A Framework For Small Government Service Contractor Business Systems

                                                             

  INTRODUCTION

Waiting for a contract award to achieve a government contracting business process is not advisable. A win may not happen at all without addressing the structure and process requirements in your proposal to convince the customer you understand his business environment.

If you are not prepared in advance and you are fortunate enough to win, then in a very short time frame you will have to evolve your business system to perform on your contract and submit a billing.

This article will discuss a framework for a small enterprise to develop a business system in service contracting, which is the most frequent venue utilized to enter the government market.

The below  diagram depicts the major elements of a suggested integrated template.

PLEASE CLICK ON IMAGE TO ENLARGE

If you are a small startup organization, your process and automation may be quite rudimentary and simple in addressing the above structure and functions. If your company is in a high growth mode with many transactions, projects and details your processes and computerization will be more complex.

The point to remember is the need to overlay the above on your existing company for the unique products and services you provide, and then address how to fit, supplement, or accommodate the necessary adjustments to support contracting to the government.

Please read the following articles on the highlighted topics for details that may assist in evolving your unique business processes to support government contracting:

Long Range Planning

Should You Consider Small Business Federal :Government Contracting?

Provisional Indirect Rates

Teaming in Government Contracting

Protecting Intellectual Property and Proprietary Data

Human Resource Planning

Generic Contingent Hire Agreement

Contracts and Pricing

Proposal Preparation

Pricing

Project Planning

Earned Value Management Systems

Contract Baseline Management

Cost Centers, General and Administrative , Operations, Job Cost Records

The "Past Performance" Challenge

Establishing FAR and CAS Compliant Small Business Systems

DCAA Audits and Small Business Job Cost Accounting Systems

Customer Relations

Customer Relations and Government Personnel Roles

What Small Business Should Know About the FEDBIZOPPS Web Site

Multiple Front Marketing In Small Business Federal Government Contracting

Small Business Set-Aside Designations

SUMMARY

You may wish to download the free book and related documents at the "Box Net" cube in the right margin of this site for further information and live examples.

Remember, small business federal government contracting is not rocket science - it is taking what you do well in the commercial environment and applying it in a slightly different manner from a business perspective to accommodate the way the federal government does business.

Seizing the Moment in Small Business Federal Government Contracting

THE MOMENT

Trends on the horizon point to a bright future for small business in federal government contracting.

Federal government agencies have set a record in exceeding the legal requirement for small business contracting goals. 

FY 2024 Goal Attainment

Small business is uniquely qualified for work in the current economy, particularly in the services sector, due to lower overhead and G&A rates, as well as agility in work force development.

New industries in Robotics, 3D Printing, Energy, Environmental Protection, Security and Geo-spatial IT are creating fields for small enterprises to compete against bigger firms or lead teams involving larger businesses on large scale projects. 

Government small business set-aside procurement is on the rise and becoming recognized by many agencies as a way to remove stodgy, entrenched companies when long term contracts come up for renewal.  These agencies look to smaller firms for cost effective, vibrant management, while inheriting an existing, trained, incumbent work force available to the winner. The process can dramatically grow smaller firms. 

Managing Incumbent Work Forces

PREPARATION

A small business anticipating participation in the federal contracting market must make pursuing it part of a long term strategy.  Success in government contracting does not happen overnight. 

Like any other market venue, a niche must be located, market research must confirm the need for products and/or services and the competition; the customer and the potential sales must assessed.  Unlike many other fields, success relies on early requirements identification and strong marketing.

Marketing to Achieve a Small Business Set-aside Contract

5 Factors in Forming a Small Business Contracting Company

The government contracting market allows a small business to pass on the costs of operations at a project level as well as write off company-wide expenses if allocated in a defined manner to single government cost objectives (contracts).  

Small business can also operate in a lower risk environment with contract types suited to the challenges involved.  The trade-offs to these features are requirements for audits and job cost accounting that require verified consistency from cost estimating to billing and contract closeout. This does not occur without preparation. 

Small Business Sytems Development

Entering the market requires carefully sculpting commercial past performance into prospective government contract performance and accumulating strong customer satisfaction ratings.  The feds talk to each other. 

Meeting the Past Performance Challenge

Business Ethics and Past Performance

EXECUTION

With the right combination of planning, preparation and opportunity, a small enterprise can seize the moment with:

Identification of specific opportunities that fit company capabilities

SAM Contract Opportunities Replaces FEDBIZOPPS

Astute bid/no bid decisions

Making an Astute Bid/No Bid Decision

A solid team of resources both internal and external

Vital Tips for Project Management

Managing Industry Teaming Relationships

A Winning proposal, effective project start-up/execution and quality products and services

Government Contract Proposal Preparation

SUMMARY

The small business segment of the huge federal government contacting market is poised to grow exponentially due to advances in technology and the need for flexibility, mobility, agility and economic performance. 

