So, you signed an onerous subcontract. Now what?

Table of Contents

1. Introduction: The Reality of Bad Contracts in GovCon
2. Analyzing Your Contract
3. Digging in and Learning from the Subcontract
4. Widening Your Growth Opportunities
5. Investing in Contracts Expertise
6. Conclusion: Getting Back on Track and Strengthening Your Growth Plan
7. Key Takeaways
8. About the Author, Kathy Wright

GovCon or no, we have all been there.  We have made the bad deal.  We signed the paper without really reading and understanding it.  Whether we committed to the 3-year deal with the home alarm company with shoddy equipment and worse customer service or signed the exclusive teaming agreement thinking, “This is the ONE!”, only to end up with a one-sided subcontract with a fraction of the work share that we were promised, we have all experienced the rush of wind leaving our sails the moment we realize that we have been had.  That rush is the sound of your company’s growth plan moving backwards.

What comes next?  How can a GovCon make the best of a bad contractual relationship?

1. Have your contract analyzed by a professional.   Maybe there is a contractual loophole or exit ramp that can let you out short of default.  Does your prime have the right to issue your task orders unilaterally? If not, finish the ones you have and decline new ones. If yes, what are the consequences of not filling a role/labor category?  If the prime reserves the right to fill it themselves versus termination for default, let them.  However, if there is no way out short of default, then perform and move to step 2. 
2. Dig in, learn everything you can and use it to your advantage.  Immerse yourself in this ugly subcontract.  Read the prime contract and all its attachments and modifications.  Figure out why your prime was awarded this contract and model the best attributes of that behavior so you can compete as prime on the follow-on or even adjacent contract opportunities.  Did they win because they do great quality work, or because they assembled a strategic team of solid performers and an attractive blend of small business categories?  Learn everything you can. Network with the other subcontractors on the effort.  Your subcontract may prohibit you from direct discussion with the government, but it probably does not restrict your conversations with other teammates.  View your time in this contract as “on the job training” to become a prime in your own right and take the next opportunity for yourself. 
3. Widen your net. The more options you have for growth, the less likely the temptation to partner with an undesirable prime. See an opportunity in SAM.gov that is in your square but too large for your small business?  Do your homework, find the incumbent, and meet with them to explore opportunities for you on their team. Find like-minded businesses that complement yours and explore joint venture opportunities, especially if your small business is one of the special categories (e.g., minority/veteran/woman owned).  Proposals are a numbers game. You will not win them all, but you will win some.  Attempt as many as you can manage, both as a prime and as a subcontractor, and afford yourself the luxury of choosing only offers that are solid paths to growth. 
4. Don’t let history repeat itself.  Find an experienced government contracts consultant that knows the GovCon world and invest in your bid and proposal process by getting each of the contractual stepping stones reviewed and negotiated.  From the RFP to the non-disclosure agreement to the teaming agreement to the subcontract agreement and all the changes that come with performing, have an ally in your corner.  

Yes, for a small business, adding a GovCon-centric contracts guru to your payroll with a competitive salary and benefits package to keep them engaged can be cost prohibitive, but BOOST LLC offers a consultant for government contracts service to GovCons as “pay for play”.  Use what you need, when you need, without sweating the expanded payroll.  You are always the decision-maker who signs the bottom line, but with BOOST you will make those decisions with eyes wide open.  And that sound you hear now?  That’s the sound of your growth plan back on track and stronger than ever.     

Key Takeaways

• Bad subcontracts are a common experience in GovCon and can hinder company growth plans.
• Having a professional analyze your subcontract can help identify potential loopholes or exit options.
• Immersing yourself in the subcontract and studying the prime contract can provide valuable insights for future opportunities.
• Networking with other subcontractors can expand your GovCon network and build relationships.
• Exploring diverse growth options and pursuing multiple proposals increase chances of success.
• Investing in contracts expertise, whether through hiring or external services, can prevent future contract pitfalls.
• Making informed decisions with eyes wide open can put your growth plan back on track and make it stronger than ever.
• Adding an expert government contracts consultant to your staff may be a good idea, but it could be just as cost prohibitive to employ back office services for GovCons as a “pay for play” option.

About the Author, Kathy Wright

Kathy Wright is a contracts and procurement professional with more than 30 years of experience working with government and commercial contracts.  She has worked for both small and large businesses and has developed a contracts management style that blends agility with process improvement.