For current and prospective government contractors, partnering with others is key to achieving success in today’s competitive government marketplace. By teaming up with other contractors, you can expand the scope of your offerings, allowing you to compete more easily for government opportunities. While all types of businesses can benefit from partnering, small businesses in particular can use their contracting partnerships to grow their footprint in the government marketplace.
In this blog, we’ll discuss the many options that contractors have for partnering, including how to assess which partnering option is the best fit for your business, and the unique benefits of each one.
The partnering options available to government contractors include subcontracting, forming a Contractor Teaming Arrangement (CTA), and forming a Joint Venture (JV). When you’re evaluating which partnering option to pursue, you may want to consider whether you would like to partner with other contractors on an entire GSA Multiple Award Schedule (MAS) or on specific government contracts.
If you would like to work with other contractors through an entire shared Schedule, then you can form a JV. If you would like to partner with other contractors on specific contracts, then forming a CTA or subcontracting is your best bet. We’ll describe each partnering option in more detail below, so you can determine which one makes the most sense for your company’s size and goals.
Before we get into how government contractors can work with each other through subcontracting agreements, it’s worth distinguishing between prime contracting and subcontracting. Prime contractors work directly with the government. To become a federal prime contractor, you need to be registered with the System for Award Management (SAM). Prime contractors can find government contracting opportunities through SAM and other avenues, and they can utilize contracting vehicles such as the Multiple Award Schedule.
Instead of working directly with the government, subcontractors are hired by the prime contractor to complete certain tasks on the contract. Subcontracting opportunities are abundant, because the government requires large or “Other Than Small” businesses to submit a subcontracting plan outlining the percentage of work that they plan to subcontract to small businesses. As a result, large businesses are eager to work with small businesses to reach their subcontracting goals.
Subcontracting agreements are made between the subcontractor and prime contractor to establish the work that a subcontractor will perform on a specific contract. If the federal contract is awarded as a small business set-aside, then the small business subcontractor may be required to perform a minimum amount of work on the contract. Prime contractors are responsible for ensuring that the subcontractor’s work is completed as defined in the contract.
Subcontracting can be especially advantageous for small businesses looking to break into the government marketplace. Small businesses can subcontract on the Multiple Award Schedule without needing to acquire and maintain their own Schedule, since all work is conducted through the prime contractor’s Schedule. Subcontractors working for prime contractors can gain valuable government contracting experience and boost their capabilities statement. They can also use their performance from awarded subcontracts to secure other government contract awards down the line.
While large businesses are often required to subcontract work, they also benefit from the opportunity to tap into their subcontractors’ skillsets. Similarly, small businesses can work on contracts they may not have qualified for alone, thanks to their prime contractors’ resources.
In a Contractor Teaming Arrangement (CTA), two or more GSA Schedule contractors team up to compete for and meet Schedule orders. CTAs are not a separate legal entity, unlike Joint Ventures, and the CTA’s terms are negotiated by the participating contractors. In addition, all CTA members must be GSA Schedule holders and are able to interact directly with the government, unlike in a subcontracting agreement.
CTAs enable contractors to compete for orders that they may not qualify for on their own. The CTA’s members can combine their complementary offerings to provide a total solution to government buyers’ needs. Small businesses in particular can benefit from this opportunity to work with a large business or another small business on projects they may be unable to complete alone. In addition, CTAs help to reduce the risk of nonperformance by allowing the members to focus only on their core competencies.
CTAs also allow contractors to compete for orders outside of their individually awarded Special Item Numbers (SINs). CTA members can sell under any SIN listed on any of the members’ MAS contracts, which can be especially helpful for small businesses looking to gain contracting experience outside of their contract’s scope. And CTAs are able to compete for socioeconomic set-asides, provided that all CTA members meet the socioeconomic category for that set-aside.
In a Joint Venture (JV), two to three businesses pool their resources together to compete for contracts. Unlike a CTA, a Joint Venture is considered a new legal entity and requires approval by the Small Business Administration (SBA), a separate UEI and CAGE code, and a new SAM account.
Rather than selling through their individual GSA Schedules, the contractors in a Joint Venture form a new JV Schedule through which to sell to the government. The JV members are not required to have held individual GSA Schedules previously. Contractors interested in forming a Joint Venture should make sure they can comply with the SBA’s rules for Joint Ventures.
Joint Ventures allow multiple businesses to share their costs and resources, combine their past performance when qualifying for contracts, and leverage each other’s experience and market share. If the JV members haven’t been individual GSA Schedule holders previously, they can share some of the burden of acquiring a Schedule by combining their past performance, for instance.
Both small and large businesses can derive further benefits from forming a Joint Venture through the SBA’s Mentor-Protégé Program. The Mentor-Protégé Program allows a small business protégé to form a Joint Venture with a mentor, which can be a large or small business. Protégés can receive valuable business development help from their mentors through the program.
A Mentor-Protégé Joint Venture is also eligible for any small business set-aside contracts for which the protégé qualifies. Consequently, a large business mentor can pursue small business set-aside contracts via their JV, which isn’t possible for large businesses in a CTA. The small business protégé can benefit from the mentor’s support and resources when bidding for government opportunities.
From JVs to CTAs to subcontracting, partnering with other government contractors can help to maximize your success by expanding the scope of contracting work you can perform. If you’ve explored these partnering options and found one that might be a good fit, you may want to look into next steps, whether that be setting up a Joint Venture, crafting a CTA Agreement, or finding subcontracting opportunities. If you have any questions about how to make the most of these partnering options, our consultants are happy to assist you.