Government Subcontracting and Teaming: How to Partner for Success

Government contracting does not have to be a solo endeavor. In fact, some of the most successful small businesses in federal procurement build their initial revenue, past performance, and agency relationships through strategic partnerships with other contractors. Whether as a subcontractor gaining experience under an established prime or as a prime contractor assembling a team to tackle a large requirement, partnership strategies are fundamental to growth in the federal market.

The federal government actively encourages teaming and subcontracting. Large businesses that receive contracts over $750,000 are legally required to submit subcontracting plans with small business participation goals. The SBA's Mentor-Protege program creates formal pathways for experienced companies to develop small business partners. And joint venture rules allow small businesses to combine their certifications with a partner's resources to compete for contracts they could not handle alone.

This guide covers every major partnership strategy in government contracting: subcontracting, teaming agreements, joint ventures, and the Mentor-Protege program. It explains how each arrangement works, when to use it, and how to structure partnerships that create value for all parties.

What Is Government Subcontracting?

Government subcontracting occurs when a prime contractor engages another company to perform a portion of the work on a government contract. The subcontractor has no direct contractual relationship with the government; instead, the subcontractor's agreement is with the prime contractor.

Subcontracting is the most common entry point for small businesses in government contracting. It allows you to:

• Gain federal past performance without the overhead of managing an entire contract.
• Build agency relationships and learn the government's operating environment.
• Generate revenue while building the capacity to compete as a prime contractor.
• Meet small business subcontracting goals that prime contractors need to fulfill.

The Subcontracting Ecosystem

Large prime contractors need small business subcontractors for two reasons:

1. Regulatory requirements. FAR 19.702 requires contractors receiving contracts over $750,000 ($1.5 million for construction) to submit subcontracting plans with specific goals for small business, small disadvantaged business, WOSB, SDVOSB, and HUBZone participation.
2. Proposal scoring. Many solicitations evaluate a contractor's small business participation plan, and teams with strong small business involvement score higher.

This creates a natural market where large businesses actively seek qualified small business subcontractors, and small businesses benefit from the experience, revenue, and past performance that subcontracting provides.

Finding Subcontracting Opportunities

SBA SubNet

The SBA's SubNet (Subcontracting Network) database is a free resource where prime contractors post subcontracting opportunities. Search by keyword, NAICS code, state, and agency.

USAspending.gov Research

Use USAspending.gov to identify which companies are winning large contracts in your NAICS codes and target agencies. These are the prime contractors most likely to need subcontractors for upcoming recompetes and new awards.

Use SamSearch's Contract Search to analyze historical award data and identify patterns in prime contractor selection and subcontracting relationships.

Agency Industry Days

Federal agencies host industry days where prime contractors and small businesses can network. These events often include matchmaking sessions specifically designed to connect primes with small business subcontractors.

Direct Outreach

Most large government contractors have Small Business Liaison Officers (SBLOs) responsible for identifying subcontracting partners. Research the large businesses active in your industry and contact their SBLOs directly with your capability statement.

OSDBU Offices

Agency OSDBU (Office of Small and Disadvantaged Business Utilization) offices can connect small businesses with prime contractors seeking subcontractors. Contact the OSDBU at your target agencies.

Teaming Agreements

A teaming agreement is a formal arrangement between two or more companies to pursue and perform a government contract as a team. Unlike subcontracting, which is typically arranged after a contract is awarded, teaming agreements are formed before proposal submission.

Types of Teaming Arrangements

Prime/Subcontractor Teaming: One company serves as the prime and manages the contract. Other team members serve as subcontractors performing defined portions of the work.

Contractor Team Arrangement (CTA): Under FAR 9.6, two or more companies form a team where each member retains its own contract with the government. This is common on GSA Schedule task orders.

