The Subcontracting Advantage For Small Businesses

Posted by Irv on January 9th, 2006

Small businesses may appreciate the fact that the rules and requirements of most subcontracts are much more straightforward than those of government jobs. Subcontracting agreements typically describe what is to be done, when government jobs will be completed and how subcontractors get paid. These documents also specify details about performance, such as safety, costs, testing, design and packing. The main thing that differentiates these contracts from normal commercial deals is that they pass down requirements set by a government entity.

Many governments have rules requiring or encouraging prime contractors to set aside subcontracts on government jobs for small and disadvantaged businesses and companies owned by women and minorities. Prime contractors are often required to present plans explaining how they will include such businesses in government jobs. Local and state governments may also mandate that certain subcontracting work on government jobs come from businesses in their geographic area.