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Subcontracting:
Advantages of Being a Subcontractor
For companies that wish to avoid the perceived complication of dealing directly with the government, but still want to benefit from providing services to the country's single largest buyer, subcontracting is the ideal solution.
- Contractual relationship is with prime contractor. As a subcontractor, you have no contractual obligation to the government. Your agreement is to provide services or supplies to the prime contractor.
- Payment protection. The government requires that subcontractors be paid before the prime contractor is paid. In contrast, private sector payments from large companies frequently exceed desirable payment periods, putting additional cash flow constraints on the small company.
- Reduced administrative requirements. While some responsibilities are carried to the subcontractor - such as complying with drug/alcohol testing - the administrative requirements are less than those required of the prime contractor.
- Direct chain of communication. Companies dealing directly with the government must follow prescribed procedures for submitting and seeking resolution of problems. Subcontractors are limited only by their relationship with the prime contractor, and problems can frequently be resolved by a single e-mail or phone call.
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