The Government Contracting Middleman Strategy (The LEGAL Way!)
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- เผยแพร่เมื่อ 28 ก.ย. 2024
- ⭐⭐⭐⭐⭐ 2024 Free GovCon Masterclass: bit.ly/4bZIggQ
#governmentcontracts #governmentcontracting #govcon #federalcontracts #govcontracts #legalmiddleman #middleman #samgov #wingovernmentcontracts #samregistration #setaside #naicscode #federalacquisitionregulations #govkidmethod #legalmiddleman #govconbusiness #federalcontracting #capabilitystatement #8a #veteranownedbusiness #womanownedsmallbusiness #sba #govconbusiness #govcongiants
Watch (Part 2) to the Middleman Strategy here: th-cam.com/video/Uba6-i8Hmrc/w-d-xo.html
Hi! Thank you so much for explaining everything so clearly, really appreciate it! Just to get some clarity - Essentially, if the contract value is under 250k, you (as the prime contractor), do not need to adhere to the rules of providing a % of the work - and you can basically become that ‘middleman’ half of TH-cam is trying to be?! haha. Please let me know and thank you again for your time and effort to make these videos, they’re awesome!
@@ictrickshots under the simplified acquisition threshold, limitations do not apply. I cover it more thoroughly in the Part 2 video: th-cam.com/video/Uba6-i8Hmrc/w-d-xo.html
instablaster...
@@GovKidMethodwhat about the 150k threshold for setasides (8a, hub zone, SDVO, WO), which one trumps then?
Is this for Federal level as well
So a way around , well not around it but just have some of your people do a Lil something
One reason that company B would want to subcontract from another company A in the same set-aside category is that company B might not have past performance and need to have those to be able to bid. I'm an owner of a SDVOSB company with SAM registration, DUNS number, and DBE, SBE, MBE, SDVOSB certifications . I'm looking for those type of company A (SDVOSB or VOSB) that are willing to subcontracts to us for the moment in the IT, network, electronic devices supplies markets.
Are you still searching sir?
@@veandreyahuda5333 yes
What u need in IT
so if its similarly situated entity i can sub 100% no matter the threshold? let say 500k contract and I'm just a small business , i can sub that to another small business, no problem ?my registration on sam is just small business set aside.Thanks.
Thank you for the clarification. I appreciate this.
Glad it was helpful!
Hey there! Great video! Is administration part of the work? Or do I need to be physically there putting in the physical work? Hypothetically, this is a service.
This is what I want answered... because I don't want to dip off into something that I can never financially recover from. :/
So where's the loop hole to get in without owning a whole construction site? Should I legally affiliate myself with a small construction business and then go for the bids under their name or set up my own construction business on paper and hire a worker to do my 15% for me?
This is great information, thanks so much for sharing this!!!! I've been looking for more info on this and this hit the spot- I have a construction cleaning company and we are WOSB and EDWOSB :)
Hello- I'm edwosb and wosb as well in transportation...Just wondering if your company has had any luck with doing business and getting contracts using this strategy since you were introduced to this video?
lmaooo IF SO , you’re barking up the wrong tree , hahaha it was such a beautiful picture though
haha that was pretty funny
wow! I did not know that. Thanks for the clarification.
You're welcome!
I took notes and know i understand how to do it the right way
That twist learning about passthrough illegal caught me off guard haha
If selling a product, say industrial equipment, as a middleman, what is the most appropriate title for such a business? Industrial Equipment Broker is the first thing that comes to my mind. Do you see any potential negatives to identifying and/or advertising as this type of business?
If that’s all you will ever want to do then it should be okay. If you want to expand or grow into another areas you could use a more broad umbrella label like “Facilities Support” or “Professional Services”.
Is the minimum level of work explained in the solicitation?
No, it's not. It's up to you to understand the regulations.
So basically if u are small business and sub contract to another small business than there are not limitations on how much of the work has to be done by the prime. Got it
To make that generalization is not entirely accurate. Set-sides play a key role in whether or not you can do that and how.
I am new to government contracting. In your video about how you won your first contract for nearly $90k for salt for the army base, it seems as though you, the middle man, did no work besides discover supplies and provide transportation and did not have a hand in the process besides set up. Now the work that you do on paperwork side and logistics, is that considered to be a percentage of the contract since you are paying yourself/company you worked for? What I am getting at is how did you not violate these laws if you did not do a percentage of the work? or is what you did considered a percentage of the work?
