MANAGING YOUR SUBS AND SUPPLIERS: THE IMPORTANCE OF REGULAR COMMUNICATION

While prime contractors may interact with sub-contractors every day, its usually about meeting a current requirement or how to approach an upcoming bid, not on some element of compliance.  When was the last time, though, that you checked the Country of Origin on products shipped from your key suppliers?  Are their key personnel still part of the company?  When was the last time they (or you) had training?  As a prime your responsibility runs beyond generating business and even beyond ensuring that your own compliance processes are up to date and being followed.  You are responsible for the performance of your sub-contractors and you can be financially liable, along with them, if there are gaps in their compliance.  While many large companies have an annual certification process for sub-contractors, many medium or smaller companies do not.  All prime contractors that work with sub-contractors should have regular oversight of their sub’s adherence to applicable compliance rules.  Topics to cover include size status, whether the source for key parts has changed, the existence of a business ethics program, compliance with FAR sub-k flow downs, and any other area that impacts a specific contract or agreement.  It can be difficult to ensure sub compliance at a time when workplaces are virtual, but your company is the one ultimately at risk during an audit or whistleblower incident. As with your own compliance, ensuring that sub-contractors are fulfilling their own obligations is a pennies on the dollar investment.   Taking the time now can save you – and your sub – money later on.