Step-by-Step Guide to Becoming a Prime Contractor

Jun 23, 2025

Nowadays, most small businesses are focusing on becoming the federal government’s prime contractor, as it provides huge opportunities for business expansion and revenue growth. The U.S government is one of the largest buyers of goods and services. In fact, each year the U.S. government awards more than $500 billion in contracts. According to citations of Scholars at Harvard, 23% of set-aside contracts are released for small businesses. Growing up as a prime contractor is a significant step to accelerating your growth and showing your business as a main player in the government marketplace. If you are currently a subcontractor or business looking to obtain prime contractor status, this blog will provide you the valuable information.

What is a Prime Contractor?

The businesses that directly work with a federal agency are considered the prime contractor. The prime contractor handles delivering the service or product, administering the subcontractors, and ensuring compliance with all government regulations. Prime contractors control the relationship with the government agency and receive payment directly. 

Prime Contractor vs Subcontractor

Feature / Aspect	Prime Contractor	Subcontractor
Contractual Relationship	Holds a direct contract with the federal government.	Has a contract only with the prime contractor, not with the government.
Project Responsibility	Responsible for overall project management, delivery, and compliance with all contract terms.	Performs specific tasks or provides specialized services as defined by the prime contractor.
Communication with Government	Directly communicates and negotiates with government agencies; serves as sole point of contact.	Communicates only with the prime contractor; does not interact directly with the government.
Compliance & Reporting	Must comply with all federal regulations (FAR), reporting, and flow-down clauses; subject to compliance reviews.	Must comply with requirements passed down from the prime; reporting is typically to the prime.
Financial Transactions	Invoices and receives payment directly from the government, then pays subcontractors.	Paid by the prime contractor, not by the government.
Risk & Liability	Bears full responsibility for contract performance, risks, and any failures or penalties.	Responsible only for their agreed-upon scope; risk is limited to their portion of the work.
Control & Oversight	Manages and oversees all subcontractors and project execution.	Takes direction from the prime contractor; follows the prime’s project management.
Experience & Entry Point	Requires strong past performance, administrative capacity, and readiness for compliance.	Can be an entry point for small businesses to gain experience and build past performance.
Scope of Work	Manages the entire project and coordinates all moving parts.	Handles specialized or limited aspects of the project as assigned by the prime.

Guide to Becoming a Prime Contractor

Government agencies look for dependable, capable, and compliant partners who can deliver a valuable service. Small businesses should focus on setting up the following qualities.

1. Explore your Niche and the Government Needs Deeply

• Know how your business can work for the government and your value to project to others.
• Dive deep into the search beyond the basics, understand the agency, include earlier awards, and send newly released solicitations in expertise. Also, find the recurring needs by monitoring government sites or platforms like MySetAside for new contract listings.
• Obtain pertinent business certifications (8(a), WOSB, SDVOSB, and HUBZone), and the agencies will collaborate with you and grant you direct access to set-aside contracts.

2. Structure a Strong Foundation

• Registering your business fully with an updated profile and Unique Entity Identifier (UEI) in System for Award Management (SAM.gov) is the primary key in the government’s vendor database.
• Prime contractors handle the entire project, with strong financial systems (often DCAA-compliant), project management capabilities, and complete internal controls to build robust infrastructure.
• Demonstrate your potential as a prospective prime contractor by showcasing your successful previous projects, or if you are a subcontractor, quantifying your contributions and obtaining favorable feedback from your prime contractor on previous projects.

3. Initiative-Taking Engagement & Proposal Excellence

• Use your network strategically by attending industry days and pre-solicitation conferences, and contact small business specialists within target agencies by building genuine relationships to understand their mission.
• Tailor the RFP by addressing every requirement, understanding the evaluation criteria, and proving your solution that delivers the best value.
• Impress the government vendors with your proposals. Craft your proposal with clear, compelling technical capabilities, and elaborate on your understanding of government needs. Accentuate your unique strengths and mention the way that aligns with their goals.

4. Compliance and Accountability

• Show potential challenges and risk mitigation strategies, prove maturity and anticipation to government customers.
• Being a prime contractor, you look for compliance with the Federal Acquisition Regulation (FAR). Understanding FAR Part 15 is critical, as most of the opportunities fall under these realms.

How MySetAside Motivates Your Prime Contractor Ambitions

Traversing the federal contracting feels like an intricate process, especially when you are aiming to be a prime contractor. MySetAside is an indispensable, customer-centric tool engineered to empower small businesses on their journey. MySetAside is engineered with specific needs to inspire prime contractors, focus them to execute the flow efficiently and more targeted. MySetAside is not just a contract search engine.

• MySetAside leverages advanced filtering to bring you federal, state, and local government contract opportunities tailored to your business NAICS code and certifications.
• A customized email alert provides notifications based on your profile by MySetAside, timely, about essential information to understand the agency priorities and networking, identifying trends in government spending to align your offerings better, gaining deep knowledge in upcoming and potential solicitations, and direct notification for relevant RFPs.
• MySetAside provides lists of prime and big contractors for various government agencies, providing irreplaceable value like who is winning, the project types that they are doing, a smart team can build relationships and past performance, helping to identify qualified small business subcontractors to meet your contractual requirements.
• MySetAside provides unique toolkits, checklists, and templates that help you to organize and manage to implement as prime contractors, which include deliverable project plans, sample project artifacts, opportunity milestones, contractors’ best practices, and internal calendar operations to track proposal requirements and due dates.
• MySetAside aids direct engagement by creating a platform between government agencies and large companies to forthwith small business communities. This is transformative for market outreach, targeted communications, and forming strategic partnerships.

Becoming a prime contractor is a significant breakthrough for subcontractors, but it is an achievable one with proper tools and a mindset. Platforms like MySetAside leverage focus on government needs and build a solid foundation that helps to transition from supporting player to directing lead in the government contracting opportunities. Many small businesses started to use MySetAside to search for winning contracts. Rather than sending a bid as a prime contractor, it aligns with strategy, visibility, and the right tools.