Limitations on subcontracting only applies to bids in excess of simplified acquisition threshold which was 150k and is currently 250k
@@GovKidMethod I was wondering that as well
Because he was inbetween the $3,500 - 250k threshold he did not violate
@@GovKidMethod so if I'm under $250k I can subcontract 100% even if the subcontractor is a big company? Right
If I want to start into Government Contracting it seems the first step is to pick a niche. So I look at what the government likes to buy rather than my particular background which may have no relevance. And I see, for example, things like Medical and IT. Now medical is not my background but does that mean I can't handle project management tasks and similar things that surround moving a project forward according to the percentage of work that I would complete? And that would be acceptable to the government? And what other related tasks could I perform in such a position that would also count toward the percentage of work that I do that complies with government regulations. So this would not be a pass-through strategy, it would rather be a strategy that opens the door to working in different niches while also adding value.
Just started my goverment contracting business and have a quick question for you. If I had an on-site supervisor or foreman would that count towards the 15% with say a construction contract?
I also have a similiar question, our company works with an 'Install team" of independent contractors who are not a separate company and work directly under us with an install manager from our company on site the entire job. does that count?
This sounds like sour grapes! There's been people doing the middle man strategy for decades! The government does not care how you make the cake and long as you deliver the cake.
The government very much cares if you are taking money out of small business programs. It’s called limitations on subcontracting for a reason. Do your homework.
That is NOT true!!!
There’s an entire article in FAR that says you can’t subcontract all the work. They do care. And people have been indicted for defrauding the government by doing just that. Just because people do it, doesn’t mean it’s legal. If the government didn’t care, they wouldn’t have made an article about it.
So if Limitations on Subcontracting do not apply to contracts under the SAT, which is $250k, I can subcontract those to Microsoft? This doesn't seem right so please correct me.
For total small business or full and open contracts, you could.
If it’s a socio economic program, the minimum self performance percentages still apply regardless of the SAT.
@@GovKidMethod Interesting, thank you for the quick reply!
@@GovKidMethod So for this scenario, I would still have to perform 50%, 15% or 25% of the work respectively, correct?
@@CaptSaveaH0 For total small business and full and open contracts, no. For socioeconomic categories, yes. I would also highly encourage you to read directly from the FAR
@@GovKidMethod Thank You, I understand it completely now after reading all of 52.219-14 including all the hyperlinked bookmarks. I used to take DAU courses for my previous job and I happened to be browsing through there and I found a training webinar from CO subject matter experts and they also confirm this.
How are people picking up contracts in states that they are not based out of then?
Federal contracting opens you up to do work in all 50 states. It's different than state or county contracts. Also, most service contracts do not require you to be in a radius of the work to be performed. You primarily would see this with construction contracts as a requirement.
@govkidmethod Great Vid! How does this apply to your 1 million large equipment story? Was that not a passthrough as the machinery vendors that you worked with supplied all of the items?
Contracting wanted brand name supplies and justified and approved the purchase from small business set aside. We didn’t lease from the OEM large. We leased from small business resellers.
This was a good video.
Your so amazing thank you so much! I’m about to start with your free courses and work my way up to your one on one
Thank you, I hope the courses help you!
@@GovKidMethod i want to get involved with this but do not have a service or product...can this still work for me?
Excuse me, someone listed a video similar to this but they mentioned using prior hired service members? Can I get in touch with you please? I want to do this right
So :
Q1: if the contract doesn't exceed $150k I can subcontract 100% of the work even if my subcontractor is not at the similarly situated entity.
Q2: I can subcontract 100% of the work if the subcontractor is at similarly situated entity.
Is that correct?
Can you have 1099 employees? Or do they have to be W2?
It depends on the needs of the contract and the definition of the two...do they work a regular schedule or is inconsistent project work?
Dude still left with 67 million and my do ten month good behavior
So important to know! Thank you so much.
Your courses are amazing and it would be an honor to buy your courses but im currently facing some serious financial problems. I wonder if you offer any discounts or monthly plans ?
Is this 100% correct? Going by the FAR as well. 🙏🏿
what are subcontractor qualifications
Do you have to be a corporation or would an LLC do? Advantages of either?
