Benefits if small businesses are considered in the subcontract solicitation process
Large companies often need to sub-contract government projects to small business for assistance on specialized projects (Burlingham, 2016). In such cases, sub-contracting small businesses can be beneficial in terms of efficiency, cost, and quality. In fact, recently, the government released the Small Business Act (SBA) emphasizing that a certain portion of its projects should be sub-contracted to small businesses (O'Connor, 2009). This Act seeks to promote contract awards to small businesses. In some way, this Act presents some significant benefits to large companies that consider small businesses in their subcontract solicitation process.
Most big corporations that have already experienced government contracting agree that the best way to approach these contracts is to secure the work by sub-contracting experienced small businesses (O'Connor, 2009). Many large businesses prefer subcontracting work to small businesses. This is a tip to land government contracts. Particularly, small businesses tend to narrow their focus down to two or three agencies, which appear to be the best prospects. Therefore, they can easily bump into the numerous opportunities provided by the government.
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Big companies need small business just as small businesses need them. The truth of the matter is that though big companies are the prime government contractors, they cannot do everything in-house (Burlingham, 2016). Hence, they need the services and products that only qualified small business can deliver. Due to the economic situation and the magnitude of government contracts, many big companies cannot produce goods and services as they did in previous years. This is particularly true when talking about niche or unique products and services that are commonly provided by small businesses (Burlingham, 2016). As a result, they obtain these specialized goods and services from other small providers in the market and become the avenue for delivering the final product or service. In addition, big companies need to sub-contract small businesses to meet the government’s socio-economic requirements (Holtz, 2012).
To what extent will adding these requirements mean additional costs will be incurred in administration and reporting of compliance?
Experts argue that adding these requirements may cause additional costs in terms of administration and compliance (O'Connor, 2009). This is because these extra requirements exert a disproportionately large burden on big companies due to the extra costs of supervising and ensuring that the small contracting business adheres to rules of the game of the big company’s industry. In addition, this requirement may make big companies less competitive in the overseas markets (Holtz, 2012). It creates inefficiencies within the business structure of American enterprises, which in turn negatively affects the global competitiveness of locally manufactured goods and services and leads to the shifting of manufacturing facilities to less government-regulated economies. Further, adding this requirement may yield uncertainty and unintended consequences. Big companies may be required to file their financial reports plus the financial reports of the sub-contracted businesses. This may result in unrelated non-compliance charges arising from the contracted company that imposes heavy compliance costs on big company owners (Burlingham, 2016).
Consequently, both small and big firms depend on subcontractors for help with specialized and short-term government projects. In this view, the government requires that big companies must consider small businesses in their contract solicitation process. However, big companies must decide whether this is worthwhile by evaluating their current situation and consulting their business operations. It might be advantageous to let small businesses do the work on your behalf.
References
Burlingham, B. (2016). Small giants: Companies that choose to be great instead of big . Penguin Publishing Group.
Holtz, H. (2012). Government Contracts: Proposalmanship and Winning Strategies . Boston, MA: Springer US.
O’Connor, T. (2009). Federal Contracting Answer Book . San Francisco: Berrett-Koehler.
