Prime Contracting Vs. Subcontracting

Knowing the benefits of being a prime contracting and a subcontractor is essential for small business owners. Often times there is speculation around knowing when to be a prime contractor and subcontractor when considering a bid on a government contract. Though it may seem clear when to prime and when to sub, there are cases when your business could qualify for each role.

Your business should be a prime contractor when:

  1. Your business has the past performance that supports the scope of the project. It is essential for your business to have the experience and the capacity to meet the standards of the contract.
  2. Your business has adequate resources to deliver the proposal and take full responsibility to perform the tasks that required for the contract.
  3. You’re confident that you and the subcontractor can win. The prime contractor must have foresight in the RFP process and select the best subcontractor that will compliment their business to the best of their abilities.

Your business should be a subcontractor when:

  1. Your small business is newly established, or your business is breaking into a new market. Businesses that fall into either category may lack the past performance that is necessary to show that your business has the experience to perform the tasks required for the contract.
  2. Your business only can offer a small portion of the total contract. Small businesses should not be discouraged by this. This affords subcontractors the opportunity to be on multiple contracts with other prime contractors.
  3. You are aware of a competitor, who has more past performance for that contract, is bidding as a prime contractor. Instead of taking the risk of losing as a prime, you could team with your competitor as a subcontractor. It’s more common than you think.