Both are suitable. Just depends on what tax structure you want for your business.
So if I’m a small business in Cali and Subcontract a fellow small business to handle the labor out in Michigan is that legal?
Great info! I cant wait to share my testimony with you. You have been so helpful! Quick question about the subcontracting rule. Does it have to be exactly the same to be exempt? For example Prime 8a works with Sub 8a. Or can It be Prime 8a and Sub Woman Owned? Thanks...once I am approved by SAM...I am hitting the ground!
Has to be the same exact set aside to be "like kind"
@@GovKidMethod perfect. Thank you!
I'm sales rep for small business but we have contract agreement with big business so they supply and to deliver the product. Will it be legal for government contract since I just find the lead, sell the product and pass it to big company for supply and delivery?
That’s what the government calls a pass through and you should avoid doing if the contract is bound by the limitations on subcontracting
@@GovKidMethod Thank you
I have an IT consulting firm and looking to procure government contracts. I dont have to know how to do the work, but if I hire IT professionals to do it then it's fine right?
Yeah absolutely - as long as you qualify, win the bud. If the contract type says you need to do 50% of the work or payroll etc then u good
Hi Derick. My company buys rock from quarries and sells to contractors. We hire trucking companies to load and deliver to designated job sites. Would this be considered illegal within Government contracting? if so, would having company owned trucks opposed to hiring trucks keep us out of the danger zone?
No
How can I want to be a middleman in construction in a legal ways?
For your first contract with the Salt; did you purchase salt w/own money or did you receive money first, and then purchased salt???
Any updates?
No no updates I'm still struggling to land my first one.
@@garretthunterhodges any suggestions?
@@Merc_From_Support 2 years later how has it gone for you?
Hello sir I have I have recently signed a contract with a ppe equipment company overseas great margins and even better when landed in the us I believe I would fall in the middle men category first how do go about obtaining some of these contracts I see on Sam
i have a client looking to have 5000 hoodies and beanies made, what is the best method to begin to contact graphic companies near me,,,,,?in terms of payment, would i have to pay myself when order is complete the gov pays me??? or would i have to sub it out as a net30 payment? that way i dont pay until gov pays me???? please advice
How do you find it with no money
Is it different with non small biz contracts?
Hello Govkid, I have a question. Ok, from some of the video that I have seen they have stated that their the middle person and that they get the contract and pass it along. From watching your video that seem to be wrong. There has to be a certain percent from the one holding the contract correct? Also what about proposals, as a prime or middle person would you have to do a proposal?
You always have to be involved in the contract from a management perspective. You should never leave it to the sub to manage. You don’t always have to do a percentage of work. That’s only in the instance where both it’s above the SAT and you’re not working with a similarly situated entity. If you can’t do a legal middleman then you need to abide by limits on subcontracting. You (as the prime) will always be doing and submitting the proposal. You will be getting quotes and technical support info from the subs to support your proposal.
age 18 can you start?
And once you have a business registered in your state with a Tax ID number
What about government weapons and ammo? Isn’t that a middle man? Or would the company have to make a certain amount of the weapons/ammo?
If it’s a contract that is bound by the limitations of subcontracting, you would have to participate in a percentage of the manufacturing of the goods
GovKidMethod so the guys in war dogs just found contracts that weren’t bound by that
@@LG-ct5hu it was a movie, bruh
@@deucealmightee 🤣🤣
for some reason i thought i had seen other videos where you have literally explained how to do exactly what ypu are saying to not do here,,,, i swear i thought you had videos where you locked in contracts out of state and such without being able to do 15% of the labor,, please correct me if im wrong
Definitely have. There's a wrong way to do it and a legal way to do it like I explain in this video
@@GovKidMethod wich is I think the contract must be under 250k or the subcontractor must be similarly entity classified. Right?
Thank you for the clarification. Now what about if the contract is under 150k Can I subcontract it 100%? I am a solo men starting this so Idh the sources to pay employees.
I cover this in my free Masterclass at govkidmethod.com
@@GovKidMethod I will for sure watch it
How do I update my NAICS code in sam.gov I need to add like 3 of them and cant find a place for it
Were you able to find out how to do this?! I'm adding it to my future videos as a topic.
@@GovKidMethod what is that video link please?
