announcement and connect with agency personnel early, before the opportunity is announced in order to be known and help shape future acquisition strategies. It got me thinking about my days as a Branch Chief and Chief of Contracting and the small businesses I know that are still flourishing today.
One particular company stands out. They were a new 8(a) firm that asked for a meet and greet. They had no federal work but showed a level of understanding about our mission that made an impression. While our acquisition strategies were in place already for the end of FY run of award, I told them I'd keep them in mind new projects crossed my desk. Every month, without fail, I would get a call or a quick drop in chat from this 8(a) to say hello and briefly inquiry about any possible upcoming projects. During one of the in-person chats about a year after our first meeting, our chief estimator popped his head in my office quickly to apologize for a few late government estimates. He said he was going crazy with end of FY and lack of staff. The 8(a) took the opportunity and said, "We can help with that." While it wasn't ideally the work the 8(a) was looking for, that simple pivot and flexibility, along with the relationship building done to that point, led to a small 8(a) sole source contract for cost estimating support. It was their first federal contract. That small contract quickly turned into a much larger 8(a) sole source contract for the same work that reached its max capacity 18 months earlier than anticipated. That led to 8(a) contracts for environmental the work the company ideally wanted, then graduation from the 8(a) program, and successfully competing on SB set-asides throughout the region and getting their own (successful) GSA Multiple Award Schedule contract.
Ask for the meet and greet. Make the phone calls. This former CO is here to tell you that acquisition personnel and SB Specialists EXPECT to hear from businesses. Large businesses aren't shy about calling (trust me). They may not be able to tell you much, but the relationship building and continual reminder that you know what they are looking for and can fill a niche--even when it's not your first choice of work--is KEY.
Small businesses must start ahead of any opportunity announcement and connect with agency personnel early, before the opportunity is announced in order to be known and help shape future acquisition strategies.
FedSubK Feature: What is Buying In?
"Buying in". Do you know what that is? Let's illustrate it with a little story...
Once upon a time an agency leader🤴 was looking around at things to make 🌟efficient.🌟 They got the idea that every agency should have the same widgets🔅 their agency had.
The agency leader🤴 called up a widget company👩🔧 and said, "We are interested in your widgets. 🔅What kind of discount can you give us?"
The widget company👩🔧 offers a discount 📉 because they know this agency🤴 not only buys for themselves but may buy for other agencies🫅🤴👸 where a highly trusted widget competitor👨🔧 presently has the work.
The widget company👩🔧 was "buying in" -- offering unrealistic discounts📉 that made the price unrealistically low not only for the current effort but also to influence the purchasing decisions on future buys. Then prices usually up 📈 again over time.
Depending on when "buying in" happens there could also be questions related to compliance with the Competition in Contracting Act (CICA) and possible other violations.
This is why agency announcements that management has made a deal for "$1 a license" and other such management interference is of concern. 🚨 Management plays the numbers game. I'm not saying numbers aren't important, but let's just say... there is a real reason why management typically does not hold contract signature authority. 😬😉
The Government is supposed to keep things fair and do its due diligence. But it's falling for the oldest trick in the book.
Risk, intent, compliance with statutory requirements, misunderstanding of requirements, and comparable market pricing must be evaluated when the Contracting Officer has reason to believe a proposed price is unrealistically low price. But are they?
If a contract isn't in place, there there is still a need to follow appropriate competition rules before a handshake deal. If a contract is already in place, there are things to consider when new discounts appear to be unrealistic including the risk of continued performance, depending on the type of product or service being purchased.
The Government gets a quick win to lock in a low rate, saving some money now. That's called the short game. Government buyers getting blurry-eyed over unbelieveably low prices and don't do the long-term analysis.
But I'll bet you a dollar the company is playing the long game. They are watching and waiting, getting to know your needs and asking loads of questions. "When do you use my widget most?" "Who buys the most widgets?" "When do you typically buy widgets?" And then as fast as they dropped the price, they raise it again on you when you can't afford to make a change -- like at an end of fiscal year. That's how they get locked in and receive perpetual contracts.
BTW...the fairy tale above is a true story. I've had new politicals and new leadership / commanders trot companies into my office saying "Company ABC here says they want to sell us "widgets" at a huge discount compared to what we're paying or others are paying now."
Well...okay then.
As a Contracting Officer, whether I could even begin to entertain that idea depends on several things. It's not an automatic "yes". You could replace "widgets" with just about any product or service and it's probably happened to a Contracting Officer somewhere. Especially as new Administrations come into Government.
The stories in the news that made me think -- "Huh, are they buying in?" are the Axios story "Anthropic wants to sell Claude to the Government for $1". (https://www.axios.com/pro/tech-policy/2025/08/05/ai-anthropic-government-sale-dollar) and FedScoop story "Federal agencies can buy ChatGPT for $1 through GSA deal" (https://fedscoop.com/openai-chatgpt-enterprise-federal-government-gsa-deal-general-services-administration-anthropic/).
My husband (also a retired Contracting Officer) and I look at each other often during the news now and, based on the reported discount or price alone, we know that company is likely "buying in". That's based on our combined 72 years of Fed experience and our Contracting Officer "Spidey sense" from having been around the block a few times. But these deals just the most recent in a series of deals GSA is making with companies since the new Administration came to town. OneGov is the program GSA is, in my former Contracting Officer opinion, using to tout savings under for the press releases. But it may come back later to be a big mistake. I hope I'm wrong.
Program/Project Managers and Contracting Officers AND the competition to these companies...LEARN about it and WATCH for it. It's on the rise.
(And don't get me started on having to argue with new politicals, leadership, and commanders about why I can't terminate a current contract and then turn around and give the same work to another contractor at their unrealistic lower price.🙄😱 That's a topic for another time.)
The practice of "buying in" is becoming more common now. Learn about it and how to spot it.
