Government Contracting Strategy: To Prime or Not to Prime
By Abraham Xiong
Prime or Subcontractor?
Another important principle, and a key secret for you to consider as you plan out your strategies is to consider whether you should start as a prime contractor or as a subcontractor. Many businesses want to be a prime contractor, meaning you want to be the direct contract holder to the agency. To achieve this, you have to properly be able to write proposals, know how to market to agencies, build relationships, and many other steps. An easier path is to start by being a subcontractor and working under a more seasoned prime contractor.
Again, the government marketplace is called the Business to Government or B2G market. There are three core marketplaces:
- Business to Consumers (B2C)
- Business to Business (B2B)
- Business to Government (B2G)
I want to expand your strategies as it relates to the B2G market. Here are some more important secrets you want to know. We’re going to extrapolate the initial to the latter.
- B2G: Business to Government
- B2B2G: Business to Business to Government
- B2B2B2G: Business to Business to Business to Government
What does this mean you ask? In a B2G model, your business is selling directly to the government. You are the prime contractor. However, most companies lack past performances when they first start off in the government market, so this is not the most effective way to pursue bids.
Some companies understand that if they have subcontractors, they can utilize the past performances of the subcontractors to help them meet the gaps of a proposal requirement. This model is where your business is the prime, but you utilize other subs to help you access awards. Here is a visual image of this method.
A better way to pursue opportunities is to be a subcontractor to a prime contractor who already knows how to win contracts. This is my best recommendation for most companies. Here is how that process will look like.
B2B2B2G – Utilizing Tier 2 Subs
The next secret principle is a B2B2B2G strategy. I want to share with you that in some situations, you may be a Tier One sub and you utilize Tier Two subs to help you complete the requirements of the prime contractor. This is how this process is illustrated.
This last principle or secret technique in a B2B2B2G approach is that you may consider starting in the government marketplace by being a Tier Two subcontractor to a Tier One subcontractor who works with the prime contractor.
Marcus, one of my students in our coaching program utilized this B2B2B2G method to land his first revenue in the government market. How did he do this? He started by creating a list of awardees in his NAICS codes. In the process of engaging these companies, he chatted with a company who was a Tier One sub to Verizon (the prime) at Maxwell Air Force base in Montgomery, AL. The Tier One sub needed someone to do low voltage wiring. Marcus committed to being a Tier Two sub, however, he didn’t have the capability to fully do the low voltage wiring, so he went to find another company who specializes in this line of wiring.
In essence, Marcus took this methodology even a step further. He became a Tier Two sub and then utilized a Tier Three sub to complete the work. Here is what that looks like as written in our process: B2B2B2B2G or Tier 3 sub to Tier 2 sub to Tier 1 sub to Prime contractor to the Government. WOW!!!… Are you keeping up with me? The truth is, in most situations, you can go down to as many tiers of subs as the prime will allow or as the government will allow.
Now that we have gone over strategies, join us next time as we discuss at which level it makes the most sense to start with government contracting.
ABOUT THE AUTHOR: Abraham Xiong
Mr. Xiong is a small business advocate, social entrepreneur, executive trainer, blockchain ambassador, technology enthusiast, business coach, and community leader. He is the Founder of GovGenie.com, which is a marketing automation platform to assist government contractors in scaling their companies in the B2G marketplace. GovGenie is offering readers of this article a free trial access: www.GovGenie.com