Rule changes are being considered to enhance entrance of commercial enterprises into the government contacting venue. Congress and the federal agencies are looking hard at constructive changes to make the challenges we have discussed here easier to meet for the small enterprise.  

Seize the small business contracting moment by being diligent in learning about the market and pursuing it. Make your company well equipped to succeed:

• Define your niche
• Learn the rules
• Plan 
• Prepare 
• Execute 

Know Your Options For Government Contracts Disputes and Appeals

REQUESTS FOR EQUITABLE ADJUSTMENT (REA)

ALTERNATIVE DISPUTE RESOLUTION (ADR)

CLAIMS

I.  INTRODUCTION

The Federal Acquisition Regulation (FAR) contains provisions for contractors and the government to resolve contract disputes.  The disputes often arise due to events during performance, many times surfacing weaknesses in the original contract work definition, technical parameters, schedule factors or related terms and conditions that can lead to change implications effecting cost, schedule and delivery.

In short, when the understanding the parties thought they had at negotiation and execution of the contract is in dispute, there must be a resolution. 

These conditions open the baseline of the contract to further clarification and negotiation. The FAR recognizes that a fair and equitable process is necessary to settle disputes and re-establish a mutually agreeable contract baseline.

 II. GENERAL CONSIDERATIONS

Contract baseline management has been discussed previously in the following article:

Contract Baseline Management

The above article offers six (6) rules of thumb:

1. KNOW - The contract value and its ceiling amount

2. KNOW - The incurred cost to date and commitments

3. KNOW - The scope of work and whether or not your current efforts are supporting it or some other objectives

4. KNOW - The estimated cost at completion based on where you are at today

5. KNOW - Your customer and who among the customer population is prone to direct out of scope effort.

6. KNOW - WHEN TO SAY "NO" to "Scope Creep" and say it officially in writing to the contracting officer specified in your contract.

The remainder of this article will discuss the three most common processes that contract disputes undergo when the baseline is in dispute and selecting the best method considering the circumstances that exist on the contract. 

III. REQUESTS FOR EQUITABLE ADJUSTMENT (REA)

An REA is most often the first and the least formal step undertaken by a contractor when there has been a clear and recognizable departure from the contract baseline in terms of events that warrant cost, schedule, technical performance or terms and conditions parameter modification.  It does not start the formal claims process under FAR with associated interest implications.

Submitted in the form of a proposal for contract change, the REA cites the "Before and After" conditions of the contract baseline and the details regarding the delta.  Implicit in the submission are actual cost records, documents regarding government actions and guidance, an estimate of the new baseline impact in terms of cost, schedule or technical modifications to the agreement and a request for contract change. 

The government agency may approve or deny the proposal, further negotiate the details with the contractor and may or may not modify the contact.  The following article is an excellent guide to use and preparation of REA’s:

Difference Between REA's and Claims

IV. ALTERNATIVE DISPUTE RESOLUTION (ADR)

ADR takes advance planning on the part of the government agency and the contractor.  Not every government contracting office chooses to place an ADR clause in contacts they execute.  Not every contractor is willing to accept one at contract award.

ADR is intended to be an alternative to the REA and formal claims process, whereby the government and the contractor agree in advance to place an ADR clause in the contract and subject any dispute that arises to the ADR process for resolution.  

Below is a quote from the FAR on the use of ADR:

33.214  Alternative dispute resolution (ADR)

(a) The objective of using ADR procedures is to increase the opportunity for relatively inexpensive and expeditious resolution of issues in controversy. Essential elements of ADR include—

(1) Existence of an issue in controversy;

(2) A voluntary election by both parties to participate in the ADR process;

(3) An agreement on alternative procedures and terms to be used in lieu of formal litigation; and

(4) Participation in the process by officials of both parties who have the authority to resolve the issue in controversy.

(b) If the contracting officer rejects a contractor’s request for ADR proceedings, the contracting officer shall provide the contractor a written explanation citing one or more of the conditions or such other specific reasons that ADR procedures are inappropriate for the resolution of the dispute. In any case where a contractor rejects a request of an agency for ADR proceedings, the contractor shall inform the agency in writing of the contractor’s specific reasons for rejecting the request.

(c) ADR procedures may be used at any time that the contracting officer has authority to resolve the issue in controversy. If a claim has been submitted, ADR procedures may be applied to all or a portion of the claim. When ADR procedures are used subsequent to the issuance of a contracting officer’s final decision, their use does not alter any of the time limitations or procedural requirements for filing an appeal of the contracting officer’s final decision and does not constitute a reconsideration of the final decision.

