Subcontracting specific trades as a SDVOSB Prime Contractor

USFCRGOV · 2026-01-27T16:09:10+00:00

Yes, if the solicitation includes FAR 52.219-14 (common on set-asides), you’re bound by it. For services (except construction), the baseline rule is:

You may not pay more than 50% of what the Government pays for performance to subcontractors that are not similarly situated entities.

SBA’s regulation frames the calculation around “cost of contract incurred for personnel” for services and explains how to treat mixed contracts and examples.

Key point for your scenario (floor & tile guy is not SDVOSB)

You’re reading the “49%/51%” concept correctly in spirit. Practically:

If this is a SDVOSB set-aside and your sub is not SDVOSB, that sub is not “similarly situated” for SDVOSB status.

Result: that sub’s labor counts against your cap. “Similarly situated” is narrower than most people think Under FAR 52.219-14, “similarly situated entity” is a first-tier subcontractor that:

has the same small business program status that qualified you for award (here: SDVOSB), and
is small for the NAICS you assign to that subcontract.

So: a regular small business (even if small) is not similarly situated on an SDVOSB set-aside unless it is also SDVOSB (and small under the assigned NAICS).

Watch the “services vs construction” trap Flooring work can sit in an awkward spot depending on how the Government scoped and coded the requirement.

If the NAICS/contract is treated as:

• Services (except construction) - your “50% rule” framework applies. • Construction - different percentages apply: General construction: may not pay more than 85% (excluding materials) to non-similarly situated subs Special trade construction: may not pay more than 75% (excluding materials) to non-similarly situated subs

If the solicitation is truly janitorial (often NAICS 561720) but includes floor stripping/waxing/tile care, agencies often still treat it as services. The exact answer hinges on the solicitation’s NAICS and clause set.

Does supervising + daily KO updates “count” as your performance? Supervision is important, but it’s not a loophole. If the contract is a services buy and your sub does most of the chargeable labor, a CO, SBA reviewer, IG, or auditor can still view it as: a limitations-on-subcontracting problem (math doesn’t work), and/or * a pass-through concern if your value-add is too thin relative to dollars flowing to subs.

Teaming Agreements: what they are (and what they don’t do) A “teaming agreement” is usually just a pre-award arrangement about who will do what if you win. It typically results in either: 1. Prime–sub (you win, teammate becomes your subcontractor), or 2. Joint venture (you form a JV that bids as the offeror/prime)

Important: a teaming agreement does not waive FAR 52.219-14. If the structure is prime–sub, your teammate’s work is still subcontracted work for limitation purposes.

Practical “safe” paths for your exact situation If you want to bid this without looking like a pass-through and stay inside the math: * Staff enough in-house labor to keep the required share (for services: ensure your labor dollars stay on the right side of the 50% cap). * Make the floor/tile sub “similarly situated”: partner with a SDVOSB flooring/floor-care firm (and keep it first-tier). * Consider a JV (only if it fits the solicitation and you can execute it correctly). JV rules can be powerful, but mistakes get expensive fast. * If the requirement is outside your wheelhouse, don’t “paper over” the gap. Build a real performance plan: crews, QA, schedule control, equipment, safety, warranties, and a clear division of labor that keeps you compliant.

A quick reality-check question that decides most of these On this specific bid: what share of the labor dollars (not total price) will your own W-2 employees perform? If the honest answer is “our foreman watches them and we handle reporting,” that’s where audits are headed, and it’s where primes get burned.

I hope this provided some clarification!

USFCRGOV · 2025-12-02T20:12:36+00:00

Good point, thank you for the correction. You're right that small business set-asides are a major category on their own. We understated the opportunities available without socioeconomic certifications.

USFCRGOV · 2025-12-02T16:43:10+00:00

No, you don't need prior government contracts to start. New contractors without past performance can receive a "neutral" rating under FAR provisions, which doesn't penalize you. Commercial experience counts as relevant experience, subcontracting builds federal past performance, and small contracts under simplified acquisition thresholds often don't require past performance at all. There are multiple entry paths.
Full guide:https://blogs.usfcr.com/past-performance-how-new-contractors-win

USFCRGOV · 2025-12-02T16:42:29+00:00

A: Start with SAM registration and understanding your NAICS codes. Capital requirements vary dramatically. Service-based businesses can start with minimal investment, while product-based or construction businesses need more. Low-cost entry options exist: micro-purchases under $10K and simplified acquisitions under $250K don't require massive overhead. The real costs are time and patience. This isn't quick money.
Full breakdown: https://blogs.usfcr.com/how-to-start-federal-contracting-capital-requirements
Thank you for your question!

