# Defense-Adjacent Supplier Readiness Kit

This kit helps a small manufacturer, machine shop, electronics or composites supplier, or test and software vendor decide whether to take subcontract work from a prime whose funding may depend on a conditional government loan, and how to protect cash if the prime's schedule slips. Print it, fill it in with your own numbers and documents, and keep it with each bid file. It does not replace advice from your own lawyer or accountant.

## Checklist

- [ ] Find and read every public financing or contract announcement from the prime. Note what it says about milestones, and note what it leaves out.
- [ ] Ask the prime in writing which milestones its loan or contracts depend on. Save the reply.
- [ ] Confirm the first-flight or delivery milestone date the prime is working to, and ask what happens to your orders if it moves.
- [ ] Get payment terms in writing: net days, progress or milestone payments, and any cap on payment delay.
- [ ] Confirm the contract has a termination-for-convenience clause that pays for materials already bought and work already done.
- [ ] Run the cash-exposure worksheet below for on-time, delayed and cancelled cases before you quote.
- [ ] Confirm your line of credit and cash reserves cover the delayed-case figure.
- [ ] Apply your concentration-risk rule: no single milestone-dependent prime above your chosen share of annual revenue.
- [ ] Register in SAM.gov and obtain a UEI and CAGE code; keep the registration current.
- [ ] Read the flow-down clauses for cybersecurity requirements (such as NIST 800-171 or CMMC) and price the compliance cost into your quote.
- [ ] Check intellectual property, data rights and export-control clauses in the subcontract.
- [ ] Send a capabilities email to the prime's supplier-diversity or small-business office.
- [ ] Line up a second customer outside defense for the same capabilities.
- [ ] Set a reminder to review the prime's news and any new government loan recipients every month.

## Worksheet 1: Prime-contractor due diligence

Fill in from public documents and the prime's written replies. Write "unknown" where you can't find it; don't guess.

| Question | Answer | Source |
|---|---|---|
| Prime company name | | |
| Source of its financing (loan, contract, private) | | |
| Is any financing described as conditional? | | |
| Milestones named publicly | | |
| Date of next milestone | | |
| Prime's reply to your written milestone question | | |
| Payment history with other suppliers (if you can learn it) | | |
| Other customers or revenue sources | | |

## Worksheet 2: Cash-exposure worksheet

Annual subcontract value: $________
Monthly value (annual divided by 12): $________
Payment terms (days): ________
Months of unpaid work at steady state (days divided by 30): ________

| Case | Months of work you cannot invoice | Cash tied up (monthly value times months) | Credit line or cash available | Gap or surplus |
|---|---|---|---|---|
| On time | | | | |
| 6-month delay | | | | |
| Cancelled (what the termination clause pays) | | | | |

Rule: if the delayed-case gap is negative, reduce the commitment, renegotiate terms, or decline.

## Worksheet 3: Concentration-risk rule

Annual revenue: $________
My cap for any one milestone-dependent prime (suggested 15 to 20%): ______%
Cap in dollars (revenue times cap): $________
Current and proposed work with this prime: $________
Over or under the cap: ________

## Worksheet 4: Subcontract clause checklist

- [ ] Termination for convenience pays for materials bought and work performed
- [ ] Progress or milestone payments instead of one final payment
- [ ] Maximum payment days stated
- [ ] What happens to orders if the prime's schedule slips
- [ ] Minimum order quantities or volume commitments
- [ ] Intellectual property and data rights stay with you
- [ ] Flow-down clauses listed and understood (cybersecurity, export control)
- [ ] Dispute-resolution process

## Worksheet 5: Registration checklist

- [ ] SAM.gov registration complete and active
- [ ] UEI obtained
- [ ] CAGE code obtained
- [ ] Capabilities statement written (one page: what you make, equipment, certifications, past customers)
- [ ] Listed with primes' supplier-diversity or small-business offices
- [ ] Registration renewal date on your calendar

## Template: email to a supplier-diversity office

```text
Subject: Small-business supplier inquiry: [Your Company Name]

Hello,

I run [Your Company Name], a [number]-person [type of company] in [city, state]. We make [products or services] and hold [certifications, if any]. Our UEI is [UEI] and our CAGE code is [CAGE].

I would like to learn about upcoming subcontract opportunities for small businesses and the flow-down requirements (cybersecurity, quality, export control) suppliers need to meet. Could you point me to the right contact or process, and tell me what documents you would like to see first?

I have attached a one-page capabilities statement.

Thank you,
[Name, title, phone, email]
```

## Template: written question to a prime about milestones

```text
Hello [Name],

Before we commit capacity to [part or service], could you tell us in writing which program milestones your financing or contracts depend on, the dates you are working to, and how orders to suppliers are handled if a milestone moves or a program is cancelled? We would also like to confirm the payment terms and the termination-for-convenience language in the draft subcontract.

Thank you,
[Name, company]
```

## Prompts

Use these with your own documents pasted in. Tell the AI to say when it is unsure.

Prompt 1, subcontract review:

```text
I run a small precision machine shop. I'm pasting a subcontract draft from an aerospace company whose own funding may depend on a conditional government loan. Using only the text I paste, make a one-page checklist covering payment terms, termination and cancellation clauses, materials reimbursement, and milestone dependence. Quote the clause number for each point. If a topic isn't in the draft, say "not in the document." If you are unsure what a clause means, say so.

[PASTE TEXT]
```

Prompt 2, cash model:

```text
Here are my monthly costs and a proposed subcontract with net-60 payment and a milestone-contingent final payment. Using only my figures, model cash need for on-time, 6-month-late and cancelled cases. Show the arithmetic, state the credit line I would need, and list your assumptions. If a number is missing, ask me.

[PASTE FIGURES]
```

Prompt 3, plain-English explainer:

```text
Explain in plain English what a conditional loan from a government capital office means for a prime contractor and its suppliers, and list questions I should ask the prime before accepting work, based on the announcement I paste. Flag anything you can't verify and say where you are unsure.

[PASTE ANNOUNCEMENT]
```

## Sources

- https://www.airandspaceforces.com/pentagon-150m-loan-rocket-lab-new-launch-vehicle-cadence/
- https://apprised.news/desk/defense/2026-11-13
- https://news.usni.org/2026/11/12/ssnx-attack-boat-will-be-a-swift-lethal-mothership-for-undersea-drones-navy-says