We are frequently asked by small or medium-sized businesses whether they should attempt to sell directly to federal end users or sell to prime contractors through subcontracts. Our recommendation is that companies should do both (with an emphasis placed on the direct sales approach). The majority of businesses would prefer to directly sell to the government rather than have to go through a prime contractor. Nonetheless, it is critical to understand how the prime contractors work. The discussion that follows will focus on how sales to prime contractors are made.

A prime contractor is generally interested in doing business with subcontractors in two specific instances. Let's assume your company's sales staff has successfully networked with the federal end user and, as a result, has made a sale. However, the federal end user wants to buy your company's product or service through the GSA schedule program and your company doesn't have a GSA schedule contract. A prime contractor will be more than happy to allow the federal end user to buy your product through its GSA schedule because the prime reaps benefits without having had to do any work on their end. Keep in mind that if your company had a GSA schedule contract, it could have sold directly to the federal end user and eliminated the necessity of going through a prime contractor.

A prime contractor will also be interested in working with your company if your business provides a unique or niche product or service that the prime cannot offer. It is less likely that you will get business from primes through this channel because the prime contractors tend to believe that they can offer every product or service needed by the government.

Notice we didn't mention the one thing that companies new to the federal market try to hang their hat on when selling to prime contractors. The sales pitch usually goes something like this: "You should do business with us because we are a small, small disadvantaged, or women-owned, business." In most cases, the primes already have a host of small and disadvantaged businesses they need lined up and they have established, strong relationships with these businesses. They are reluctant to take on new subcontractors because the prime contractors have built trust relationships with those who have performed well for them in the past. The risk associated with established subcontractors is minimal while the risk attendant with taking on new ones is much greater.

In those situations in which the prime contractor has a specific business opportunity for your company in mind, it has only one criterion for letting you through the door. The overriding question the prime asks is "Will this company increase our chances of winning?" Other less important considerations are (i) whether you have something that the prime cannot offer or one of its known and trusted subcontractors cannot offer, (ii) whether your company's involvement will reduce the prime contractor's costs, and (iii) whether you know the customer or have information that will enhance the prime's position. Assuming you meet at least one of the criteria above, you must sell the prime contractor's contract manager (the equivalent of a federal end user). If you have really done your homework and have sold the federal end user prior to going to the prime contractor, ask him or her to introduce you to the prime contractor's contract manager or have the end user suggest to the prime that your company would be ideal for the project.

If you are not bringing a deal to the prime, be prepared for a protracted, discouraging search. The contract managers are buried deep within the prime contractor's worldwide organization. Contract managers are very difficult to locate and even harder to get on the phone. They usually sit next to their federal customer and are extremely adept at dodging sales calls unless prodded by the federal customer to accept them. Contract managers are not the "Subcontract Coordinator" listed at the prime's web site. The Subcontract Coordinators are the front-office types who will ask for your company's background information and will promise to "get back to you." It is critical to peel back the layers of the prime contractor's organization to get to the contract manager level. In learning how prime contractors operate, you will maximize your chances for success.