Government subcontracts typically have three basic components: the statement of work, the delivery schedule, and the invoicing schedule. Your company may need to attend one or more pre-work meetings so that your managers know what's expected of them and what technical, financial, and regulatory oversight will be required.
Statement of Work
This part of the contract will resemble the statement of work that appeared in your subcontracting proposal, but the contract version is binding and thoroughly spells out the agency's and prime contractor's requirements. It will list details about the job, describe how any changes to the work plan should be made, and identify the official contacts on both sides. It may also spell out how much support the prime contractor will offer toward completing the task.
Although the delivery schedule is usually not as formal as a statement of work, it's an important list of the specific deadlines for each phase of the job. The stages may range from initial design to retooling to final delivery and inspection. These deadlines are crucial because they will help the prime contractor integrate your work into the overall project. There may also be provisions for schedule changes in case the prime misses its own deadlines.
This document explains how you get paid. Is there one payment for the entire project, or will you be paid in installments? When can you submit invoices? Will the prime reimburse costs or over-budget expenses? Will you be penalized for late or unsatisfactory work?
Before you sign the contract, make sure you ask the prime contractor any and all questions so you can avoid grievances later on. Here are some issues to consider:
- Termination: If the agency ends the prime contract for whatever reason, what happens to the subcontract? Assuming work stops immediately, will you be paid for partial fulfillment?
- Flow-down: Have you been notified of all the government's rules and requirements? For example, do you have to adhere to certain hiring policies, safety codes and material requirements?
- Informal agreements: Don't trust a handshake or a verbal promise. Get everything in writing to protect your business. A statement of work is a necessity.
- Specifications: Anything the prime contractor wants done should be covered in the contract and statement of work. As a rule, subcontractors shouldn't attempt extra work unless authorized in writing to do so. Also, if the prime contractor's agreement with the agency changes, the prime should let you know about these changes as soon as possible, as you may need to revise your statement of work.
- Prime involvement: Will representatives from the prime contractor visit your business regularly?
- Deliverables: How should the final goods arrive? Should they be shipped, delivered, or prepared in a certain way? Will your business need to assist with installation, adjustments or repairs?
- Missed deadlines: Is the specified delivery date a suggested or final deadline? What happens if the deliverables are late? Are any penalties involved? Has everything been defined in the statement of work?