You’re Only As Good As Your Worst Subcontractor
You’re planning to write the best proposal you possibly can. You’ve compiled years of positive past performance, assembled the most capable project management team, developed the most outstanding product to support your agency’s mission, demonstrated your ability to efficiently transition the ongoing work over from the predecessor contractor, put together a subcontracting plan that meets the RFP’s subcontracting goals, and arrived at a competitive price that comes in well below the government estimate. What could possibly go wrong?
Depending on how much thought you really put into that subcontracting plan, you could be setting yourself up to face more problems than you realize.
Subcontractors can be tremendously beneficial to your proposal; a good sub can bolster your qualifications and make you more likely to win the contract. As the prime, however, you need to make sure you’re doing your homework on the subs you plan to use. Here are three of the most common subcontracting pitfalls you need to avoid:
1. Hiring Underqualified Subs
Hiring an underqualified sub is one of the worst mistakes you can make, especially on a construction project. To ensure the technical qualifications of prospective subs, it’s a good idea to take the project specifications from the RFP and create a list of desirable qualifications that exceeds what is necessary for the scope of work.
Consider qualification items like similar project experience, project management and staffing approaches, client satisfaction, company safety policies, and others. Compiling a list of acceptable subs based on qualifications that go beyond what is required by the contract at hand will set your proposal up for success.
2. Hiring Subs With Poor Past Performance
You have to take a close look at your proposed subs’ past performance references, because the Government is certainly going to. In a recent bid protest, a $147 million award made by NASA was challenged on the basis that the awardee’s proposed subcontractor had received only a “moderate” confidence rating on a contract it referenced as past performance. Although the proposal was unsuccessful, the big takeaway was that the Government evaluators do look into subs’ past performance references, and it’s a good idea for you, as the prime, to have already done that research.
If you’re proposing a sub that has skeletons in the closet, you need to know in advance—either so that you can explain them away, or so that you have time to propose a different subcontractor.
3. Failing to Negotiate Intellectual Property Clauses
For many federal contractors, success in the marketplace depends on their ability to develop and maintain proprietary software and processes that distinguish them from the competition. When teaming with a subcontractor, it’s important to execute, prior to the disclosure of any proprietary information, a written confidentiality agreement restricting access to that information by third parties.
Ownership of intellectual property created during the course of performance should be negotiated, too, especially if the delivery of software or other technology is central to contract performance. Whether the sub will be creating works for hire, retaining ownership of intellectual property that is licensed to the prime, or participating in the creation of intellectual property that will be jointly owned by the prime and the sub, it’s important to have ownership details ironed out in advance in order to keep unintended prime/sub conflicts from throwing the project off course.
The Government is going to do its homework when it comes to the subcontractors you list in your proposal. Evaluators will dig into your proposed subs’ qualifications and past performance; you don’t want to be in the position of being surprised by their findings. If you avoid proposing subs that are underqualified or light on favorable past performance, and you take the extra steps to clearly delineate intellectual property ownership in advance, you can proceed knowing that your prime/sub relationship will be a benefit to your proposal rather than a liability.