What is a prime and a sub?

Chris WiedemannWhat is a prime and a sub?By Chris Wiedemann, consultant

So far in our “What is…?” series, we’ve covered some of the basics of selling commercial items to the federal government, and with good reason – at immixGroup, our suppliers and partners are in the commercial business, and we care about the way our customers buy our products.

However, if you dig into the numbers, you’ll see that the bulk of the federal government’s annual IT spending doesn’t go to buying standalone commercial products. Instead, the bulk of IT contracting is done for services – in other words, paying companies to do things like staff federal data centers; provide hosting and infrastructure management; or develop, engineer and manage complex solutions and mission systems.

This means that we should be discerning when researching budgets, in order to make sure that the money we see on the page is actually addressable for commercial vendors – but it also means a new customer base, since the companies handling services contracts often need to buy commercial products in order to deliver on the business they win.

We’ll look at some of the intricacies of selling to contractors in future posts. For now, it’s important to understand a critical distinction – the difference between prime contractors and subcontractors often referred to as “primes” and “subs” respectively.

As the name implies, a prime contractor is the company (or companies, in the case of a multi-award contract) chosen by the government to perform whatever task is being solicited. For example, if an agency like the Department of Health and Human Services requires a new, custom-developed, mission-critical solution, they might choose to contract that work out to one or more primes rather than building the solution in-house.

As you might expect, prime contractors are the household names of the industry, in part because many of them have built decades of experience doing the kind of complicated work that federal agencies contract out. In fact, in some cases, prime contractors who are entrenched in a program or agency will know it better than the agency’s leaders, many of whom are political appointees and tend to rotate out of government with the administrations that appointed them. There are even programs that, despite having a government full-time employee as a named program manager, are run by primes. This means that prime contractors are an important customer group and any federal sales strategy needs to take them into account.

Despite their experience with complex solutions, the large businesses that often win prime contract awards are sometimes incapable of delivering everything the government wants themselves. This creates a lane for smaller, more specialized companies to team up with the large primes and become part of their bid – playing the role of a subcontractor. For example, if an agency requires a large mission system to include help desk support, the prime may want to outsource – or “sub out” – management of that help desk to a smaller company that specializes in that kind of work. Subcontracting is a great way to either target companies with a niche commercial solution, or get involved in systems development and integration to support mission-critical solution sets.

The definitions I’ve given above are by no means comprehensive. There is a wide world of government-facing contractors out there, all of whom partner with each other at different times for different reasons. The general dynamic of one or more primes with various subcontractors, however, tends to hold throughout federal contracting.

To get a more in-depth understanding of government contracting, sign up for my next class on Fundamentals of Selling IT to the Federal Government on Oct. 27 at immixGroup’s McLean, VA headquarters.

One Response to What is a prime and a sub?

  1. Pingback: What is a prime and a sub? | Government Sales Insider - Government Aggregator

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