Prime vs. Sub: Which Federal Contracting Role is Right for Your Small Business?

If you’re trying to break into or scale up in the federal contracting world, there’s a pivotal question you’ve likely faced: Should you go after contracts as a prime or team up as a subcontractor? The answer can shape your entire growth path—and what you’re risking along the way.

Here’s a straight-talk breakdown of what each role really means for your small business, how to decide which is right for you now, and how to play both strategically over time.

What’s the Difference, Really?

In federal contracting, a prime contractor holds the direct contract with the government agency. They’re the lead, the one ultimately responsible for the whole project, and the only party that has a formal relationship (a.k.a. “privity”) with the government.

A subcontractor, by contrast, is brought in by the prime to handle a portion of the work. You won’t interact with the government directly, and you’re not on the hook for the full contract’s performance—just your part of it.

That might sound like a small distinction, but in this world, it changes everything—from compliance burden to visibility to payment terms.

Why This Choice Matters for Small Businesses

Let’s talk about what’s at stake—beyond just titles.

• Access to Set-Asides: If you’ve got federal contracting certifications like SBA 8(a), WOSB, or SDVOSB, you can access exclusive contract opportunities—but only as a prime. These can include sole-source awards or set-asides that restrict competition, a major edge for growth. It's where 8a certification assistance or women business certification pays off.

• Past Performance Credit: Only primes get full credit in federal systems like CPARS. As a sub, your contribution might not show up in public databases or count toward your federal contracting certifications. That can make it harder to win bigger opportunities later.

• Control and Profit: The prime controls pricing, schedule, and the subs. They also take home the larger profit share. As a sub, you’re often working on narrower margins with less flexibility.

On the flip side:

• Lower Risk, Lower Overhead: Subcontracting can be the easiest entry point into the federal market. You avoid the intense compliance and paperwork load that primes must manage. And you can still gain experience without betting the farm.

• Learning Opportunity: Being a sub gives you a front-row seat to federal contracting without the full weight of responsibility. Many small businesses use it to learn the ropes—Government Contract Proposal Writing, FAR compliance, reporting systems—before stepping up.

How to Choose: Prime or Sub?

Here are five strategic questions to ask before deciding which role to pursue:

1. Do we have relevant past performance?
   No? Start as a subcontractor. Yes? You may be ready to prime—especially if you’ve got a clear niche and agency relationships.

2. Do we hold key certifications?
   If you’ve got 8a contracts services eligibility or disabled veteran small business certification, you’re well-positioned to go after set-aside prime work.

3. Is our internal infrastructure ready?
   Primes need DCAA-compliant accounting, cybersecurity protocols, compliance checklists, and the staff to manage the contract. If that’s not in place, subcontracting is a safer bet while you build.

4. Do we have the cash flow to handle government payment cycles?
   Remember: the government often pays on net-30 or longer. As a prime, you’ll need the reserves to float those costs—and pay subs—until you get reimbursed.

5. Do we know how to write proposals and price competitively?
   Prime proposals are demanding. If you’re not confident yet, subcontracting gives you time to sharpen those skills without burning out your team.

Tips for Success—Whichever Path You Choose

Subcontracting Tips

• Use tools like SUBNet, GSA eLibrary, and the SBA DSBS to find and reach out to large primes.

• Build relationships through capability briefings, APEX Accelerators, and teaming directories.

• Deliver high-quality work, get testimonials, and be the sub that primes want to bring back.

Prime Contracting Tips

• Start with small awards under Simplified Acquisition Procedures (SAP) or micro-purchases to build your prime record.

• Use mentor-protégé programs or joint ventures to team up with experienced firms.

• Leverage your SBA 8a certification services or women owned small business certification status to unlock sole-source and set-aside opportunities.

• Strengthen your proposal writing chops—or partner with a firm that offers Government Contract Proposal Writing support.

Zooming Out: Why You Might Eventually Do Both

The most successful small contractors don’t pick a side forever—they evolve. Many start by subcontracting to gain experience and relationships, then move into prime roles as they build capability. Others prime smaller jobs while subbing on larger ones to balance growth and risk.

If you’re strategic, you can use both roles to grow your government contracting business over time. The key is being honest about where your business stands right now—and where you want to go.

Want more on building your federal contracting chops?
Check out "The Email You Should Be Sending Every Week to Contracting Officers (But Probably Aren’t)" to learn a practical strategy for warming up leads and finding new government contracting opportunities fast.

If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.