Our latest video and article provide answers to a few questions your organization should answer if you are interested in moving to a prime contractor role. This change will affect your business operations, so your staff should consider it and plan for the future. From proposal development to subcontract management, your organization may experience some growing pains.
Are you thinking of grabbing a bigger slice of the pie and moving from a subcontract role to a prime contract role? That's the goal for a business to grow and steadily gain more work in different functional areas. However, there are some things a company should prepare for if you are considering priming.
Here are some questions your company should answer during your analysis.
Question #1 - Do I Need to Plan for More Staff?
It depends. You may not need to hire more staff if your existing staff can handle a wider bandwidth. However, subcontract management requires more steps across the organization. Some organizations have their contract staff perform dual hat roles as a contract administrator and a subcontract administrator.
However, depending on the number of subcontractors, your number of programs, and your proposal pipeline, their graphs may start to weaken. Think about it this way. Every prime contract change will likely cause an administrative change to the applicable subcontracts.
Every data call on your prime contract will require a data pull or input from your subcontractors relative to financials, deliverables, human resources-related data, and project control analysis.
Question #2 - How Does This Affect my Proposal Pipeline if I Want to be a Prime Contractor?
If you've typically been a subcontractor, now you'll deal directly with the U.S. government and do all the heavy lifting on the proposal. Depending on the type of product or service, complexity, and type of contract, it may be more time-consuming and laborious. If you're engaging subcontractors, time should be dedicated to negotiating the prices and rates as well as negotiating any contractual issues. As a prime, you should clearly communicate with your subcontractors about what you need from them with respect to the effort and not assume your point of contact is handling everything. You should clearly communicate your requests in writing and track them to completion.
Question #3 - Does This Affect my Contracts Group?
Yes, depending on how your organization is set up. Suppose your contracts group is wearing dual hats, serving as subcontract administrator and contract administrator. In that case, they should be able to effectively drive the proposal process with the subcontractors, ensuring the requirements are met, prices are negotiated and documented correctly, and required clauses are adequately flown down. Rules relative to subcontract awards and administration are voluminous and in a highly audited area. Thus, you need to ensure that your staff has the tools and bandwidth to ensure success.
Question #4 - If my Receipts, Business, and Headcount are Growing, are There Other Items to Think About?
Yes. If you are starting to outgrow your NAICS small business standard and your contract values are growing, you may be nearing more administration and compliance concerns. Suppose you're about to exceed your size standard for qualifying as a small business. In that case, you may be nearing close to cost accounting standard (CAS coverage) and other compliance concerns on your award, which has a major impact on your accounting system and compliance programs. Your systems and policies may need to be reviewed, as certain requirements are imposed upon contractors based on the value of the contract.
Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions, including leadership roles in DCAA. Our team brings significant accounting, contract administration, and human resources experience specific to government contracting. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor together for compliance for our clients.