What do u. All when u provide a kit of hardware items to the defense department. Kit includes - rivers, nuts and bolts. Hardware is already made and you need purchase from approved brokers / distributors. You are technically not making it but you are putting a specific kit together - thought
I’m not sure what the question is here
what if I pass 99.9999999% of the contract to someone else
I explain how much you need to self-perform in the video :)
@@GovKidMethod what if its a non small business contact
💡🧐📝 🙏🏿
lol. plot twist
What if u just hire all the “employees” needed tho for that month🤣
Wait can u actually do that?😳🤔
Just as Delhi Government promoting liquor sale for money, tobacco products for money, it may start making many other drugs legal to earn more money. Govt now wanting drinking age in bars to 18. More will do drunken driving, hopefully they take downs the crooks.
Man you have great content but your videos are too freaking long
The picture is so funny. Because they prioritize black owned businesses. So it’s just having a black be awarded the contract but it still goes to a white man anyway.
If you watch the video that’s the exact opposite message
Great info. I’ve seen videos saying (I won’t say names) that it’s completely legal to simply start an LLC and pass all work to the sub without doing any work. The key term is “similarly situated entity.” I think a lot of ppl have missed that point which could mean serious trouble down the line.
so if its similarly situated entity i can sub 100% no matter the threshold? let say 500k contract and I'm just a small business , i can sub that to another small business, no problem /
It's reckless advice and I have zero tolerance for it. Hopefully the correct information is circling back to the blind that have been leading the blind...
So its for a total small business you can use another small business? That's a similar situated company
So if its under 150k can you subcontract it out 100%?
Yep. LOSR (limitations on subcontracting) kicks in at 150k. "The limitations apply to contract set-asides for small businesses when the contract amount exceeds $150,000"
@@GovKidMethod Follow up question . Does this also mean that as long as my subcontractors have the same certifications , I can subcontract 100% and/or accept contracts greater than $250k ?
@@lorenzolyons5088 great question, did you get any answers, please let me know. Thanks
I want to become the middle man for large projects. Right now I'm the direct man for small projects.
Good morning, how was it that you got into subcontracting?
@@nickolasetchu-tambe7003 They will never tell you... 😆
Do u have to own a business to be a middel man
@@veganista5096 actually we are too busy making money to be stalking replies on youtube. Lol!
I stand in agreement with you.
Glad I came across this video! I enjoyed the clarification and attention to detail. Really good info! I subscribed.
Welcome aboard!
interesting...I just watched a video where the host had a guest on that does the "pass thru scheme", and he is selling a course...I knew it sounded too good to be true.
Jason white, right?
How is it that there are so many gurus out here that show proof, on this you tube platform that say people can middleman, with reception of more than million dollar awards for these contracts,
with no money and while providing no service or products other than administrative and invoicing and project management, which is completely contradictory to what you're saying?? Now I'm left completely blown out confused.
Not trying to complicate it. Rather, simplify it. But we must adhere to federal acquisition regulations. There are ways to do a 100% legal middleman. I teach it. It’s being taught without respect for the regs though, and I thinks that’s reckless.
This is literally me LOL I am in the construction and real estate industry. I sub out MOST of my work federally, with local contracts and with corporate entities. I leverage my set asides (MBE,SDVOSB,EDWOSB) to start the conversation with COs and potential subs. 😊 Amazing strategy.
I just added you on Sheena on indeed. But I will be talking to you soon.
Sheena. I’m going to message you on LinkedIn.
@@keithconwell6263 You can add me on LinkedIn - Sheena Parker
What’s your linked in name ? Would love to chat
Do you have a webinair? Or course for sale
Thank you once again for opening my narrow view. I’m starting to understand why the regs. and laws are in place in government contracting and that helps so much how the process works. Everyone needs to follow the rules, trust in the system, deal with just facts and most important care about what that person is doing. Once again thank you Govkid
hey man I wanna go into contracts , do you wanna connect ?
That intro was 🤣🤣🤣! Great content!!
Haha, glad it had affect 🤣
What constitutes 15% of the work tho? Does that mean marking up the subs work no more than 15% and providing management? I feel like people use me for this. I float all the costs and labor.
In construction, 15% would be met by providing at least 15% of the labor. You cannot buy material to satisfy this requirement. Depending on the requirements of the job, you can provide Project Management, Scheduling, A&E, Health and Safety, and Skilled Labor as a construction company to meet the 15%.
