Government Subcontracting: How Small Businesses Win Work From Prime Contractors

Government Contracting Guide · Teaming

The fastest way in is through a prime.

Finding primes, teaming agreements, flow-down clauses and mentor-protege joint ventures.

$900,000subcontracting plan threshold

6years a mentor-protege agreement can last

3proteges a mentor may have at once

Government subcontracting lets a small business work on public contracts as part of a prime contractor’s team, building past performance, cash flow and relationships long before it bids as a prime on its own.

Why primes need small subcontractors

A prime contractor signs the contract with the government and is responsible for all of it. On federal contracts over $900,000, or $2 million for construction, large primes must have small business subcontracting plans with goals, a threshold raised from $750,000 and $1.5 million on Oct. 1, 2025. State and local agencies often set participation goals too. Beyond goals, primes simply need reliable specialists for parts of the work they do not do themselves, from trucking and testing to IT, training and outreach.

Finding the right primes

Start with SBA’s SubNet, where primes post subcontracting opportunities. Use award data on USAspending.gov to see which companies win contracts in your field and with which agencies. Read planholders lists on large local projects, which show who downloaded the plans and is likely bidding. Attend agency and prime outreach events, and keep your SAM.gov profile complete, because primes search it by NAICS code and certification when they build teams. SBA Commercial Market Representatives also work with large primes and can point you to their small business liaison officers.

Teaming agreements

Before a bid, a prime and a sub often sign a teaming agreement describing the work the sub will do if the team wins. It helps both sides plan, but it is not a subcontract, and courts often treat vague teaming agreements as unenforceable agreements to agree. Make the work share as specific as you can, watch for exclusivity clauses that stop you from joining other teams, and understand what happens if the prime wins but the scope changes.

The SBA Mentor-Protege Program

SBA’s Mentor-Protege Program pairs a small business with an experienced company that helps with management, finances, contracting and teaming. A protege and its mentor may form a joint venture that can bid on contracts set aside for small businesses, which lets a small firm compete for larger work with a stronger partner. A mentor-protege agreement can last up to six years, and a mentor may have no more than three proteges at one time. Look for a mentor whose customers and capabilities complement yours, and write down specific goals for the relationship.

Delivering as a subcontractor

Your first subcontract is an audition. Send short weekly updates, raise problems early with a proposed fix, and keep clean records of hours, materials and approvals. Invoice exactly as the subcontract says, with every required backup document. At the end, ask the prime for a written reference and permission to list the project in your past performance, then track your results so you can bid as a prime when you are ready.

Mistakes to avoid

• Signing a teaming agreement with no defined work share.
• Accepting pay-when-paid terms without understanding the cash flow risk.
• Ignoring flow-down clauses such as labor standards or cybersecurity rules.
• Doing extra work without a written change order from the prime.

Getting paid as a subcontractor

Cash flow is the biggest risk for a small subcontractor. Many subcontracts say the prime pays within a set number of days after it is paid by the government, and some use pay-when-paid or pay-if-paid language that shifts risk to you. Federal rules encourage primes to pay small business subcontractors quickly, and many states have prompt payment laws for public works subcontractors, but the contract terms still control most of the timing. Before you sign, estimate how long you may wait, what payroll and material costs you must carry until then, and whether you need a line of credit. Invoice on time with complete backup, and follow up politely the day a payment is late.

Protecting your business

Keep copies of everything: the teaming agreement, the subcontract, every change request and approval, daily logs, photos and correspondence. On public construction, learn your payment bond rights, because the prime’s payment bond protects subcontractors and suppliers who are not paid, with strict notice deadlines. Carry the insurance the subcontract requires and confirm that you are not taking on liability for work outside your scope.

From subcontractor to prime

Subcontracting is a stage, not a destination. Each job adds past performance, references and knowledge of how an agency works. When you have several strong projects for the same type of customer, start bidding small prime contracts, often small business set-asides, while keeping your best prime relationships. Many firms do both for years: prime on smaller jobs, and subcontract on larger ones.

Frequently asked questions

Sources

• Federal Register: FAR Inflation Adjustment of Acquisition-Related Thresholds (Aug. 27, 2025)
• SBA SubNet: Subcontracting Network
• U.S. Small Business Administration: SBA Mentor-Protege Program
• USAspending.gov