How to Make $10M Federal Subcontracting | Business Development Roadmap
Feb 23, 2023
Winning a prime contract with a federal agency can be hard if you're new to the federal government market.
Fortunately, subcontracting offers a lucrative path for many small businesses.
Remember there are 3 Paths to Federal Revenue as a government contractor.
If you are just getting established or if you just don't want to be a prime, you can still build a $10 million revenue stream by repeatedly subcontracting on existing federal contracts.
Subcontracting on a contract that is already awarded and managed by a prime contractor is a faster and easier path to federal revenue.
Subcontracting by the Numbers
As the image shows, your company can subcontract under another small business, or you can subcontract for a large prime contractor.
Either way, the other company has the federal contract – you are just on their team.
Subcontracting is right for you, if:
- you want to develop experience and build performance history
- you don't want the bureaucratic responsibilities required to manage a government contract
Prime contractors with awarded contracts frequently need specialized subcontractors and add FTEs to a project as often, and as long as necessary, to fulfil the government's needs and meet their deadlines.
- IDENTIFY 10 potential teaming partners to build strategic relationships with
- GOAL: To secure 4 subcontracting opportunities per year per teaming partner (total = 40 opportunities)
- Example for tech services company (double annual rate = annual rate)
- Average rate of $100 hours FTE = $200,000 annual
- 5 FTE = $1M; 50 FTE = $10M
- Spread across 5 years = $2M per year
- Faster if your firm is larger
- Opportunity: 8a STARS III contract and subcontracting partners ($50B contract vehicle with 1000 participating companies) The 8(a) STARS III GWAC is a small business set-aside contract that provides flexible access to customized IT solutions from a large, diverse pool of 8(a) industry partners. Learn more here 8(a) STARS III Contract Overview
ROADMAP for SMALL BUSINESS SUBCONTRACTING
To succeed in subcontracting, you must hyper-focus on your strongest core competency and be able to communicate this expertise clearly.
- Determine your business maturity level
- Determine your core competency
- Primary Agency: Choose only one agency to target
- Primary Location: Determine where you want to grow geographically
- Contract Vehicles: Determine which vehicles align to your target agency and core competency
- Capability Statement: Create a fresh statement highlighting your contribution to a partner’s team
- Call Plan Template: Follow a structured plan to standardize your call objectives and questions
- SB POCs: Research ideal small business partners
- Large POCs: Research ideal large business partners
- Industry Day: Attend industry days at target agency to learn and network
- Intro Calls: Schedule intro calls to begin new relationships
- Regular Meetings: Schedule recurring meetings every 2-3 weeks as appropriate
- General NDA: Once you start conversations with another firm, ask for a signed NDA
- Supplier Portals: Register in large prime and agency internal vendor databases
- Identify Ops: Bring opportunities to discuss with teaming partners
- Open Reqs: Research open positions with teaming partners to see where you might fit on their current contracts
- Contract Vehicles: Get on teaming partners contract vehicles
- Reusable Content: Create reusable content for proposals