Prime and Subcontracting 101: A Worker’s Perspective

Defense Contractors

This article will describe the contracting process and explore the differences between a prime and sub-contract from the perspective of someone working on a contract.  A later article will describe how program management roles differ between prime and sub-contracts.

As a member of the national security community, you are most likely in one of these categories

  • A direct employee of a federal agency or the DoD
  • A member of the military, providing support to or acting on data provided by or to the Intelligence Community (IC)
  • A contractor providing support to the DoD or a federal agency within the IC

If you are a contractor, you either work directly for a defense contractor in a management or services role, or you work on a prime or subcontract.  You may have heard the terminology, “I work for the Prime”, or “I work for a Sub.”  There is a difference. In order to really understand and grow within your career, you should be aware of the differences and how being on a prime or sub contract could impact you.

Within the IC, most prime contracts are granted by government agencies through a process called source selection.  To describe the whole contracting process in its simplest form, this is what happens:

  • An agency has a need for products or services. This could be a new need or an existing and continuing need with a contract that is due to expire.
  • The agency formalizes this need and engages with contracting companies, first to make them aware of an impending contract opportunity and possibly exchange ideas, then formally in what is known as the acquisition process.
  • Once the agency completes their acquisition plan and formalizes exactly what they need, the agency issues a Request for Proposal (RFP), sometimes openly and sometimes to pre-selected companies.
  • Prime Contractors and their team members (sub-contractors) develop a proposal response and submit it the agency for review.
  • The agency reviews the proposals received and selects a winner in a process known as source selection.
  • The selected Prime contractor meets with the government and finalizes the terms of the awarded contract and work begins.

This entire process is very complex and subject to close oversight from both federal as well as specific agency regulations that govern each step. The overarching federal regulation covering this activity is known as the Federal Acquisition Regulation (FAR).

Entire careers can be spent as agency members supporting the acquisition processes or in a contracting company in roles such as Business Development, Capture Management, Proposal Management, Contracts, or proposal support.

The Prime Contract

A prime contract is a direct contract with a contracting agency or company. Typically, contracts are established to provide a service or product to defined customer specifications/requirements. The prime contractor will have established a team and been responsible for overseeing the team’s development of a winning proposal and submitting their proposal response to the contracting agency. Once selected as the winning contractor, the agency and prime contractor negotiate the final terms of a contract.  This typically includes identifying exactly what needs to be done, measurement criteria, and final pricing. The prime contractor is responsible for ensuring that work gets accomplished to satisfy the terms of the contract that they have with the agency. This includes staffing and quality of contract performance.

The Sub-Contract

In order to win a contract, then perform well on that contract, prime contractors select team members that best compliment the prime’s ability to perform and even add new capabilities sought under the terms of the contract. Teaming Agreements (TA) are formalized and signed. The TA describes how the team member will be expected to support the prime before and after award and promises to issue a sub-contract once (and if) the prime contract has been awarded. Teams are typically built during the BD and Capture phases of the program acquisition process, although new team members can be added at any time. When a prime contract is awarded, the prime then issues subcontracts to team members as described in formal TA’s. These subcontracts will include, at a minimum, requirements for performing on the contract, a Statement of Work (SOW) or Appendix A that describes the work to be performed, and agreed-upon pricing and descriptions/requirements for each labor category.

A Worker’s Perspective

So, you are on a contract, providing support to a customer within an agency.  There are two things that you need to find out. The most important thing to know is what the Statement of Work says that you and your department are assigned to do.  A Work Breakdown Structure (WBS) is derived from the SOW and will provide the details of your labor category and job description. Your focus, whether you are on a prime or sub-contract is to know your job and do it well. Understanding your role is the first step. From there, you also can determine who your customers are, identify what excellence looks like to your customers, and learn what the overall contract goals are for your piece of the work. I always find that understanding the bigger picture helps me to perform my assigned functions. The second thing to find out is whether you are employed by the prime or a subcontractor.

Truth be told, as a worker, there is not a huge difference between primes and subs.  However, there are some impacts that you should be aware of.

  • The Staffing Process
  • Leadership
  • Inclusion or Exclusion

Staffing for sub-contractors is a little more difficult. When you apply to a company or pursue a new position with your existing company, there is an extra step in the process for sub-contractors.  This step, if you are a sub, is being submitted by sub-contractor managers to the prime managers for consideration.  This amounts to a second vetting for suitability. While not usually a problem, it is just something to keep in mind. As a prime program manager, I know what my program openings are and exactly what is needed on any team opening.  As a sub program manager, I may not have that level of insight, so I submit potential candidates for further vetting.

Leadership opportunities may be limited for sub-contractors. This is not true on all contracts, but, as a general rule, leadership positions are most often given to prime contractors. There are exceptions to this. As a sub-contractor, I have held leadership roles and some of my current employees, while sub-contractors, are in leadership positions. Leadership roles often provide more detailed insight into how the contract is performing, involves setting direction that satisfy both company and customer goals, and can provide closer coordination and involvement with agency customers than the prime would like for subs to have. Again, this is not a rule, but it does happen.

Inclusion. Once again, this is not a hard and fast rule, but generally speaking, prime contractors are typically included while subs can be excluded. Prime contractors can have more insight into the overall program goals, plans and accomplishments. They may be allowed to attend more meetings with the agency customer, may have more insight into contract performance and goals, and may even be allowed a voice in how to best support or achieve customer objectives.

If you are a sub-contractor, focus on performing your job role to the best of your ability. Demonstrate to prime leadership that you can look after prime as well as customer interests and this could lead to your being included more, and possibly even a leadership position. Whether a sub or prime, your focus is still on achieving customer mission objectives.  Identify excellence and then achieve it.  Prime or sub, your career will benefit.

Todd Keys is a Program Manager at Cantada, Inc. He has been in the intelligence Community for 30 years, as a member of the military (USAF), and as a contractor for top 100, top 10, and small business federal defense contractors. He has held multiple roles, CONUS and OCONUS, ranging from technician to executive, providing site O&M, system administration, engineering, supervision, contract management, and Capture/BD for the DoD and multiple intelligence agencies.