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Guide to Winning Government Subcontracts


$100B+ in Federal government subcontracts are awarded per year and developing robust teaming strategies has become increasingly critical for all government contractors

Solving the Government Subcontracting Puzzle

The Federal Subcontracting Market

A Large and Growing Market

The federal subcontracting market is massive, with at least $100 billion awarded in government fiscal year 20221. Moreover, the value of reported government subcontracts has increased significantly over the past decade. While some of this increase is due to better subcontract reporting by prime contractors, the government's push to increase government contracting dollars directed to small businesses, and disadvantaged small businesses in particular, is likely driving a significant portion of the increase.

Prime and Subcontract Obligations Over the Past 10 Years2

Historical Subcontracting Obligations Per YearHigherGov Analysis

Definitions: Throughout this guide, prime contract refers to contracts that are directly awarded by the government to a prime contractor for goods and services.  Subcontract refers to an agreement between a government prime contractor and a subcontractor, where the prime contractor delegates portions of services or products to be completed under the prime contract to the subcontractor.

A Subcontracting Strategy is Crucial for Small Businesses

For most successful small business government contractors, subcontracting is a critical part of a business development process. At least $70 billion was awarded to small business government subcontractors in 2022 based on disclosed subcontracting figures.  Including undisclosed subcontracts, the total value likely exceeded $90 billion. 

In addition to being a large figure in its own right, this is significant compared to the $156 billion obligated in prime contracts to small businesses that year.  Moreover, within the small business market, competition for subcontracts is often less than for prime contracts.  While approximately 60,000 small businesses split the $156 billion in small business prime contracts in 2022, fewer than 20,000 small businesses split the awarded subcontracts. 

Nevertheless, many small businesses disproportionately focus on prime contracting and do not develop an effective subcontracting plan. 

Other Benefits of Subcontracting

Beyond the significant revenue opportunity, subcontracting offers additional benefits.  Subcontracts often have higher margins than prime contracts due to fewer administrative and business development costs (and no requirement to further subcontract work). Additionally, for a small business, subcontracting is a powerful tool to gain the experience and agency relationships necessary to successfully win prime contracts in the future.  For a large business, subcontracting can be a gateway to contracts where it lacks socioeconomic certifications or is too large to meet a contract's SBA size standards

In some markets, due to required experience, size or socioeconomic restrictions, contract consolidation, or contract vehicle access, subcontracting may be the only feasible way for a business to access government contracts.

Process of Finding and Winning Government Subcontract Opportunities

Government Subcontracting Process

HigherGov Subcontract Opportunity FlowchartHigherGov

We recommend a circular five-step subcontracting strategy that takes feedback from the process of pursuing and securing subcontracts to adjust value proposition and partner strategy to continually expand subcontracting business:

  1.  Assess Your Value Proposition: Evaluate your company's strengths, certifications, unique capabilities, prior experience, and competitive pricing to understand what distinguishes you as a subcontractor.
  2.  Identify Potential Teaming Partners: Conduct research to find leading prime contractors, key contract vehicles, upcoming opportunities, existing teams, and recently graduated prime contractors within your target market.
  3.  Market to Potential Partners: Utilize multiple channels including direct outreach, industry days, government-sponsored matchmaking events, supplier portals, and industry associations to promote your company and connect with potential teaming partners.
  4.  Establish Teaming Arrangements: Set up teaming agreements or joint ventures with partners. 
  5. Find and Win Opportunities: Proactively seek subcontracting opportunities and continuously assess your subcontracting strategy and adjust accordingly.

While the above strategy is recommended for many businesses, the exact process you follow should depend on your objectives. For example, in some cases, rather than identifying potential teaming partners first, it can make sense to identify specific opportunities that you can pursue as a subcontractor first and then tailor your process to determining the best prime contractor specifically for that opportunity.  

Typically though, it is better to develop long-term relationships with multiple prime contractors in your target markets, so when major prime contract solicitations are released, you will have established relationships with multiple prime contractors pursuing the opportunity and can either join multiple teams (potentially guaranteeing that you will be on a winning team) or select the prime contractor most likely to win.  

Assess Your Value Proposition as a Subcontractor

With thousands of contractors vying for high-quality subcontract relationships, creating a differentiated value proposition is key to securing relationships with the strongest prime contractors.  Thus, the first step to pursuing subcontract opportunities should be assessing the value that your business can add to a prime contractor and developing a compelling marketing strategy and marketing content.

Size and Socioeconomic Set-Asides

Most prime contracts valued at more than $750,000 ($1.5 million for construction contracts) are required to have plans and goals for subcontracting with small businesses. Classifying as a small business for a given NAICS can enable a subcontractor to satisfy a prime contract's subcontracting requirements.