@@GovKidMethod This is a great question because I plan to hire two individuals on to take on project management, scheduling, billing and Q&A with myself. My only question @GovKidMethod is am I able to hire them on contract with my company for this project, or am I to be safe with the W2?
Good question
Quick question: as a fully small business not registered with any other set aside, would another small business that meets the same parameters that qualifies it as a small business be considered similarly situated? Or is this terminology only referring to other certified set asides?
Yes, this is called Total Small Business set-aside and is the most practical set-aside to use for a similarly situated entity approach.
So the limit on submitting is now $250k right?
So if a contract is under $250k, there is no subcontracting restrictions?
Limitations on Subcontracting do not apply to contracts under the Simplified Acquisition Regulations...currently 250K
How are these youtubers teaching the middleman strategy able to BOLDLY teach it without worry? How are they not being chased & shut down by the Feds & put in jail?? They teach that Project Managing the contract is enough to satisfy the requirements 😮
What about government contracts for products ? Will I have to buy and own the products to do business legally ?
What about Drop shipping? Can you fulfill Government contracts with drop shipping? Thanks
Is it legal to be a middle man when its just a product and not a service? For example, if the gov wants 10k napkins. Can I buy 10k napkins from a wholesaler and ship them directly to the location its supposed to go?
Limitations on subcontracting only applies over the simplified a question threshold which is $250,000 currently so that would not be a breach of this clause
GovKidMethod so the example I just mentioned above, as long as its under 250k, it’s completely legal? Even for me to dropship the items?
Yes, there’s not really any other way to fulfill the contract. Any company that manufactures napkins is probably not going to be a small business, so if this is a small business set aside you would have to order from wholesaler or supplier and set up the delivery
Thanks for making the same question as me
As a prime, can I hire temps through a temp agency? Would that suffice and meet the minimum limitation? Thanks
Did you find an answer? I'm curious myself.
@@Puckett0311 as am I
Temps are considered I9 employees (independent contractors under the staffing agency that represents them). Good question.
Is there a niche market for items instead of projects ? By items I mean products or equipment ect.
Yes! As long as you source 50% to small business suppliers/manufacturers you can build a "sourcing" business
By me being the middle man. Does the capabilities statement come from me or the prime contacter?
So, as long as I'm under what's now 250k I'm all legally good?
Ok I’m a little confused on something’s I hope someone can clear up but I get this is an old video. 1. If the contract awarded is between $3,500 -$150k if you sub out 💯 of the work it doesn’t break the pass-through law? 2. The similar entity exemption does that mean it has to be the exact so say you’re a WOSB you need to sub to a WOSB for neither company to be in violation or can say a hubzone sub out to a WOSB or a SDVOSB? 3. What if you don’t have employees as payroll but rather subcontract but you have a record for paying them a salary?
The SAT is currently 250k, so anything under the LOS does not apply. Yes, similarly entity needs to have the same small business program by definition. And employees have to be paid directly by your company to be considered self performance.
@@GovKidMethod thank you
Harper made a million sized profit at the cost of 16 months in jail jajajajajajajja
If I land a large generator contract. And manage on site and help out where needed, can I bill my labor and project managment to be 15% of the labor on this. The parts are maybe $1.1million. Would I have to do 15% of the labor or 15% of the total contract cost?
If you are saying 15% because this would qualify as a construction job, then the limitations on subcontracting for construction do not include the cost of material. It has to be 15% of labor. For example, you cannot just purchase the material to meet your 15% and sub out the rest if you are needing to meet LOS.
Hello can you provide me the written guidance where I can find this information in writing stating the legal way and illegal way to subcontracting
Here is the limitations on subcontracting portion that was referenced in the video:
www.acquisition.gov/far/52.219-14
Well, passthrough is not the way to go. Listening to others, on getting contract after contract it seems like they are doing that. Thanks for the video.
yea man i super extra crazy confused specially when most people i watch talk more about locking in contracts nationwide then finding a company with good review on google (literally) in the area and subbing it out,,,,
so could i resell a contract?
Very informative, thank you for sharing!
I watched all your previous videos to get here. I am excited. Go 8mile!
Sarah don’t have a “crew” to work along with Brian’s crew 🙄
?
