Subcontracting and JV Teaming: A Good Place to Start | Episode 19

Very often the quickest way to break into the government contracting market and gain some history with the federal government is as a subcontractor or in a joint venture (“JV”) teaming arrangement with a more experienced contractor.

In this episode of FedBiz’5 we are hosting Anthony D’Attore from FedBiz Access to discuss subcontracting and joint venture teaming as a good place to start in government, especially to build a record of successful performance.

In a subcontracting arrangement, the prime contractor is the party who gets awarded the contract and may utilize subcontractors to help fulfill the contract requirements. Often the prime contractor includes the subcontracting parties in the response to the solicitation, especially when certain set-aside categories must be included in the contract. 

The subcontractor has a responsibility directly to the prime contractor, and the prime contractor has the direct responsibility to the federal government agency that they are working for.

For most small businesses, subcontracting is a great way to begin to grow their government contracting experience and build past performance. The subcontractor also gains valuable experience while avoiding the administrative overhead costs and resources necessary to manage the execution of large contracts.

In a JV teaming arrangement, two companies come together to present a stronger front for one solicitation. The parties typically form a JV company, and both are responsible to the government agency for the contract fulfillment. The parties bid on the solicitation as one entity. Therefore, the parties need to agree ahead of time on how to manage the dispersion of work, and who's responsible for what.

Under a JV teaming arrangement, the parties pre-negotiate their terms of working together and jointly prepare the solicitation proposal. 

Under a subcontracting arrangement, the prime typically dictates the statement of work, pricing, terms, etc. to the subcontractor. Therefore, it is important for the subcontractor to negotiate the subcontracting terms prior to the contract award while it may have better leverage on the prime contractor. This is because subcontractor’s skills or set-aside can help the prime contractor win the award.

The best way for a small business to get into subcontracting is to identify from historical and expiring contracts the commercial companies that have won contract awards in their industry. They need to do their homework in a market research system like the Market Intel Database to find out who's been doing the work, what part of their larger contract can they help them with, and what are new opportunities on the horizon.

Subcontracting and JV teaming opportunities are primarily prevalent in construction, facilities management, staffing, and IT contracts. Although any contract proposal can be submitted under these arrangements. 

In addition, larger contractors that bid on large scale proposals that exceeds a certain dollar amount must include a subcontracting plan that includes certified vendors across the set-aside categories.

By leveraging relationships in subcontracting and JV teaming, a business can accelerate their path in government contracting by gaining contract experience and building a record of performance.

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Transcript

Subcontracting and JV Teaming: A Good First Step-FedBiz5_Episode 19

Jesse Sherr  0:06  

My name is Jesse, and I work with small businesses in the government marketplace. 

Jesse Sherr  0:10  

You're listening to FedBiz'5, where you get informed, get connected, and get results on everything government contracting. 

Jesse Sherr  0:19  

Hello, and welcome to another episode of FedBiz'5. Be sure to tune into our previous podcasts, wherever podcasts are heard. 

Jesse Sherr  0:27  

Again, we are welcoming back Anthony D'Attore.

Anthony D'Attore  0:31  

Thanks. 

Jesse Sherr  0:31  

Great to have you back Anthony. How are you?

Anthony D'Attore  0:33  

Good, thank you. Nice to be here.

Jesse Sherr  0:35  

Alright, so Anthony last week we talked about open solicitations and some of the benefits and challenges there. So to continue, what else can a business do to enter the federal market?

Anthony D'Attore  0:50  

Well, there's a few different tracks that one can follow, and they sort of run parallel. One of them is the solicitation path, which we've talked about. 

Anthony D'Attore  1:00  

Another one would be the subcontracting path. Very often the quickest way to break into the federal market and to gain some history with the federal government is as a subcontractor. 

Anthony D'Attore  1:21  

Now, there's also teaming and subcontracting. Now, they're a little bit different. 

Jesse Sherr  1:28  

Okay, so what makes them different?

