How do Government Subcontractors Work in Federal Business Process?

Prime contractors are typically those who work directly for the government, which in this instance is the federal government. In order for the prime contractor (prime) to complete the contract, the subcontractor would enter into an agreement to provide goods and/or services to the prime contractor. Government subcontractors can take advantage of this opportunity to gain valuable experience working with government agencies while building relationships with multiple government agencies at the same time.

 
Ensure your business is protected by subcontract provisions

Taking into account that Government subcontracts are commercial agreements between private parties is essential before discussing the specific provisions of your subcontract. Because every contract is unique, it is important to pay close attention to the details in your subcontract.

Following that, here are the key considerations to keep in mind:

• Changes – According to most subcontracts, the prime contractor has the option to change the work scope, deliverables, or performance criteria.
• Project Delays & Extensions –In typical subcontracts, there is a clause addressing what will happen if the project is delayed without the subcontractor's fault. Even though these clauses often exclude compensation for any additional costs incurred as a result of the delay, they may provide the subcontractor with an extension of time to complete their performance.
• Unforeseeable Events – These provisions help to protect government subcontractors from the risk of default in the event an unforeseeable event (often referred to as an "act of God") occurs, which prevents the subcontractor from being able to perform or frustrates the purpose of the contract.
• Suspension and Work Stoppage Provisions – Under these provisions, the prime may temporarily suspend performance as directed by the Government, and remedies may be provided to address costs incurred. There have been a number of notices sent to government subcontractors whose work is not workably instructing them to stop working until otherwise instructed.
• Subcontract termination – It is usually provided in subcontracts that the contract can be terminated before the end date. There are many instances when these are used in "Terminations for Default", which are terminations due to the subcontractor's failure to perform.