Key Elements of a Teaming Agreement

A well-drafted teaming agreement should address:

• Scope and purpose. The specific opportunity or set of opportunities the team will pursue.
• Roles and responsibilities. Which party performs what work, and who serves as prime.
• Work share. The percentage or scope of work allocated to each team member.
• Exclusivity. Whether team members are restricted from teaming with competitors for the same opportunity.
• Intellectual property. How proposal content and proprietary information will be protected.
• Term and termination. How long the agreement lasts and under what conditions it can be terminated.
• Dispute resolution. How disagreements will be handled.
• Key personnel. Individuals committed to the team for proposal and performance.
• Pricing agreements. How pricing will be developed and shared.

When to Use Teaming Agreements

Teaming agreements are most valuable when:

• The contract requires capabilities that no single company possesses.
• The solicitation evaluates team composition or small business participation.
• You want to combine certifications (e.g., pairing an 8(a) firm with a technical specialist).
• The contract is too large for one company to perform independently.
• Geographic coverage requirements exceed one company's footprint.

Joint Ventures

A joint venture (JV) is a separate legal entity formed by two or more companies to pursue specific government contracts. Joint ventures are more formal than teaming agreements and are commonly used in conjunction with the SBA Mentor-Protege program.

How Joint Ventures Work

A joint venture:

• Is created as a separate legal entity (typically an LLC).
• Has its own SAM.gov registration and UEI.
• Can be structured so that a small business member's certifications apply to the JV.
• Can cite the past performance of all member companies.
• Must comply with SBA regulations regarding management, control, and work performance.

SBA Rules for Small Business Joint Ventures

Under 13 CFR 121.103(h) and 124.513, small business joint ventures used for set-aside contracts must meet specific requirements:

• The small business participant must own at least 51% of the joint venture (or the JV must comply with the SBA's populated JV rules).
• The small business must serve as the managing venturer and control the JV's operations.
• The small business must perform at least 40% of the work on each contract.
• The JV can only be awarded up to three contracts within a two-year period (unpopulated JVs).

Advantages of Joint Ventures

• Access larger contracts by combining resources without losing small business status.
• Cite both partners' past performance on proposals.
• Build past performance for the JV and the small business member.
• Maintain certification benefits (8(a), SDVOSB, HUBZone, WOSB) through the small business partner.

The SBA Mentor-Protege Program

The SBA All Small Mentor-Protege Program is available to all small businesses certified under SBA programs (8(a), SDVOSB, HUBZone, WOSB) and even non-certified small businesses. It creates formal mentoring relationships where experienced companies help small businesses grow their government contracting capabilities.

How the Program Works

1. The small business (protege) identifies a potential mentor, typically a larger, more experienced contractor.
2. The protege and mentor develop a mentor-protege agreement outlining the assistance the mentor will provide.
3. The agreement is submitted to the SBA for approval.
4. Once approved, the mentor-protege pair can form a joint venture with special benefits.

Types of Mentor Assistance

Mentors can provide:

• Technical assistance: Access to the mentor's technical expertise, tools, and processes.
• Management assistance: Help with business planning, financial management, and organizational development.
• Financial assistance: Loans, equity investments, or bonding assistance.
• Contract assistance: Subcontracting work, introducing the protege to agency contacts.
• Personnel support: Temporarily assigning mentor employees to support protege operations.
• Trade education: Industry-specific training and knowledge transfer.

Mentor-Protege Joint Ventures

The most powerful benefit is the ability to form a joint venture where:

• The protege's small business certifications apply to the JV.
• The mentor's past performance, personnel, and resources can be cited.
• The JV is treated as a small business for size standard purposes.
• The protege must serve as the managing venturer and perform at least 40% of the work.

This structure allows a small, newly certified business to compete for contracts worth millions of dollars by leveraging the mentor's established track record and resources.

Finding a Mentor

Look for mentor candidates that:

• Operate in your NAICS codes and target the same agencies.
• Have strong past performance in areas that complement your capabilities.
• Have a genuine interest in developing your business (not just using your certification).
• Need small business subcontracting partners for their own subcontracting plans.

Use SamSearch's Contract Search to identify experienced companies winning work in your target areas and research potential mentor candidates.