Does pass through apply to goods too? like Unison?
govology.com/federal-distributors-must-understand-non-manufacturer-rule-nmr/
So in your first government contract, the road salt one, would you say that you subcontracted 100% of the labor?
Ike Ledford there was no labor requirement in the contract. Just for the salt. A pure commodity buy so we purchased 100% of the salt. Plus it was below the 150k threshold where Limitations on Subcontracting applies
GovKidMethod ah ok makes sense. I’m 18 and going to college this coming year and hoping to get into it in a few years. Having other people ship the salt to the guard base was all legal too? Even if it was above 150K everything you did was legal and didn’t count as pass through?
Ike Ledford correct
@@GovKidMethod i just want to say thanks for being a reliable resource im 14 i will admit war dogs and lord of war brought me here obiously i wasnt attracted by the movie magic stuff but rather the idea of running a business that didnt require some ground breaking discoveries or a customer base you have to bring in its really perfect as a Canadian i can always have a clientele on a tender site and what i like is that this isnt dropshipping where everyone and there mothers know about it this seems pretty niche since you need to actually put effort into it unlike what all the "wantraentrepreneurs" sell but i was wondering how much would you say do you need to do a bottom of the barrel contract dollar wise
thank you so much
-Evan
for one,,, Thank you soo much for specifically using that video as reference as im new around here and happen to be the one video i saw and was planning to ask the same question the same way,,,,,,,,,, also big ups to you for only being 18 and in college into this stuff
Super helpful and good to know. Thank you!
Derek hello, first, I want to thank you because if I do anything I want to do it right. I worked with the government for 10 years and the last thing I'd want to do is the wrong thing. They don't play and believe by the time they come for you which may take a while they have all their evidence. My question is, if I'm a small business and a woman owned small business if I get a contract that is for either, if the sub contractors set aside matches mine I'm not limited to the limitations? Also if I'm under 250,000 (new limit) I'm not subject to the limitations?
Thank you for the effort to provide this valuable information. Lots of middleman talk to submit, submit, submit, and less talk about some of the fine details that we should know if we're going to do this type of work. I've heard other presenters claim that the "work" for the prime can be administrative and that would count toward the necessary percentage. Maybe, maybe not. Either way, I feel better knowing more about this aspect before submitting a bid. Thanks GovKid!!
So if you are a small business- you can subcontract to another small business? Because when you first start out. You are not 8 a or any of the certs other than a small business.
Is it illegal or considered subcontracting to give the work to a 1099? Or does it have to be a W2 employee?
I wonder if I need a business account an credit card with government contractor.
Damn Why did you have to call me out like that?
Thank you for amazing content. Great channel, I'm now a subscriber.
Welcome aboard!
@@GovKidMethod there’s a popular youruber who’s teaching it the way you say is illegal , he’s been doing and preaching this method for 10 yrs faithfully how is that
@@MrJamesstarks I get this question a lot. I wonder if anyone has asked this to the person who’s doing it? I can’t speak for anyone else…
Do you have a course that provides how to preform as a middleman when submitting a product like zero turn mower to the government?
Hey Jhowze. Thanks for the question. I have a standalone Legal Middleman Method course that quickly gets you up to speed on the regulations and also shares guidance for working with subcontractors. And secondly, I have the Bidding Bundle which is a combination of The Legal Middleman Course + Bid Training for responding to solicitations: govkidmethod.samcart.com/courses/directory
So, am I correct in thinking it sounds like you have to do business with sub contractors that are also already linked in the government system?
No. There is no obligation for that. You can find virtually any business to pull in as a subcontractor, but you can't use them for 100% of the work. Your company as Prime must perform a percent of the work - in this case 15% of the cost as labor from your own payroll. This is often done by placing one of your employees on payroll as an operations manager to oversee the work remotely, and hiring one or more local temps to aid the subcontractor with their labor.
However, you can do a direct pass through if the company you are passing to has the same certifications that you used to obtain the set-aside or sole source (E.g., 8a, SDVOSB, WOSB, etc).
A lot of big prime do what u describe as “illegal”. How/who do we report this to?
Why is illegal in quotes? These are small business regulations that don't apply to large contracts. Small business breaches can be reported to the Inspector General.
This is good
Awesome Information! Thank you so much!