Government Contracting for Beginners: Why Subcontracting is Your Gateway to Success
- Katherine Gentic
- Aug 12
- 4 min read
For a company with no prior government experience, the idea of winning your first prime contract— that is, a direct contract with a federal agency—can feel like a monumental leap. While it’s certainly an achievable goal, attempting to jump into the deep end of the pool right away can expose your business to significant risk.
This is why, for many new entrants, a more strategic and successful path is to begin as a subcontractor. Subcontracting means you work for a larger, more established prime contractor to fulfill a specific portion of a larger government contract. It’s a lower-risk, higher-reward way to get started and build the foundation for future success.
The Problem with Priming Too Early: The "Responsible Source" Hurdle
When the government evaluates a bid for a prime contract, they must determine if the bidder is a "responsible source." This is a fundamental concept in federal acquisition and it's where aspiring contractors often face their biggest challenge. The government needs to be confident that you have the capability to perform the contract successfully. This isn't just about a good idea or a low price; it's about a proven track record.
For a new company, a lack of experience means you likely don't have the necessary mechanisms in place to handle more complex contract types, like higher-value, cost-reimbursement contracts. These contracts require a sophisticated accounting system, strong project management protocols, and a deep understanding of government regulations, particularly the Federal Acquisition Regulation (FAR). Without these systems, you run the risk of being deemed not a "responsible source," which disqualifies you from the bid entirely. To learn more about what it means to be a responsible source, check out our article here.
Additionally, a contractor's past performance is a factor in the evaluation process. While not typically the most important factor and though the government won't penalize you for a lack of past performance, a neutral score isn't very helpful when you're competing against established companies with a long history of successful contract execution. Building up a positive past performance record gradually by taking on smaller subcontract opportunities first gives the government confidence in your ability to deliver. Without it, you're at a significant disadvantage.
The Benefits of Starting with Subcontracting
Subcontracting addresses these challenges directly and strategically. It allows you to enter the government market from a position of strength, not desperation. Here’s how:
You Gain Past Performance: As a subcontractor, you perform a specific part of a larger government contract. Your successful performance builds a track record you can then use in future bids. You are building a history of working on a government project, which is invaluable.
You Don't Bite Off More Than You Can Chew: Prime contracts, especially larger ones, come with a vast Scope of Work (SOW) and significant administrative burdens. As a new company, you could easily get overwhelmed by the sheer size and complexity. Subcontracting allows you to focus on a smaller, more manageable part of the SOW that aligns with your core competencies.
You Get Easier-to-Manage Contracts: A prime contractor is more likely to give you a straightforward, fixed-price subcontract. This is a great way to learn the ropes. You'll be able to focus on delivering the work without the complex accounting requirements of a cost-reimbursement contract, which would be a heavy lift for a business just starting out in this space.
The Big Picture: Building Your Systems, One Step at a Time
Ultimately, the goal of starting as a subcontractor is to use each opportunity as a building block. You're not just executing a project; you're building your company's internal systems to handle government work.
As you successfully complete a subcontract, you'll:
Build a positive past performance record.
Gain an initial understanding of the FAR.
Develop relationships with prime contractors who can vouch for your work.
Gradually implement the robust accounting and project management systems needed for larger contracts.
By starting small, gaining experience, and building your systems gradually, you will become a more attractive and "responsible source" in the eyes of the government. When you are finally ready to bid for that first prime contract, you will have a solid foundation and a proven track record that makes you a credible and competitive choice.
Starting the subcontracting journey can be confusing, from finding the right prime partners to understanding the legalities of a subcontract agreement. Akiri Consulting specializes in helping businesses like yours navigate these initial steps. Whether you need help negotiating a teaming agreement, setting up the robust systems needed to be considered a responsible source, or developing a compliant budget for your first subcontract opportunity, our expert team can provide the guidance you need. Contact Akiri Consulting today for a free consultation and let us help you lay the groundwork for a successful and profitable future in government contracting.