Additionally, subcontracting plans require a percentage of work be subcontracted to certified Small Disadvantaged Small Businesses (8a), Service Disabled Veteran Owned Small Businesses (SDVOSB), Women-Owned Small Businesses (WOSB), and HUBZone small businesses.  Having access to these certifications as a subcontractor can be valuable to a prime contractor and so it is important to emphasize these certifications in marketing materials and to pursue the formal certification process with the SBA if you are eligible. 

Since small business subcontracting goals vary widely by agency, consider focusing subcontracting efforts at agencies with higher subcontracting targets.

Differentiated Capabilities

Offering unique or cutting-edge capabilities as a subcontractor that a prime contractor does not offer can help the prime contractor win a contract and/or improve their performance, making you a compelling partner.  Focus on marketing the capabilities that your business can offer that the primes (and other subcontractors) in your market do not have.

Past Performance

Beyond capabilities, offering experience that prime contractors may not have to effectively compete for a contract is highly valuable. Researching a prime contractor's past contracts as well as their existing subcontractors can help you complete a gap analysis to see what past performance you can offer.  If you are an experienced government contractor, having a track record of strong CPARS is also valuable.

Competitive Pricing

Offering lower labor or product rates than large prime contractors can achieve can be highly beneficial as it enables prime contractors to lower their overall proposal cost. To determine the attractiveness of your labor rates, you can benchmark your rates against those of your competitors using publicly available pricing data from Multiple Award Schedule and other GWACs.

Marketing Your Capabilities

Maintaining a strong and professional capabilities presentation, an up-to-date website, and keeping your information up-to-date in DSBS can help you stand out from competitors and help prime contractors find you. Developing case studies or white papers highlighting successful past prime or subcontracting engagements can further demonstrate your value and expertise to potential partners.

2023 HigherGov Prime Contractor Survey

Q5: What are the primary reasons you utilize subcontractors? (n=122)

Why do Prime Contractors Subcontract?HigherGov Analysis

We also recommend highlighting your profile (requires sign-in) on HigherGov as our awardee profiles and team building tools are used monthly by tens of thousands of business development teams and government contracting officers.

Identify Potential Teaming Partners

There are multiple strategies you can take to identify high quality potential teaming partners and subcontracting opportunities.

Find Leading Prime Contractors

Research leaders in the markets you are focused on as a subcontractor.  For example, you may want to research the largest full & open prime contractors for a given NAICS at a particular agency (you can quickly do this in HigherGov in our Analysis tool). 

Selecting strong prime contractors to team with is important to have the greatest chance of success of being on a team that can win contracts.  Some characteristics to look for in a strong prime contractor include:

  1. Size and experience in target market
  2. Growth rate in target market
  3. Access to key contract vehicles
  4. Experience working with subcontractors
  5. Differentiating technology or services
  6. History of winning sole source contracts

Identify Key Contract Vehicle Holders

More than half of all government contracts are awarded through contract vehicles, and the importance of contract vehicles has increased over the past five years.  However, if you are not a prime awardee on a vehicle, access to the money awarded through vehicles requires a partnership with an existing prime contractor. 

To find vehicles and prime contractors to team with, first research the key vehicles for your target markets.  You can use HigherGov's vehicle ranking analysis (requires sign-in) to find the most important multi-award vehicles in a given market.

Once you have identified key vehicles, research which prime contractors are winning the largest proportion of awards on that vehicle and focus your efforts in building teaming relationships with those prime contractors.

In addition to joining a team on an existing vehicle, you should monitor news and solicitations for new vehicle opportunities that you can find partners for.

Prime Contract Obligations Awarded Through Indefinite Delivery Vehicles

Vehicle-Based Prime Contract Awards by YearHigherGov Analysis

Research Upcoming Prime Opportunities

Closely monitoring and researching upcoming prime contracts can be highly valuable for finding subcontracting opportunities whether you already have a team or are looking for new prime partners. 

However, by the time solicitations are posted on SAM, it is often already too late to find new teaming partners and execute effectively.  Therefore, it is important to monitor contract forecasts, which can give you with advanced notice of when solicitations are likely to be released.  Moreover, you can monitor contracts that are likely to recompete in the next 6-12 months to plan in advance for potential teaming needs.

Research Existing Subcontracting Relationships

Another approach to finding potential partners is to look at your competitors or other adjacent companies to see who their current prime teaming partners are.  Then you can reach out to the prime contractor to see if they are looking for additional partners or position yourself to displace your competitor. 

In some cases, you may want to (anonymously) submit FOIA requests for key contracts a prime holds to obtain subcontracting plans to learn more about what existing work is potentially being subcontracted.