Limitations on Subcontracting

The SBA imposes limitations on subcontracting to ensure that small businesses performing set-aside contracts are doing meaningful work, not simply passing the contract through to a large business subcontractor.

Current Thresholds

For small business set-aside contracts:

Similarly Situated Entity Rule

The SBA allows a prime contractor to count work performed by a similarly situated entity (a subcontractor that also qualifies as small and holds the same certification) toward the prime's self-performance requirement. This means two 8(a) firms can team together, and work performed by either firm counts toward the limitation on subcontracting threshold.

Structuring Successful Partnerships

Choose Partners Carefully

The most important factor in a successful partnership is alignment. Look for:

• Complementary capabilities. Partners should bring skills or resources that you lack.
• Compatible cultures. Working styles, communication, and values should align.
• Shared commitment. Both parties should be equally invested in winning and performing.
• Financial stability. Partners should be financially sound and able to perform.

Define Roles Clearly

Ambiguity destroys partnerships. Document:

• Exactly who performs what work.
• Decision-making authority and escalation procedures.
• Financial arrangements including payment terms and cash flow management.
• Performance standards and quality expectations.

Protect Your Interests

• Have legal counsel review all teaming agreements and JV operating agreements.
• Include intellectual property protections for proprietary processes and information.
• Address non-compete provisions to prevent a partner from competing against you on related opportunities.
• Define exit procedures for unwinding the partnership if necessary.

Build the Relationship Before You Need It

The best partnerships are formed before a specific opportunity arises. Invest time in relationship building:

• Attend industry events and introduce yourself to potential partners.
• Start with small subcontracting engagements before pursuing a joint venture.
• Build trust through consistent communication and reliable performance.

Frequently Asked Questions

What is government subcontracting?

Government subcontracting is when a prime contractor hires another company to perform a portion of the work on a government contract. Large businesses with contracts over $750,000 are required to submit subcontracting plans with specific small business participation goals, creating a consistent demand for small business subcontractors.

What is a teaming agreement?

A teaming agreement is a formal arrangement between companies to pursue and perform a government contract together. One company typically serves as the prime contractor, and the agreement defines roles, work shares, intellectual property protections, and other terms governing the partnership.

What is a joint venture in government contracting?

A joint venture is a separate legal entity formed by two or more companies for government contracts. Unlike teaming agreements, JVs create a new entity that can register in SAM.gov, hold certifications through its small business member, and cite all members' past performance.

What is the SBA Mentor-Protege program?

The SBA All Small Mentor-Protege program enables experienced businesses to formally partner with small businesses. Approved mentor-protege pairs can form joint ventures where the small business's certifications apply and both partners' capabilities are available for proposals.

How do I find subcontracting opportunities?

Search SBA SubNet, use USAspending.gov and SamSearch to identify prime contractors, attend agency industry days with matchmaking sessions, contact prime contractors' Small Business Liaison Officers directly, and engage with agency OSDBU offices.

What percentage of work must the prime contractor perform?

On small business set-aside service contracts, the prime must perform at least 50% of personnel costs. For supplies, at least 50% of manufacturing costs. For general construction, at least 15% of personnel costs. Work by similarly situated entities counts toward these thresholds.

What should be included in a teaming agreement?

Include roles and responsibilities, work share percentages, exclusivity provisions, intellectual property rights, term and termination clauses, key personnel commitments, pricing arrangements, and dispute resolution procedures. Have legal counsel review the agreement.

Can a small business be a prime contractor with a large business subcontractor?

Yes. Small businesses frequently prime contracts with large business subcontractors, especially on set-aside contracts requiring specialized expertise. The small business must maintain the required self-performance percentage under SBA limitations on subcontracting rules.

Next Steps

Whether you start as a subcontractor or build a teaming arrangement from day one, partnerships are a proven path to growth in government contracting. Begin by identifying potential partners using SamSearch's Contract Search to research companies active in your target agencies and NAICS codes.

Prepare your capability statement to present to potential partners, and attend agency industry days where primes actively seek small business teammates. For information on certification programs that enhance your value as a teaming partner, see our SBA Certifications Guide.