You do not need to win a prime contract to start earning money in government contracting. Thousands of small businesses enter the federal market as subcontractors first. They build experience, earn past performance ratings, and learn the rules while working under an established prime contractor.
The federal government spent over $755 billion on contracts in fiscal year 2024. Large businesses that win those contracts are required by law to give small businesses a fair share of the work. That requirement creates a built-in pipeline of government subcontracting opportunities for companies like yours.
This guide shows you where to find those opportunities, how to approach prime contractors, and how to turn subcontracting into a stepping stone toward prime contracts of your own.
What You’ll Learn
- Why subcontracting is the smartest entry point for new government contractors
- How FAR 19.702 forces large businesses to create subcontracting opportunities
- Six places to find subcontracting opportunities right now
- The difference between subcontracting, joint ventures, and teaming agreements
- How SBA and DoD mentor-protege programs work
- A 7-step process for approaching prime contractors
- How to build past performance through subcontracting
Why Subcontracting Matters for New Contractors
A subcontractor performs a portion of the work under a prime contract. The prime holds the direct relationship with the government. The subcontractor’s relationship is with the prime, not the agency.
That structure creates four advantages for newcomers:
- Build past performance without prime contract risk. Subcontracting gives you documented work history you can cite in future bids.
- Learn the regulatory environment with a safety net. Your prime handles most compliance obligations. You learn by doing.
- Build relationships with established primes. Strong subcontract performance often leads to larger roles on future contracts.
- Start earning revenue faster. Most small businesses take 6 to 12 months to win their first prime contract. Subcontracting can produce revenue in weeks.
Federal law requires “maximum practicable” subcontracting opportunities for small businesses. That is backed by specific rules in the Federal Acquisition Regulation (FAR).
The Legal Engine: FAR 19.702 Subcontracting Plan Requirements
Federal law requires large businesses to submit subcontracting plans on contracts above certain dollar thresholds. This is the mechanism that creates government subcontracting opportunities for small businesses.
Here are the current thresholds, effective October 1, 2025:
| Contract Type | Subcontracting Plan Required Above |
|---|---|
| Most contracts | $900,000 (up from $750,000) |
| Construction contracts | $2,000,000 |
Source: FAR 19.702, Acquisition.gov Threshold Changes
If a large business fails to negotiate an acceptable plan, it is ineligible for the award. The plan must include goals for contracting with small businesses, small disadvantaged businesses, Women-Owned Small Businesses (WOSBs), Historically Underutilized Business Zone (HUBZone) firms, Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), and veteran-owned small businesses.
Small businesses are not required to subcontract. But the fact that large businesses must subcontract creates a steady supply of opportunities for your firm.
Six Places to Find Government Subcontracting Opportunities
Opportunities do not come to you. You need to know where to look. Here are six proven sources.
1. SBA SubNet (Subcontracting Network)
SubNet is the Small Business Administration’s (SBA) free database where large prime contractors post subcontracting opportunities. Search by keyword, North American Industry Classification System (NAICS) code, state, or small business type. No account required: SBA Subcontracting Opportunities
2. SBA Prime Contractor Directory
The SBA publishes a directory of federal prime contractors with active subcontracting plans. Use it to find which companies must subcontract in your industry, then visit their websites to learn about their supplier registration process.
3. SAM.gov Contract Data
Search SAM.gov to find which companies hold large contracts in your NAICS codes. If a large business holds a $10 million IT contract, that company almost certainly has a subcontracting plan with small business goals. That is your opening.
4. Agency OSDBU Pages
Every major federal agency has an Office of Small and Disadvantaged Business Utilization (OSDBU). These offices publish upcoming procurement needs, prime contractor information, and subcontracting resources. Check the OSDBU website for every agency that buys what you sell.
5. USAspending.gov
This free tool tracks every federal dollar spent. Search by NAICS code to find which companies win contracts in your space, then research those companies for subcontracting opportunities.
6. Industry Days and Matchmaking Events
Federal agencies host events where small businesses meet prime contractors. These include agency-hosted industry days, SBA matchmaking expos, OSDBU vendor outreach sessions (such as the Department of Homeland Security’s virtual 15-minute matchmaking meetings), and APEX Accelerator networking events. Check agency OSDBU websites, the SBA events calendar, and your local APEX Accelerator for upcoming events.
