INSIDER EXCLUSIVE: How healthy is the prime-sub relationship? PeopleImages

Our research looks at the attributes and qualities companies look for when they are a prime and when they are subcontractor. Reputation is at the top of that list.

No matter the shape and size of your company, partnerships and alliances with other businesses are critical to success.

That message came through loud and clear in a recent Washington Technology reader survey.

We asked over 100 readers a set of questions that explore the state of teaming and partnering in the federal market. Here’s what we found.

A strong majority of 71% said their company worked both as a prime and a subcontractor. That confirms what we’ve heard anecdotally from executives over several years – Sometimes we prime, sometimes we sub.

Large companies prime more often than small, but our survey showed that the openness to being a subcontractor remains strong at companies with more than $500 million in annual revenue.

Within the large business respondents, 70% said they do both and 26% said they are only a prime. The remaining 4% of the large businesses said they only are a subcontractor.

Among the businesses with less than $500 million in annual revenue, 74% said they do both and 14% said they only prime. The remaining 12% said they only are a subcontractor.

Most of the respondents to our survey are intimately involved in the teaming process at their companies, with 76% saying that they evaluate and recommend partners. Sixty-eight percent said they negotiate partnership agreements. Exactly half of the respondents said they have the authority make a final approval.

The numbers drop off a little when we asked about involvement in managing a partnership after it is established. Fifty-nine percent said they have executive-level oversight, while 47% said they routinely interact with partners on projects. Forty-two percent said they manage programs and projects.

In our survey we wanted to explore the overall health of the prime-sub relationship and here the news is pretty good.

On a scale of 1-to-7 with 1 being very negative and 7 being very positive, 51% of respondents picked 6 and 7. That reading indicates positive feelings about their teaming relationships. Another 21% gave the relationship a 5, while 19% gave it 4.

Only 2% rated the relationship as very negative, compared to the 19% who said it was very positive. Another 5% gave the relationship a score of 2 and 2% gave a score of 3.

While the positive scores were much higher than the negative, there is a still a significant number who rate the relationship toward the middle with scores of 4 and 5 on the 7-point scale.

Not great scores, but not horrible scores either. A main takeaway here is that there is room for improvement and perhaps fodder for a future survey.

We also explored key attributes companies look for in partners and topping that list is trustworthiness. It was most common quality respondents said they look for in a partner with 29% picking it as their top attribute.

Relationships with customers came in second with 22%. Past performance and proven experience were both picked by 14% of respondents.

Qualities you value most in your prime and subcontracting partners
QUALITY Response 
Trusworthiness 29%
Relationships with customer 22%
Past performance 14%
Proven expertise 14%
Technology solutions 6%
Reputation 6%
Easy to work with 5%
Responsiveness 2%
Familiarity with workings of government 1%

Technology solutions and reputation both garnered 6%, while being easy to work with was picked by 5% of respondents. Responsiveness received 2% and familiarity with the workings of the federal government received just 1%.

We also presented a set of statements and asked respondents to score them from Strongly Agree to Strongly Disagree. The statements describe different benefits of teaming and winning business in the market.

Several things stood out to us. Teaming was almost universally seen as a way to get exposure to other contractors with stronger relationships with customers, to which 92% of respondents said they strongly agreed or somewhat agreed with the statement.

We asked respondents whether they agreed or disagreed with the following  statements. The percentages represent the respondents who either strongly agreed or somewhat agreed, the two top choices.
Statement Response
It is hard for subcontractors to win federal contracts 49%
Teaming is a great way to get exposure to other contractors who might have stronger relationships with federal agencies 92%
Teaming is just another way for primes to keep subs from winning contracts 23%
My best government contracts are ones where we teamed with another contractor 59%
Primes have taken our company into opportunities we were not previously aware of 69%
I would only work with a sub if I knew its reputation 76%
The reputation of our subs reflect on our team and company 91%
Prime contractors are gatekeepers to winning federal contracts 62%
I'm not sure what value teaming with a subcontractor brings to table 9%

Another highly-rated value was the reputation of subcontractors and how that reflects on the prime, which 91% highly or somewhat agreed with.

Respondents also look at multiple primes when picking one to team with (80%).

Familiarity is another factor that received high scores, with 76% saying they only work with subcontractors where they know their reputation.

We can draw these main conclusions from our survey:

  • Reputation trumps technology
  • Primes are critical gatekeepers
  • Relationships are important, both with customers and between primes and subs.
  • Being a good partner is a multi-faceted endeavor.

When you mix those elements together, the big takeaway is that teaming is critical to success and not taking it seriously puts your business at risk.

While the overall state of the prime-sub relationship is healthy and positive, there is room for improvement.