Advantages and Cost Considerations of Engaging Small Businesses in Government Projects
Involving small businesses in government subsidies involves multiple advantages. Some of these advantages include working with larger projects, lower employee benefits and compensation costs, and extra expertise for projects. It is crucial to consider any additional costs caused by said interaction as well. This paper will provide a more detailed depiction of these advantages and explain the costs incurred by including these requirements.
Anticipated Benefits of Including Small Businesses in the Subcontract Solicitation Process
As mentioned earlier, one of the main advantages is the capability to deal with larger projects. Businesses that use subcontractors acquire profit on the part of the project dealt with by the latter and can significantly improve their revenues in total. The use of experts is another valuable and helpful benefit. Companies with exceptional skills in various areas may be significantly cheaper than unqualified and can complete a project sooner than expected.
Another advantage is that subcontracting helps save a great deal of money. Subcontracting to companies that make large amounts of one or more products can prevent one from spending significant amounts of money. Some types help save money on employee benefits as well.
Moreover, one can shorten the project’s duration due to small businesses featuring highly qualified professionals. This is because the involvement of subcontractors grants the opportunity to implement extra resources. Finally, some projects may be too complicated for the company to accomplish independently, as it may lack the necessary equipment and qualified staff. Involving co-executors will assist with accomplishing the assignment on time without any negative consequences.
Administrative and Compliance Costs Associated with Small Business Inclusion
All tasks require a thorough review of the most devastating risks related to their implementation, the skills of the company and its resources, and those of the subcontractors. This means that the interaction between multiple small companies needs to be controlled firmly (Prime and subcontracting, n. d.). There is a risk that the tasks may not be completed the way the principal company wants. This is why the US Small Business Administration advises assessing compliance with the requirements.
The company that is the prime contractor is responsible for providing relevant and accurate information regarding the activities of the businesses. Moreover, all tasks that feature subcontractors are controlled during every stage. If there are some issues with quality or technology, the project may be paused or ended, and the contract may be given to another company. Companies must maintain appropriate control of the project and the requirements.
Various cases, such as contract termination and claims against subcontractors, are reserved for the prime contractor. Large projects are riskier because as more subcontractors receive orders, there is a threat of one of them not performing appropriately. Besides these problems, coordination and consistency must be considered (Chron, 2020). The principal company must guarantee that the profit and revenue are enough for the riskier project to be a valid option. This emphasizes the multiple issues that cooperation with subcontractors usually involves.
References
Chron. (2020). Advantages & disadvantages of subcontracting. Small Business. Web.
Prime and subcontracting. (n.d.). Web.