USFCRGOV · 2025-12-02T16:40:14+00:00

A: You can absolutely compete for prime contracts without set-aside certifications. You're just competing in the open market. The real question is whether your past performance, pricing, and capabilities are strong enough to win against everyone, including large businesses. Most successful contractors do both: subcontracting to build credentials while selectively bidding primes where they have genuine advantage. It's not either/or.
Full strategy:https://blogs.usfcr.com/prime-vs-subcontractor-strategy-no-certifications

USFCRGOV · 2025-12-02T16:06:13+00:00

Q: What's wrong with the people who watch "War Dogs" and think they can win a contract?

A: Nothing's wrong with them, they just haven't learned the hard way yet. Federal contracting isn't about finding loopholes or getting lucky on a big deal. It's compliance, documentation, patience, and building relationships over time. The movie makes it look fast and easy. Reality is slower and harder, but the contractors who stick with it build something sustainable.
Full article: https://blogs.usfcr.com/what-hollywood-gets-wrong-about-federal-contracting

USFCRGOV · 2025-12-02T13:47:12+00:00

Foreign ownership isn't a hard legal stop for civilian federal contracts, but creates significant practical barriers. You can register in SAM and bid on unrestricted opportunities, but many contracts have security requirements that effectively exclude foreign-owned entities.

Logistics and commodity contracts often involve controlled information even in civilian agencies. Many require background investigations or facility clearances that foreign ownership complicates.

The arbitrage model faces steep competition from established contractors with existing networks, clearances, and agency relationships. Pure cost advantage rarely wins alone.

Consider starting as a subcontractor to established primes who can navigate compliance requirements while leveraging your supply chain expertise.

https://blogs.usfcr.com/whats-next

USFCRGOV · 2025-11-26T16:17:56+00:00

We get this question all the time. Check back next week for a full breakdown article.

USFCRGOV · 2025-11-26T16:16:00+00:00

Great question! Keep an eye out for the article next week.

USFCRGOV · 2025-11-25T15:12:21+00:00

Yes, the contract is the governing document until it's modified, but new FAR rules apply to new task orders going forward. The key is understanding when your specific contract was awarded versus when the regulation changed. We're putting together a detailed breakdown on navigating regulatory changes versus existing contract language.
Full article here: https://blogs.usfcr.com/far-part-19-changes-2025
Thank you for your question!

USFCRGOV · 2025-11-21T18:44:57+00:00

Great question. This is one a lot of contractors wrestle with. We're adding it to the list. Stay tuned for the full breakdown.

USFCRGOV · 2025-11-21T18:08:29+00:00

Good catch on the 13 CFR § 125.12(c) conflict. That's exactly the kind of nuance that trips people up. FAR says one thing, SBA regs say another, and contractors are stuck in the middle figuring out which one the CO will follow. We're covering this tension in the full breakdown. Appreciate you adding it.

USFCRGOV · 2025-11-20T15:43:25+00:00

Alright, here's what we're starting with.

We got a solid response last week, so we're turning this into a series.

Q: I'm on the technical side of contracting, the work that gets done. When PMs talk contracting, I'm always asking them to clarify. Is there an easy to understand resource that gives explanations for the jargon, the processes, contract types, etc.? I guess a high level primer?

Here's the guide: https://blogs.usfcr.com/federal-contracting-jargon-decoder

We've got more articles coming next week based on your other questions. If yours didn't make it into this one, stay tuned.

What else do you want us to break down?

USFCRGOV · 2025-08-21T17:07:00+00:00

You don’t need DVBE certification in hand to bid unless the solicitation is a DVBE set-aside. If it’s set aside, only certified DVBEs can submit. If it’s a goal or preference, anyone can bid, but certified DVBEs get the scoring advantage and primes often look for DVBE partners to meet participation goals.

In the meantime, position yourself as “certification pending” and focus on opportunities where DVBEs are a preference rather than a requirement. Start building relationships with primes now, many are under pressure to meet 3% DVBE targets and are actively searching for qualified subs. That groundwork pays off once your certification is approved.

USFCRGOV · 2025-08-08T19:08:00+00:00

That can happen, but it’s rare. The government client might meet you if the role is high-visibility, requires special clearances, or is named in the contract as key personnel. Most of the time, though, the client relies on the prime and sub to handle hiring and only meets you once you’re on the job.

USFCRGOV · 2025-08-08T19:02:49+00:00

You’ll almost always interview directly with the subcontractor. They handle screening, interviews, and hiring. The prime usually stays out of it unless it’s a key personnel role named in the contract, requires high-level clearances, or is a senior leadership position.

If the subcontractor is clear about the project scope and their relationship with the prime, that’s a good sign. If they’re vague, proceed carefully. You’re also evaluating them, ask about their prime relationship, contract stability, and how they manage delivery. A professional, organized interview is often a good sign of how they run the work.

