Subcontract Management from A-to-Z 2024

Subcontract Management from A-to-Z Series 2024

Every year, the U.S. government awards hundreds of billions of dollars to prime contractors to deliver products and provide needed services. But a significant portion of this funding flows through the prime contractors down to subcontractors and vendors – entities who ultimately have no direct contractual relationship with the federal government, yet still are subject to a host of laws, policies, and regulations governing their performance. Federal law places a significant burden on prime contractors to carefully select subcontracting partners and effectively manage these agreements to ensure the government’s interests are protected.

Join the Sheppard Mullin Supply Chain Management Team as we explore, in this in-depth 9-part series, the complicated world of Federal subcontracting, including the responsibilities both prime and subcontractors have to ensure compliance with lengthy contract and regulatory requirements. Whether you are a prime contractor trying to understand your subcontract oversight responsibilities, or a subcontractor trying to understand your obligations when doing work for federal customers, the Sheppard Mullin Supply Chain Management Team is here to discuss real-life, practical, best practices in subcontract management.

Throughout this series, attendees will learn about:

• Understanding who is and is not a “subcontractor” under the FAR;
• Subcontracting policies and procedures in FAR Part 44;
• Tips in selecting business partners, including small business subcontractors, joint ventures, and teaming agreements;
• Developing and administering subcontracting plans;
• Negotiating subcontracts, including terms and conditions and other required flowdowns;
• Managing pricing issues under government contracts, including commercial item subcontracts; and
• Best practices for subcontract management and administration.

Subcontract Management from A-to-Z
Third Tuesday of the Month, 12:00-1:30pm ET

• January 16 – Federal Subcontracting 101: An Overview
• February 20 – Joint Ventures and Teaming Agreements
• March 19 – Small Business Subcontractors
• April 16 – Subcontracting Plans
• May 21 – Contractor Purchasing Systems
• June 18 – Awarding Subcontracts
• September 17 – Flow Downs and Terms & Conditions
• October 15 – Subcontract Pricing
• November 19 – Subcontract Management and Administration

Part 1: Federal Subcontracting 101: An Overview

Prime contractors are required to flowdown a host of contractual requirements to their subcontractors. But determining who is and is not a “federal subcontractor” is not as easy as it sounds. In Part 1 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will explore the meaning of the terms “subcontractor” and “subcontracting” under applicable laws, policies, and regulations, including how to distinguish between your “federal subcontractors” and mere vendors or suppliers, as well as why this distinction truly matters. We will also provide an overview of FAR Part 44 – the heart of the federal government’s rules regarding subcontracting policies and procedures.

Part 2: Joint Ventures and Teaming Agreements

There are a variety of ways traditional “prime” and “sub” contractors can partner together under a federal procurement. Beyond the traditional prime/sub arrangement, companies may also consider utilizing joint ventures or teaming agreements to maximize the value provided to the government customer. In Part 2 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will discuss the major differences between subcontracts, joint ventures, and teaming agreements, including circumstances when you may (or may not) want to use these kinds of business relationships.

Part 3: Small Business Subcontracting: An Overview

Contractors frequently do business with small businesses for a variety of reasons, including tapping into a market reserved for small and socioeconomic preferences. In Part 3 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will walk through the various types of small business relationships and socioeconomic programs that companies might utilize to maximize their ability to win government work. We also will discuss some of the common pitfalls that arise when doing business with small or disadvantaged entities.

Part 4: Subcontracting Plans

Contractors frequently do business with small businesses for a variety of reasons, including tapping into a market reserved for small and socioeconomic preferences. In Part 4 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will dig into the FAR Part 19 guidance and requirements for Small Business Subcontracting Plans, providing tips on preparing subcontracting plans, as well as discussing record keeping and reporting requirements.

Part 5: Contractor Purchasing Systems

The same way the FAR sets forth the policies and procedures guiding federal buyers in how they administer prime contracts, prime contractors are, in turn, required to implement policies and procedures to manage subcontractors effectively. In Part 5 of our 9-part series, the Sheppard Mullin Supply Chain Management Team will explore the basic requirements for contractor purchasing systems, identifying best practices for implementing and maintaining adequate purchasing systems and going through a contractor purchasing system review.

Part 6: Awarding Subcontracts

Having subcontracting policies and procedures is one thing, but none of it really matters if you can’t actually get business done. In Part 6 of this 9-part Series, the Sheppard Mullin Supply Chain Management Team will review best practices for selecting, awarding, and negotiating subcontract agreements, including discussing the government’s right to consent to contracts under FAR Subpart 44.2.

Part 7: Flow Downs and Terms & Conditions

Prime contractors have obligations to flow down certain prime contract requirements to subcontractors; subcontractors, for their part, typically want to resist as many of these flowdowns as they can. In Part 7 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will walk through mandatory flowdown clauses, and explore which other clauses should be flowed down to help manage the prime contractor’s risk. We also will discuss other standard terms and conditions companies typically want to ensure are included in their subcontracts.

Part 8: Subcontract Pricing

The federal government wants to ensure that it obtains the best value when contracting – whether at the prime or subcontract level. This means that prime contractors are expected to scrutinize their subcontractors’ pricing, much the same way the federal government scrutinizes its primes’. In Part 8 of this 9-part series, the Sheppard Mullin Supply Chain Management Team will explore common pricing issues that arise when awarding subcontracts, including discussion of how commercial item subcontracts and commercial item determinations might limit the insight that a prime contractor has into a subcontractor’s pricing.

Part 9: Subcontract Management and Administration

Wrapping up our 9-part series is a discussion of best practices for subcontract management and administration. Join us as the Sheppard Mullin Supply Chain Management Team uses real-world examples to provide practical advice for managing your subcontractors and supply chains, scaling your internal processes and procedures to best meet your customers’ needs, and ensuring that you leave a verifiable audit trail that demonstrates the level of care when managing subcontractors.