Should You Pursue Your Own GSA Schedule or Partner with a GSA Contractor?

Once you decide to penetrate the federal market and start selling to the government, there are two major ways to do it. The first one is to get your own Schedule contract. The other one is to partner with another GSA contractor. Which way is better? Let’s take a look at pros and cons.

• Two ways to sell to the government
• Getting your own Schedule contract
• Advantages of getting your own GSA Schedule
• Disadvantages of your own GSA Schedule
• Partnering with a Prime contractor
• Advantages of partnering with a GSA contractor
• Disadvantages of being a subcontractor to another GSA contractor

Two ways to sell to the government

The Multiple Award Schedule (MAS) program allows two routes to sell products and services to the government. One way is by becoming a prime GSA contractor, and the other one is through subcontracting, when a vendor without a GSA Schedule partners up with a prime contractor, and offers products and services to the government indirectly, through the agency of that authorized GSA reseller.

While both options are potentially very beneficial for your company, each contracting approach has its advantages and disadvantages. We recommend carefully considering alternatives and making an informed decision.

1. 1. Getting your own Schedule contract

Acquiring your own Schedule is one way to offer your products to federal agencies that are buying through the GSA Schedules. How does one get a Schedule contract? Overall, the steps are as follows:

• Prepare a document package for GSA application
• Register your business as SAM.gov (System for Award Management)
• Submit your documents for review
• Negotiate prices, terms and conditions with a GSA representative
• Secure a GSA MAS contract

Obviously, a random company simply cannot start selling to the government. There are certain strict requirements to every potential contractor. The company must be financially stable; it must have a minimum of two-year experience in the industry where it wants to offer its services or products to the government; the company also must be compliant to the Trade Agreements Act. Overall, the process of application for a GSA Schedule and becoming a prime contractor takes 9-12 months to complete.

1. Advantages of getting your own GSA Schedule

The pros of being a certified GSA contractor are well known. We’ve discussed them in this article and also here. In comparison with subcontracting, your own GSA Schedule contract has the following benefits:

• Unlimited potential. There is no upper limit on the size of an order. A GSA Schedule can yield million dollar contracts as long as you qualify for them.
• Freedom to select clients. Since you work with federal buyers directly, you can control the process in full, and respond to solicitations you are interested in.
• Faster turnaround. You get paid faster by working with the government directly..
• Reputation. In addition, being an authorized GSA contractor helps on the commercial market .

Disadvantages of your own GSA Schedule

The government contracting job has its disadvantages too.

·  Costs. There are costs of obtaining a GSA Schedule and maintaining it. You also need to pay the Industrial Funding Fee.

·  Long review times. Overall, reviewing your GSA Schedule submission requires around 9-12 month to complete.

· Minimum sales requirement. If you sell below the annual minimum, your contract can be cancelled. And in fact, many vendors really face such an outcome.

· Full liability. Unlike subcontractors, a prime GSA contractor bears full responsibility for every single word in the contract.

· The GSA plays its own game. The government sets its own rules and can terminate an active GSA Schedule contract at its own convenience, unilaterally. This fact is among many things many GSA contractors do not know about GSA Schedules.

As you see, acquiring your own GSA Schedule contract is both more profitable and more risky, at the same time. Let’s take a look at another option – partnering with an authorized GSA contractor. 

2. 2. Partnering with a Prime contractor

Unlike prime GSA contract holders, subcontractors cannot work with the government directly. Instead, they work with other contractors. This means that the major advantage of being a subcontractor and partnering with another GSA contractor is you don’t have to acquire a GSA Schedule yourself. We’ll get to other advantages soon, but for now let’s review how a small business can become a subcontractor.

In fact, many small businesses start their government contracting operation as subcontractors. Indeed, this is a great opportunity for a business to get their first sales on the federal market, learn the basics of government contracting, and get ready for more, without investing too much into acquiring a GSA Schedule.

How to partner with an authorized GSA contractor? The high-level procedure is as follows:

1. Find prime contractors. There are several ways to find potential opportunities for partnering:

·  GSA eLibrary.

