A Subcontract Agreement Can Help You Get Contracts

If you, as a small business owner, see a Request for Proposal (RFP) that you are interested in, but not fully qualified for, it is often possible to bid and win by subcontracting those skills which are not part of your specialty. A good, strong team can often outperform a more experienced, but mediocre competitor.

There are two types of situations that are prime for subcontracting. The first is a situation where your company installs toilets, for example, but the project also calls for occasional water audits, which you do not perform. You can subcontract the water audit portion. The second is a situation where the RFP calls for a contractor to have an established office in each of two, far-distant locations, and you do not. You can hire a competitor who has an office in the area where you do not have one to carry out that part of the contract.

There are variations and combinations of each of these two scenarios. The point is that it is possible to turn around a seemingly weak set of qualifications by being willing to subcontract to others more skilled in the areas you are not. Choosing the right subcontractors that fill out and highlight your skill set can make you highly competitive for almost any contract you are somewhat qualified for AND really interested in.

You can even subcontract an entire project, if your strength is in program management and the other requirements are for disparate field skills. While your company coordinates and consolidates the overall plan, subcontractors could carry out each of the main parts.

An example of that kind of situation might be a RFP put out by an electrical company for development of a regional management plan that includes:

1. Estimating new installations required in the future,

2. Maintenance of existing systems, and

3. Opportunities for replacement with renewable sources.

How can you find good subcontractors? Make it a point to get to know your competitors and potential collaborators. Make sure you or someone in your company goes to promotional events, conferences, meetings, and workshops to meet people in your field. Target companies with products or services similar to yours or supportive of yours.  

Follow up with people you meet that you were impressed by and relate well to, people you know you will enjoy working with and can learn from. Compatibility is important when you work closely with other companies or specialists.

This will give you a database of potential subcontractors to draw from when new opportunities arise. It will also give you several additional sets of eyes in the field who are looking out for you, knowing you are looking out for them. Keep track of your interactions with them and keep in touch periodically.

Many government agencies and utilities set up pre-bid conferences or meetings specifically for potential contractors to get to know each other. This is especially true with complex projects where the agency has had a hard time finding competitive bidders in the past.

Pre-bids give you a chance to find out more about the project being offered, so you can decide whether to bid the whole thing yourself, bid as a prime contractor, or team up with someone else as their subcontractor. The agency will usually have attendees identify themselves from the beginning as potential prime or subcontractors (or both), so the others can decide who to approach after the meeting. At the end of the meeting, the agency will encourage attendees to meet and mingle. During the next day or two, they will also provide everyone with the list of attendees and their contact information via email to facilitate partnerships.

On occasion, a situation will arise where no one in attendance is really qualified. I recently went to a pre-bid like that. Attendance was not mandatory, so it didn't rule out qualifying proposals coming from companies not there, but we decided to go for it anyway without a subcontractor. We chose to highlight our almost readiness, and the backgrounds of our staff that showed we could do the project, given a little extra training. In fact, we had experience in all venues but that one. Had there been a small company specializing in that field or located in the area, we would most likely have approached them to subcontract.

Check with companies you've worked with in the past, former employees, other subcontractors, and the agency who put out the RFP. Be frank. Tell them you have all the skills and experience required, but that one you are missing, and ask if they can refer someone to supply the missing skills. Tell them you want to present as strong a proposal as you can, and that if the partnership works out there may be opportunities for further collaboration in the future.

Remember that every good partnership is a two-way street. Not only will you benefit, but your subcontractor will too. Both of you will have a chance at more work together than you would alone. And if the partnership works out, both of you will increase your skills, knowledge, experience, and will most likely look out for opportunities for each other in your respective networks. And the agency bidding the contract will also benefit by having a highly qualified team available to carry out the current and possible future contracts.