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What You Need to Know About the Basics of Subcontracting

If you aren’t actively involved in seeking out subcontracting work in the City of New York, you are leaving a ton of money and valuable experience on the table.

Last year, Mayor de Blasio announced the goal to award 30% of government contracts to M/WBEs by 2020. As New York City literally spends billions of dollars on goods and services each year, this could potentially be a huge windfall for M/WBEs. The competition is fierce so, if you haven’t yet been able to land yourself a government contract, then perhaps you might want to explore subcontracting.

I firmly believe that subcontracting should be a significant part of every MWBE’s l business’ plan to increase their revenue. Being a subcontractor to a company that is working on a government contract is an excellent way for you to learn the ropes and discover what you need to know about how to do business with the City of New York.

That said, subcontracting should be approached carefully. Here are some of the basic things you should consider before entering into a subcontracting agreement with a prime contractor on a government project:

Know the Types of Projects You Want to Work On

If you’re just getting into the world of government contracts, then you may not have put much thought yet into the type of projects that you want to work on.

You need to take the initiative and establish a small business subcontracting plan that identifies the projects that are a potentially good fit for your firm taking into consideration your firm’s resources and capacity.

Find Prime Contractors

Once you know exactly the kinds of contracts that you will be targeting, it’s time to look for prime contractors who have already landed them.

By doing the work of identifying the prime contractors in the City of New York who is already engaged in providing the services that you wish to offer, you will have the inside track to land subcontracting work. Instead of just hoping that work will come to you, you can start to actively search for subcontracting work.

There are tons of companies out there with government contracts who are delighted to work with M/WBEs as subcontractors. That said, it’s best to be picky about choosing the right partner company, as a mistake in this area could lead to disaster.

Consider Your Value Proposition

Before you start to find with prime contractors to work with, you need to know the exact value proposition that your business brings to the table. There are tons of M/WBEs out there, so what makes you different?

Consider the things that set small businesses apart such as accessibility to ownership, quick turnaround, timely reporting, technology, and customer service.

Establish Some Ground Rules

One of the things you realize when you start to land government contracts is that you are going to be dealing with a lot of rules and regulations. Similarly, when you’re invited to participate in a subcontracting relationship, it’s vital that you establish detailed ground rules that benefit everyone.

Create a written agreement outlining your responsibilities as a subcontractor and how and when you are going to be paid. You may want to exchange mutual non-disclosure agreements and figure out what the tone of communication will be between the two companies. Don’t leave everything up to the prime contractor. Instead, be actively involved in the procurement process as much as possible. You don’t want to be waiting for the prime contractor to give you projects; you want to be fully involved from beginning to end.

Subcontracting is a fantastic way to grow your business and gain experience with government contracts that will help you land your own in the future. If you want to learn more, we are holding the Basics of Subcontracting Workshop at the NYC Department of Small Business Services on October 31st. This is a completely free workshop that will walk you through how to start finding subcontracting work and what to do once you’ve landed it! These M/WBE-centric courses tend to fill up quickly, so it’s vital that you register to book your spot as soon as possible.

We look forward to helping you open up your small business to an entirely new stream of revenue!

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