Subcontracting To Snag Stimulus Dollars
For small business owners trying to find a way into the lucrative market for federal contracts, subcontracting can provide a back door.
With billions of extra federal dollars being offered though the economic stimulus package, many small business owners have set their sights on winning contracts directly from federal agencies. For those with no previous experience, this may be aiming too high.
“It can be a challenge for an inexperienced company to do business with the government,” says David I. Sonde, a managing partner with The Winvale Group LLC, a government-contracts consultancy.
By subcontracting, business owners can boost their profits and learn about the many requirements of government work without the requirement to meet all of them. At the same time, they can provide the prime contractor with expertise and resources they may lack.
When bidding on big contracts, large businesses must submit subcontracting plans. “They need small businesses to meet their subcontracting goals,” says Diana Dibble Kurcfeld, president of Design To Delivery Inc., a government-contracting consultancy firm.
To be sure, profit margins may be lower if you are a subcontractor rather than a prime contractor, and contracts can also fall through. But business owners who pick their partners carefully and do a good job can parlay the credibility they’ve built up into prime contracting roles as well as more collaboration in the future.
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RedHotFranchises on September 9th, 2009 1:15 am
Subcontracting may be a profitable way for a business to expand its capabilities and keep clients happy, but some companies can get into trouble by taking on too much. Success depends on circumstances such as mark-up, quality of the sub, clarity of the contract and scope of work.
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