Government Contracting Basics
Prime and Sub Contracting
Key Benefits and Drawbacks from Each Approach
Prime Contracting vs Sub-Contracting: What’s the Difference?
Typically, the government contracts with one “prime” contractor for every award. (For the sake of a straightforward explanation, we are going to ignore the more complicated teaming agreements, mentor-protégé agreements, and joint-ventures. We will get back to them shortly!) As the name implies, this vendor is the primary contact with the agency that issued the task order or request for services. Ultimately, the responsibility for delivering against the terms of the award fall to this contractor.
Sub-contractors (or “Subs”) do not work DIRECTLY for the government but perform a sub-set of tasks under the prime. The prime contractor takes care of all of the invoicing, contract management and other bureaucratic items required to operate a government contract.
Typically the prime receives more of the overall contract value, as broken down by number of hours of work performed or contract value. In fact, with some set-asides, the prime contractor is required to perform at least 51% of the overall award — though this number can vary based on the type of set-aside and total contract…