·  FBO.gov

·Small Business Administration Subcontracting Network

·  Schedule Sales Query Plus (SSQ+)

2.Contact potential partners. Once you have located a number of prime GSA contractors you could be offering your products or services to, you need to contact them. There is not a unified, GSA-wide way to contact prime contractors, so you should do this directly. Get the contact of a contractor and send an e-mail message to them. We recommend using this rough template:

· Explicitly state that you are contacting them regarding a GSA subcontracting partnership

· Provide all the information about your company: your DUNS and CAGE, your NAICS codes, your expertise and past performance

·  If your business qualifies for one of GSA set-asides like WOSB, 8a, HUBZone, VOB etc., specify that too. Prime contractors may find it profitable to delegate some of the work to a small disadvantaged business, to cut down costs.

· Ask for documents, forms, contracts and agreements you need to fill out to become a subcontractor.

Importantly, for some RFQs, prime contractors are often required to submit a subcontracting plan; otherwise they may be unable to fulfill the requirements of the given solicitation. This means that prime contractors are also potentially interested in partnering with you!

3.Start the partnership. Provide all the necessary documents to the prime GSA contractor, such as: representation of the size and socio-economic status of your company, financial status, commercial practices, pricelists and so on. Note that you would be signing the agreement with the prime contractor, not the GSA.

1. Advantages of partnering with a GSA contractor

While working individually through your own GSA Schedule may be more profitable in the end, partnering with an authorized GSA reseller has its advantages as well, especially if you are new to the federal market. Here are some major pros of working with a GSA contractor as a subcontractor.

• You don’t need a Schedule. This means no costs for acquiring the Schedule, and no maintenance costs either. You can start selling to the government with a relatively lower budget.
• You can start early. While pursuing your own Schedule can easily take up to a year, with subcontracting you can start much faster. All you need is to find a good company among existing GSA contractors and partner with it.
• Reduced liability. The prime contractor holds responsibility for quality of products and expedience of delivery. Compliance issues are also none of your business.
• Prime contractors are interested in you. Yes, according to FAR 19.702 prime contractors are required to submit a subcontracting plan if the overall contract cost is going to exceed a certain amount, typically $750,000 for normal solicitations, and $1.5 million for construction solicitations.
• Bidding is somewhat easier. Since you don’t actually compete with ALL vendors on the market, bidding for subcontracting opportunities is less competitive. The procedure is also a bit simpler.
• Government offers protection. The GSA provides protection for a subcontractor against certain abuses from the prime. This often means you will be paid even if something goes wrong with the prime GSA contract.
• Less administrative burden. Since all the hassles are on the prime contractor, you don’t need to assign anyone, solely to manage your GSA contract.
• You gain experience. The federal market is a brave new world. Even if you are a shark on the commercial market, this doesn’t mean you will be as successful playing by the government rules. Working some time as a subcontractor allows you to gain experience required to happily acquire your own Schedule in the future.

Disadvantages of being a subcontractor to another GSA contractor

Of course, being a subcontractor implies some minuses. A few of them are:

• Lower potential. While you can still secure lucrative contracts by partnering with a GSA contractor, there is still an upper limit that you as a subcontractor will hardly exceed. Partially, this is because a GSA contractor is required to fulfill a certain percentage of the work with its own employees and cannot delegate it to subcontractors, especially if the subcontractors work in other socio-economic conditions.
• Subcontractors are still a subject to flow-down compliance. What does this mean? This means a prime contractor can and must flow-down certain compliance issues to its subs. Yes, you are not at risk of sanctions from the GSA due to TAA compliance issues, but you still must pay attention to them. If an awarding agency chooses your prime GSA contracting partner as a target of a compliance review, it may then be required to flow-down come clauses of their contract to you.
• No direct relationship with GSA representatives. If you aren’t ready for your own Schedule yet, that’s not a big deal. But gathering contacts and building relationships with GSA procurement officers is extremely advantageous for any GSA contractor, so without a way to hear and understand the final client, you are doomed to wander helplessly in the dark of the GSA contracting system.
• You have to adapt to prime’s way of doing business. You partner with an authorized GSA contractor and are hence obliged to follow its commercial practices, even if you’d prefer not to. Sometimes this may even require drastic changes to the way you do your business. And the question is: are you ready to sacrifice a part of your business independence for the ability to sell to the government?

Conclusion

Whether you prefer a solo sailing or decide to partner with an authorized GSA contractor, the resulting sales depend on many factors. There is hard work to do regardless of the chosen option. And Price Reporter is ready to lend a hand in helping you find the best way to secure government sales for your business, and acquire either a profitable GSA contract or a subcontracting opportunity.