As dictated by federal law, prime contractors subcontract over twenty percent (20%) of their business. Billions of dollars of subcontracted products and services are bought annually in this market (e.g., lumber and paint for a military base maintenance contract).

Prime contractors, at least in theory, must follow federal purchasing regulations. The prime contractors can buy from your company using established commercial pricing for products (as found in the open market) and can also ask for labor rate cost justification for services. However, the prime contractors prefer GSA schedule pricing because it drastically reduces their subcontracting paperwork and procurement lead times. GSA schedule buys made by prime contractors can be based on "best value analysis" and, where products are concerned, the prime contractor can choose the subcontractor/vendor as long as the products sold by that subcontractor are listed on GSA Advantage. In contrast, service subcontract bids must be advertised to three vendors.

Vendors find that prime contractors repeatedly return to their favorite subcontractors (preferably those with a GSA schedule). Like all of us, prime contractors are motivated by self-interest and prefer subcontractors that they know and trust. If the foregoing sounds familiar, don't be surprised - the prime contractor and subcontractor market mirrors relationship sales made with the federal government.

The overriding message of this story is that smart companies get their schedule before trying to sell to prime contractors. Subcontractors will tell you that by getting your schedule ahead of time, you have dramatically improved your chances of getting your foot in the door of a prime contractor's company. Of course, your company shouldn't stop selling to primes if you don't yet have a schedule. The prime contractors can still do business with you. By initiating the process of getting on the schedule now, your company has made it easier for the prime to get to you in the future.

Another method used to receive work from a prime contractor is to sell directly to a federal end user and have the end user ask the prime contractor to bring your company on board. If you demonstrate that you can perform, the prime contractor will become a loyal repeat customer. View the prime contractor route to sales as another procurement vehicle just like a GSA schedule or an agency-specific multiple award schedule contract.