Explore Recently Awarded Opportunities

Many large contracts have subcontracting plans requiring participation from small businesses. While many contractors will already have a full team in place before submitting their RFP responses, for large contracts there may be time after award to try to join an existing team or offer your services.  Monitoring recently awarded contracts with subcontracting plans can help you identify such subcontract opportunities.

Find Graduated Prime Contractors

Each year, thousands of contractors either lose socioeconomic certifications (such as graduating from the 8(a) program) or have grown (or been acquired) and no longer meet the NAICS size threshold for a contract. 

There are two potential approaches to capturing these contracts: (1) Try to prime the recompete alone, or (2) prime the recompete with the incumbent as a "leading subcontractor." While this approach (2) involves priming rather than subcontracting, often the incumbent prime will take much of the lead on the contract given their prior experience and existing customer relationships, and the new prime will behave much like a subcontractor.

Market to Potential Teaming Partners

In order to connect with potential teaming partners, consider a multi-faceted outreach strategy. Given the multi-year nature of many government contracts, target prime contractors may not always be looking for the capabilities that you offer, so ongoing outreach over time is critical to building multiple strong teaming relationships.

  • Direct Reach-Out:  Many large prime contractors have specific small business contacts or contacts for specific contract vehicles. You can often find these contacts on large prime contractor websites.
  • Industry Days: In-person industry days can be an effective way to network with prime contractors. Some large contractors hold their own events or publish the events they plan to attend.
  • Government Matchmaking Events:  Many federal government agency small business offices hold annual matchmaking events and some APEX centers hold events for contractors focused on certain geographies.  
  • Supplier Portals: Some large prime contractors have subcontractor portals where you can register as a supplier or subcontractor.
  • Industry Associations: There are several industry associations, including the National Association of Government Contractors, that hold events providing networking opportunities for subcontractors.
  • SubNet: While not heavily used, the SBA provides the SubNet portal to promote subcontracting. The portal includes a small business directory and allows contractors to post opportunities where they are looking for partners.

Establish Teaming Arrangements

Once you are ready to establish a relationship with a prime contractor, there are two types of teaming arrangements to consider:

1. Teaming Agreements (Vertical Teaming)

A teaming agreement is a formal contract between a potential prime contractor and a subcontractor under a specified federal government contract or acquisition program. The teaming agreement specifies the responsibility and scope of work of each party, duration, dispute resolution, and other legal constructs. In a teaming agreement, only the prime contractor has a direct relationship with the government. 

For subcontractors, teaming agreements have the benefit of being quick and easy to put in place.  For "other-than-small" subcontractors, teaming agreements also have the benefit that only the prime must fall below the applicable size standard on a contract.  The downside for subcontractors is that they will typically not have extensive (if any) direct contact with the contracting officers or agency customer, which can make it challenging to build agency relationships.

2. Joint Ventures (Horizontal Teaming)

A joint venture (JV) is a new legal entity formed by two businesses to act as a potential prime contractor. In a JV, because all parties are part of the prime contract entity, all parties have a direct relationship with the government customer. Except for JVs operating under an SBA-approved mentor-protégé agreement, a joint venture only qualifies as a small business for a contract if all of its owners fall beneath the applicable size standard. 

While the joint venture is technically the prime contractor (and the JV may or may not enter into separate agreements with its owners on a contract-by-contract basis), there is often one contractor that acts as the de facto prime and drives the JV's relationships.  

JVs, and particularly mentor-protégé JVs, have become increasingly popular with small businesses as a way to leverage the experience and qualifications of their large business partner, especially in self-scoring submissions.  The downside to JVs is that they can be more time-consuming to establish, and in the case of mentor-protégé JVs, the small business can remain effectively dependent on the large contractor's past performance to win contracts. 

Find and Win Subcontract Opportunities

Success at winning subcontracts will largely be driven by success in establishing relationships with the right prime contractors using the above steps.  However, being proactive in identifying new potential opportunities where you could be a subcontractor is better than passively waiting for a prime contractor to find opportunities. The strategies discussed above (such as monitoring contract forecasts) can be used to proactively identify opportunities.

Successfully navigating the government subcontracting market involves understanding your unique value proposition and successfully targeting the right prime contractors and submarkets.  Based on the success (or lack thereof) of your initial strategy, you should adjust how you market your value proposition and your partner outreach strategy accordingly.  


Justin Siken
Founder of HigherGov


  1. The total of awarded subcontracts is likely even greater, as small and second-tier subcontracts do not need to be disclosed and subcontract reporting is often incomplete.  Prime contractor reported subcontracting figures reported to the government are adjusted by HigherGov to remove likely duplicates and erroneous values.  
  2. 2022 subcontracting values based on reported figures through April 2023.  As subcontracts are often reported late, this value will likely increase.

Data Sources

HigherGov Analysis, Federal Procurement Data System, SBIR.GOVFSRS