What to negotiate in your sub-contract

Once you have an agreement in principle to come as a 1099 or sub-contractor, you'll have to fill out the sub-contract paperwork.

The prime will give you their template and instructions. Most of it is just nonsense material that doesn't matter much, but you should keep an eye out for the following terms because they can actually impact you:

• Rate/pricing - Just confirm it's what you agreed to with the program manager
• Payment terms - Net-30 is standard. I've seen Net-45. Negotiate to Net-30. I had to do Net-35 once. If you're on a firm-fixed price contract confirm what the deliverables are and when/how you'd get paid.
• Insurance - Sometimes there are excessive insurance requirements. Argue that you're a solo 1099 so the risk is low. It depends on the type of insurance but I have a company of 6 people and we our umbrella coverage is only $2 million. Some ask for $10 million.
• Exclusivity/non-competes - Primes will sometimes try to include language that says you agree to only team with them on the contract and/or for any future re-competes. If you want to keep your options open ask them to remove this.
• Weird admin requirements - I had a sub-contract that had language about having some sort of export control certification or something. It would take months to get (at best) and potentially thousands of dollars. It was not necessary for my work. So I asked them to remove it.

Legal documents and templates are added to as things go wrong and compaines go "oh we should add X to the contract because that one company screwed us over last time."

Bigger companies may be less interested in changing their sub-contract for you because they are more bureacratic but I've actually found they are also fairly amenable to modifying language.

Smaller companies can also be flexible but may push back on payment terms more. They may have tigter cash flow cycles so net-45 gives them more breathing room than net-30.

Most of this stuff is fairly minor and you don't need a lawyer to go through the paperwork. Just watch out for the items above and you'll be good to go.

Want the full playbook? Check out Going 1099.