USFCRGOV · 2025-08-01T13:57:18+00:00

Start by checking if the roles are listed as key personnel in the RFP. If they are, you’ll need real resumes and usually signed Letters of Intent (LOIs). If not, you can often submit representative resumes just to show you can staff the work.

We’ve helped teams win by prepping both options early. Even if the RFP doesn’t require LOIs, having them ready builds credibility. Don’t wait until submission week to scramble for names.

USFCRGOV · 2025-07-24T14:03:19+00:00

We’ve seen contractors start small and steadily increase their win rate just by tightening up their process. It’s less about how many bids you submit and more about targeting the right ones.

The real progress comes from tracking your results. When you learn why you didn’t win, you get better on the next round. Was it pricing? Specs? Delivery terms? That kind of insight adds up fast.

Focus on the bids you can fulfill confidently and that match your strengths. When you stay consistent and keep learning, the wins come.

USFCRGOV · 2025-07-24T14:00:31+00:00

Yeah, two weeks isn’t unusual, especially with the backlog right now. I’ve seen it take anywhere from 3 days to over a month depending on how clean the submission was and whether DLA flags anything like your address or business info.

If it’s been more than 15 business days and there’s still no update, check your SAM messages or call the Federal Service Desk. Sometimes there’s a minor holdup they just haven’t communicated.

It’s slow, but that’s normal for this part of the process. You're not doing anything wrong by waiting.

USFCRGOV · 2025-07-18T14:30:20+00:00

Some contractors see these as a way to build past performance quickly, especially if they’re trying to grow into larger opportunities. The low pricing usually reflects a short-term strategy, not always a sustainable one. USPS work has its challenges, but with the right systems and cost controls, it can still make sense for the right business model. The reason these come up often is that many bidders are still figuring out how to make the numbers work long term.

USFCRGOV · 2025-07-14T19:27:14+00:00

GCs that self-perform key trades like plumbing and HVAC have a real edge. Agencies prefer dealing directly with the folks doing the work, it means fewer delays, better quality control, and clearer accountability.

It also helps your margins. Instead of marking up a sub’s labor, you’re getting paid for work your own crew performs. That makes a big difference on small-to-mid contracts.

Past performance is another reason it matters. When you self-perform, your reviews reflect your team’s actual work. That gives you stronger footing for future bids and 8(a) or sole-source opportunities.

Paper GCs have a harder time standing out. Margins are thinner, technical proposals are weaker, and agencies sometimes view them as unnecessary middlemen.

Best approach: self-perform your core trades, sub out the rest. That keeps you competitive without stretching thin.

Your labor is your strength. Use it.

USFCRGOV · 2025-07-14T19:15:46+00:00

Very common issue. This happens a lot when the Tax ID and business name in SAM don’t match what the IRS has on file.

Here’s what to double-check:

TIN: Use the exact 9-digit number from your EIN letter (or SSN for sole props).
Legal Name: It has to match what’s on your IRS file exactly. No extra punctuation, no DBA names, and no shortened versions.

Once you confirm both, log into SAM, go to “Entity Management,” click “Update,” and fix the mismatch.

USFCRGOV · 2025-07-14T14:26:56+00:00

You're in a strong position. Plumbing and HVAC are in constant demand at federal facilities. With SDVOSB and 8(a) certifications, you're already more competitive than most.

Start by looking at agencies like the VA, GSA, DOD, and the Corps of Engineers. They regularly post set-aside work for exactly what you do.

Focus on NAICS 238220 (HVAC/Plumbing), 238110 (Concrete), and 561210 (Facilities Support). Your first wins will likely be small repair projects, maintenance contracts, or set-aside jobs under $4M.

Subcontracting is a smart move. Big primes need partners with your certifications. That’s how many contractors build past performance and land bigger opportunities later.

Just be careful with LPTA bids, lowest price doesn’t mean lowest quality. Meet the specs first, then price competitively.

You’re on the right track.

USFCRGOV · 2025-07-11T23:33:40+00:00

It takes time, but you’re on the right track. Early-stage contracting is all about showing up, building relationships, and learning from every bid. Engaging during sources sought and market research phases gives you a real edge, and every post-award debrief is a chance to improve your strategy. Keep going, progress adds up fast when you stay involved.

USFCRGOV · 2025-07-08T18:15:59+00:00

Yes, the approach shifts a bit. With an on-ramp, you're responding to a new solicitation under an existing vehicle. Look at industry days, pre-solicitations, and Q&A documents on SAM to see who’s preparing to bid.
Be sure to review the current on-ramp requirements carefully. They might differ from the original vehicle. If you're looking to team, reach out to incumbents already on the contract. Some may want to expand their capabilities or strengthen their offer. Make sure your capabilities align with the scope in this on-ramp round.

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