Anthony D'Attore  1:30  

In a subcontracting arrangement, the prime, there's the prime and the sub, the prime contractor is the one who gets the contract and then they take on a subcontractor. And if they're going after a solicitation, they have to know who that subcontractor is when they put in their bid for the solicitation. So, the subcontractor has a responsibility directly to the prime, the Prime has a direct responsibility to the federal government agency that they're working for.

Anthony D'Attore  1:58  

In a teaming arrangement, that's when two companies come together to present a stronger front. Right, and they register together. It's like a separate entity. 

Anthony D'Attore  2:11  

Now in that arrangement, as far as responsibility goes, they have an equal responsibility to the federal agency that they're working for. So, that's the difference between those two.

Anthony D'Attore  2:23  

Another track that you can go through, like I was saying, is subcontracting. And the way to do that is to identify who are the companies, the commercial companies, that are getting these projects now? 

Anthony D'Attore  2:35  

Who's doing the work? The primary work for what it is that you do? Or, if they're getting these larger contracts? What part of that larger contract can you take advantage of?

Anthony D'Attore  2:46  

Now, when you're looking for primes, very often it's the same tendencies that you would use if you were going directly to a federal agency and trying to present your company to them, which is something else we'll talk about sometime. But what one would do is go to that company's website, see if there's a place to register to do business with them, or register yourself as a subcontractor. That's really prevalent in construction companies, IT companies, you know, your larger contracts. But really any industry can subcontract. 

Anthony D'Attore  3:20  

If a contract exceeds a certain dollar amount, then if a larger company is going after it, they have to include a subcontracting piece. So getting in there early, getting that company to, you know, starting to establish a relationship with that company, is a good way to kind of walk you down that path a little bit quicker. Very often it's the most direct way for you to break into the federal market.

Jesse Sherr  3:44  

Fantastic. Can you tell me a little bit more about the teaming up?

Anthony D'Attore  3:49  

The teaming arrangement is pretty formal. It's a legal contract between these two companies, and that's what makes it a little bit more challenging to do teaming because it has to all be agreed on ahead of time. What the dispersion of work is, and who's responsible for what? 

Anthony D'Attore  4:12  

So, they actually register as a separate entity. So, you have company X and Company Y. And they realized, while we do kind of the same things, or we have different parts of the same sort of service. If we teamed, we could go after larger contracts, but they would have to register as a teaming partner. 

Anthony D'Attore  4:33  

You know, like that new teaming arrangement would have to get its own CAGE code, DUNS number, or I guess we're not using DUNS anymore, but CAGE code and be able to present themselves as a separate entity from each of the individual companies. So, it's a little bit more challenging from that point of view. It is, if you can find those companies, you can then arrange those teaming arrangements. It does provide a broader front for your company so that you can take on more work.

Jesse Sherr  5:07  

Wonderful. It sounds to me like it's definitely beneficial, but you know be cautious.

Anthony D'Attore  5:12  

Right? And that's a good point. And you should do that as a subcontractor to. You want to make sure of that? I mean I've heard stories from companies where they have, you know, horror stories about it where not being diligent in the front end or not clearly defining what the split is. You know, how much work are you doing? How much work are they doing? 

Anthony D'Attore  5:33  

I mean, there are some parameters to that, that are set by the government. You know, as a subcontractor, you can only do X percentage of work, but you know, it would not be unheard of for companies to sort of take advantage of each other. So yeah, you want to have something written. You want to have something that you can fall back on in case that workload doesn't work out quite the way you thought it was going to

Jesse Sherr  5:56  

Excellent information. We do appreciate it. I think that's going to conclude this week's podcast. 

Jesse Sherr  6:04  

Anthony, thank you so much for coming on. As usual, we appreciate your knowledge and information that you're willing, so willing to share with our listeners. Appreciate you coming on.

Anthony D'Attore  6:16  

Alright. Thanks, Jesse. Good to talk to you.

Jesse Sherr  6:19  

This concludes this week's episode of FedBiz'5, where you get informed, get connected and get results. 

Jesse Sherr  6:28  

Today's podcast is sponsored by FedBiz Access. Government contracting made simple.

Jesse Sherr  6:33  

Visit them at FedBizAccess.com or contact them at 888-299-4498.