How to Become a GSA Schedule Subcontractor

While acquiring your own GSA Schedule contract can be extremely beneficial to your business, this is not the only way to sell your products or services to the government. The other possibility is GSA subcontracting. It shares almost all the merits of owning a GSA contract, but lacks many of its disadvantages.

What is GSA subcontracting?

Subcontracting is a way to work as a contractor with the government but without holding a primary GSA Schedule contract. This way, a GSA reseller or a subcontractor partners with some prime GSA contractor to provide its services or products through them, but not directly.

But why would someone hire subcontractors to begin with? Because the government requires anyone Other Than Small Businesses to create subcontracting opportunities for small businesses by outsourcing a certain portion of the contracting jobs to them (see FAR 19.702). A corresponding GSA subcontracting plan submitted to the GSA depicts how exactly such outsourcing will be done.

What are advantages and disadvantages of subcontracting?

As always, there are some pros and cons of being a subcontractor.

Subcontracting advantages

• You can sell to the government without a GSA Schedule. Which means you don’t get to deal with compliance issues, communicate with GSA officers, and even acquire the contract to begin with.
• The entry point is lower. You can start selling to the government with a low budget and without long preliminary preparations. And you don’t have to pay GSA’s fees incurred by contractors, such as the Industrial Funding Fee.
• Milder competition. Unlike prime contractors, subcontractors don’t have to compete directly with all other offers on the federal market.
• Reduced liability and simplified administration.

Subcontracting disadvantages

• You have to adapt to your prime contractor. The way you do business may not be acceptable by your prime. And you have to take it or leave it.
• No direct connection with the GSA. This means you don’t get true government contracting experience which may be crucial if you plan to move on to it someday.
• Lower potential of sales volume. You can’t jump over the head and earn more than your subcontract allows.

What are GSA Schedule subcontracting rules?

FAR 19.702 regulates how Other Than Small Businesses should assign a part of their work to subcontractors. The rules are as follows:

1. To become a GSA subcontractor, your business must fall into one of these categories: small business, WOSB, VOSB, SDVOSB or HUBZone business.
2. A prime contractor who wins a contract with the overall value greater than the Simplified Acquisition Threshold must give the maximum opportunity to businesses of the above categories to become subcontractors.
3. A subcontracting plan is required if the value of the contract is greater than $750,000 ($1.5 million for Construction).

If all these GSA Schedule subcontracting rules are fulfilled by both your and the prime contractor’s side, you can apply for a subcontracting opportunity.