Teaming Structures: Subcontracting vs. Joint Venture vs. Teaming Agreement
Subcontracting is one of three common teaming structures in government contracting. Each serves a different purpose and carries different risks. Here is how they compare:
| Feature | Subcontracting | Joint Venture | Teaming Agreement |
|---|---|---|---|
| New legal entity? | No | Usually yes | No |
| When formed | After contract award | Before or during proposal | Before proposal (capture phase) |
| Direct relationship with government | Prime only | Joint venture entity | Prime only |
| Liability | Prime bears all | Joint and several | Each party for own work |
| Size status | Based on prime’s size | Based on JV entity (SBA rules apply) | Based on prime’s size |
| Duration | Contract duration | Contract duration + close-out | Typically expires at award |
| Key document | Subcontract agreement | JV operating agreement | Teaming agreement |
| Best for | Performing defined work scope under a prime | Two firms bidding together as one entity | Setting roles and intent before a bid |
A teaming agreement sets intent during the capture phase. After award, it converts into a subcontract or joint venture operating agreement. A joint venture creates a separate entity where both parties share risk and reward. Under the SBA mentor-protege program, a mentor-protege joint venture can qualify as small if the protege individually qualifies.
For most newcomers, subcontracting is the right starting point. Lowest legal complexity, lowest risk, and it delivers the experience you need to grow.
SBA Mentor-Protege Program vs. DoD Mentor-Protege Program
Two major mentor-protege programs exist in federal contracting. They serve different purposes and offer different benefits.
The SBA program is government-wide and focused on joint venture opportunities at the prime contract level. Any SBA-certified small business can be a protege. The protege must own at least 51% of the joint venture and perform at least 40% of the work. Agreements last 3 years (extendable to 6), and a protege can have different mentors for different NAICS codes.
The Department of Defense (DoD) program is focused on strengthening the protege’s ability to perform as a subcontractor on defense contracts. The key difference: DoD reimburses mentors for the costs of assisting proteges and gives mentors credit toward their subcontracting plan goals.
| Feature | SBA Mentor-Protege | DoD Mentor-Protege |
|---|---|---|
| Scope | All federal agencies | DoD only |
| Primary benefit | Joint venture qualifies as small | Financial incentives for mentor |
| Who pays for mentoring? | Mentor (no reimbursement) | DoD reimburses mentor |
| Protege eligibility | Any SBA-certified small business | Small disadvantaged, WOSB, SDVOSB, HUBZone, and other categories |
| Duration | 3 years (extendable to 6) | 3 years (extendable) |
| Best for | Firms seeking prime contract opportunities | Firms seeking DoD subcontract growth |
Sources: SBA Mentor-Protege Program, CRS Report on Mentor-Protege Programs
How to Approach Prime Contractors: A 7-Step Guide
Finding opportunities is only half the battle. You also need to know how to introduce yourself to primes. Follow these seven steps.
- Research the prime before making contact. Use SAM.gov, USAspending.gov, and the prime’s website to understand their contract portfolio and small business goals. Walking in informed sets you apart from cold contacts.
- Prepare a tailored capability statement. Include your core competencies, past performance, small business certifications (8(a), HUBZone, WOSB, SDVOSB), NAICS codes, and Unique Entity Identifier (UEI). Prepare two or three versions for different audiences.
- Attend industry events where primes are present. A 15-minute face-to-face conversation at a matchmaking event is worth more than 50 cold emails. Bring printed capability statements and a 30-second pitch.
- Send a personalized email. Contact the prime’s small business liaison or supplier diversity office. Reference a specific contract or need. Keep it under 200 words.
- Register in their supplier portal. Most large primes (Lockheed Martin, Booz Allen Hamilton, SAIC, Leidos) maintain online registration systems. Complete the registration for every prime in your space.
- Follow up without being pushy. Send a follow-up two weeks after initial contact, then once per quarter.
- Be patient and stay ready. It typically takes 6 to 12 months to develop a working relationship with a prime. Stay visible, attend events consistently, and be ready to deliver when the call comes.
