Due to technology advancements over the last decade, there has been a shift in government contracting. Now, prime contractors typically integrate the supplies and services of other businesses with the desired expertise. As either a prime or subcontractor, do you know all you need to know about subcontracting?
Most prime contractors know they need to bring in subcontractors to create an effective technical solution for their government agency clients. The Government’s complex missions demand this level of performance. Subcontractors with unique expertise and good past performance records on government contracts are an important factor for the prime contractor to get and keep government business.
A Subcontract Offers a Unique Aspect of Government Contracts
Rapid advancements in technology make it difficult for a prime contractor to have a high level of technical capability in multiple areas. It only makes sense for the prime contractor to contract with qualified contractors to gain the needed expertise to have a competitive advantage.
As a systems integrator, the prime contractor typically develops a proposal that incorporates the technology and services provided by subcontractors. The contractual relationship between the prime contractor and subcontractor is unique in a number of respects:
- Since there is no contractual relationship between the Government customer and the subcontractor, the prime is the official
go-between. The prime is responsible to the Government for every subcontractor’s actions;
- The prime contractor must ensure the subcontractor is paid in a timely manner for acceptable work;
- The subcontractor still has certain obligations that flow directly from the Government; and
- The parties must recognize that the subcontract is NOT a government contract, but rather a hybrid commercial contract with some
obligations to the Government.
Ideally, all stages of government contract and subcontract administrative work would be reviewed by legal counsel due to these complex interactive obligations.
Government Subcontracting Requirements
The prime contractor and subcontractor must coordinate their goals and performance capability. Therefore, the parties must have a clear understanding of their contract obligations. This increases their ability to perform the technical baseline and effectively communicate.
Subcontracting requirements must be compatible with the Government’s objectives for mission success. Those subcontracting requirements must support the prime contractor’s proposed “Best Value” solution for the Government.
The Busch Law Firm appreciates the interaction between the prime contractor and subcontractor to effectively perform the Government’s technical baseline.
The complexity of government procurement dictates that a prime contractor must improve their subcontract management techniques. Federal Subcontractor cost overruns and schedule delays have a serious impact on program success.
Federal procurement regulations, therefore, provide that the Government still has oversight in subcontracting requirements through the prime contractor, to include:
- Technical design reviews;
- Source inspections;
- Small business subcontracting;
- Requests for Equitable Adjustments;
- Consent to Subcontract;
- Socio-Economic Requirements;
- Audits; and
- Subcontractor payments – the Government has taken a new and increased interest in ensuring that the Government contractor is
Government Contracts Attorney
Early involvement by Mr. Busch is instrumental for all contractors involved on a project. As an experienced government contracts attorney, he can assess the government’s requirements. That assessment will help create an effective prime contractor and subcontractor relationship from the start through contract completion.
The Busch Law Firm’s extensive experience with Lockheed Martin subcontractors gives the Firm an in-depth knowledge of how large defense contractors with complex performance baseline obligations approach subcontract award and management. In addition, Attorney Busch’s experience representing subcontractors is evident in his understanding of the issues that face you in your prime or subcontractor relationships.
A subcontractor was having performance and payment problems with a prime contractor on a government construction project. The prime contractor was behind schedule in other aspects of the project not caused by Mr. Busch’s client. In addition, the prime contractor was not paying Mr. Busch’s client from the proceeds the Government had paid the prime for the work completed by his client. In addition, the prime contractor was dealing directly with Mr. Busch’s client’s subcontractors. These actions by the prime contractor directly interfered and hindered Mr. Busch’s client’s ability to manage their obligation under their subcontract with the prime contractor.
Mr. Busch was able to convince the Government to audit and intercede on the payment issues between the prime and subcontractor. Finally, Mr. Busch was able to get the Government to investigate the actions of the prime contractor’s performance on the project.