Building Past Performance Through Subcontracting
Past performance is the currency of government contracting. Without it, your proposals lose points. Subcontracting is the fastest way to build a track record.
The Contractor Performance Assessment Reporting System (CPARS) is the government-wide database where agencies record performance evaluations on a five-point scale: Exceptional, Very Good, Satisfactory, Marginal, and Unsatisfactory. Only the prime’s performance is formally evaluated, but the evaluation includes a section where key subcontractors and their contributions can be documented.
Five Ways to Build Your Record as a Subcontractor
- Ask the prime to document your contributions in CPARS. When the prime receives their evaluation, they can identify you as a key subcontractor and describe your role.
- Collect reference letters from every prime you work with. Request written references describing your scope, deliverables, and performance quality.
- Maintain your own performance records. Track scope, deliverables, metrics, and outcomes for every subcontract.
- Track dollar values and contract duration. Proposal evaluators want to see you have handled work of similar size and complexity.
- Cite subcontracting experience in future proposals. Agencies evaluate subcontract past performance, though it carries less weight than prime experience.
Source: CPARS.gov, FAR Subpart 42.15
The 50% Limitation on Subcontracting Rule
If you win a set-aside contract as a small business prime, you cannot subcontract all the work to someone else. FAR 52.219-14 sets minimum performance requirements to ensure that small business set-asides actually benefit small businesses.
Here are the current limits:
| Contract Type | Minimum the Small Business Prime Must Perform |
|---|---|
| Services (except construction) | 50% of the cost of contract performance incurred for personnel |
| Supplies (non-manufacturer) | 50% of the cost of manufacturing (excluding materials) |
| General construction | 15% of the cost of the contract (excluding materials) |
| Construction with specialty subcontractors | 25% of the cost of the contract (excluding materials) |
Source: FAR 52.219-14
This rule matters from both sides. As a sub, the prime cannot hand you more than the allowed share. As a future prime, plan your teaming arrangements to stay within these limits. Violations can result in the prime losing its small business status and facing SBA investigation.
Frequently Asked Questions
Do large contractors have to subcontract with small businesses?
Yes. Under FAR 19.702, large businesses must submit subcontracting plans on contracts exceeding $900,000 ($2 million for construction). These plans must include specific goals for awarding work to small businesses, women-owned firms, HUBZone firms, and other categories. If they fail to submit an acceptable plan, they cannot win the contract.
Can subcontractors get past performance ratings in CPARS?
Not directly. Only the prime contractor receives a formal CPARS evaluation. However, the prime can document key subcontractors, their UEIs, and their contributions within the evaluation. You should also collect reference letters from primes and maintain your own detailed performance records for use in future proposals.
What is the difference between a teaming agreement and a subcontract?
A teaming agreement is a pre-award document that sets intent. It says which company will be the prime, which will be the sub, and what each party’s role will be. A subcontract is a post-award, legally binding agreement that defines scope, deliverables, payment terms, and flow-down clauses. The teaming agreement comes first. The subcontract makes it official after the prime wins.
How much of a government contract can be subcontracted?
For small business set-aside contracts, the prime must perform a minimum percentage of the work under FAR 52.219-14. For service contracts, the prime must perform at least 50% of the personnel cost. For general construction, the prime must perform at least 15% of the contract cost (excluding materials). Large business primes on non-set-aside contracts face fewer restrictions but must still comply with their subcontracting plans.
How long does it take to get a subcontracting opportunity?
Timelines vary widely. If a prime contractor has an immediate staffing need, you could start work within weeks. Building a relationship from scratch typically takes 6 to 12 months. The fastest path is attending matchmaking events where primes have identified specific needs and are actively looking for subcontractors to fill them.
Your Next Step
Start today with three actions:
- Search SBA SubNet for subcontracting opportunities in your NAICS codes
- Download the SBA Prime Contractor Directory to identify primes that must subcontract in your industry
- Build or update your capability statement so you are ready when you find the right prime
Once you have built experience as a subcontractor, you will be ready to explore state and local government contracting or move into prime contracting through the federal market.
This article is for informational purposes only. It is not legal, financial, or regulatory advice. Consult with qualified professionals for guidance specific to your business.