(d) When appropriate, a neutral person may be used to facilitate resolution of the issue in controversy using the procedures chosen by the parties.

(e) The confidentiality of ADR proceedings shall be protected. 

(f)(1) A solicitation shall not require arbitration as a condition of award, unless arbitration is otherwise required by law. Contracting officers should have flexibility to select the appropriate ADR procedure to resolve the issues in controversy as they arise.

(2) An agreement to use arbitration shall be in writing and shall specify a maximum award that may be issued by the arbitrator, as well as any other conditions limiting the range of possible outcomes. 

(g) Binding arbitration, as an ADR procedure, may be agreed to only as specified in agency guidelines. Such guidelines shall provide advice on the appropriate use of binding arbitration and when an agency has authority to settle an issue in controversy through binding arbitration.”

V. CONTRACT CLAIMS

A formal contract claim is a significant step in the relationship with your customer.  It acknowledges that the REA and ADR (if applicable to the contract) processes have not been effective in resolving the dispute and refers the matter to a formal claim which has the potential for adjudication.  It also starts the interest clock in terms of government payment liability in the event the agency loses the claim during adjudication. 

Below are the major clauses regarding formal contact claims and the certifications by the contractor that apply.  They have significant legal implications.

Protests, Disputes and Appeals

VI. SUMMARY

When contract disputes or the potential for claims and appeals arise it is best to view each instance uniquely in deciding which of the three avenues discussed in this article may be appropriate. 

Contract disputes are serious matters. In the event the impact to the company from a risk perspective is substantial, it is best to involve a law firm that specializes in government contract claims for advice on how to proceed. 

The Changing Dynamics of Collaboration in Today's Small Business Contracting

Collaboration in government contracting is changing dramatically. 

The government is becoming more open in its dealings, driven by a dramatic need for commercial technology from the commercial sector, dire efficiency issues and the weight of a massive debt load. 

Budget and funding pressures, competition for scarce resources, efficiency and similar concerns are creating an environment where open, accessible communication and teaming at several levels can yield excellent returns for progressive small enterprises and their partners.

These advances are being enhanced by communication and processes made instant with technology, remarkably enabled for creativity and teamwork, as well as the lower operating costs of a small enterprise.  The new collaboration includes reaching out to clients, industry partners and suppliers. It also requires employee involvement at all levels in the dynamics of the collaborative process. 

Although sound, professional and business contracting techniques will always be necessary, together with prudent management and risk analysis, the collaborative dynamic is on the move. 

Now is the time to take the initiative in designing collaborative efforts with federal agencies, marketing solutions that maximize contractor and government resources and the best possible efficiencies in service solutions. Go in early, go in hard, go with a team concept and be open and objective with your primes, your suppliers and your customer. Engage your employees at all levels in the effort.
　
Many are planning strategically, are you?

Insights To Succeed In Small Business Government Service Contracting








 
　

　

　

What is a "Compliant" Federal Government Services Contract Small Business System?

It seems the single word, "Compliance" in small business federal government services contracting business systems implies many different things:

• Small Businesses wish to know about compliance to assess the cost of doing business with the government, assure readiness and business system capability.
•  Software Suppliers maintain they have compliant tools to achieve government contracting business management and wish to sell them.
• The Defense Contract Audit Agency (DCAA) has the mission to insure compliance with Cost Accounting Standards (CAS) under the Federal Acquisition Regulation.
• Defense Contract Management Agency Fact Finding Teams wish to observe small business systems to determine if an enterprise is capable of pricing, job cost accounting and billing consistency.
  
• Prime Contractors wish to know if a subcontractor is compliant with FAR and CAS so related flow down clauses can be made part of contractual agreements.

The criteria for determining government contracting small business system "Compliance”, as discussed above, is met when:

1. The business system is unique to the company, and recognizes the way the firm is organized and the way it manufactures or delivers products, supplies or services. Each company does business in a slightly different way, performs services or delivers products with organizations that function in various manners and yet all ultimately meet Modified US Government Cost Accounting Standards (CAS) objectives by live data demonstrating consistency with regard to cost allocation to contract objectives in pricing, job cost accounting, billing and closeout.

2. The business system meets Modified Cost Accounting Standard (CAS) Coverage defined by the government is as follows:

Standard 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs  Standard 401


Standard 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose Standard 402

Standard 9904.405, Accounting for Unallowable Costs Standard 9904-405, Accounting for Unallowable Costs Standard 405     Unallowable Costs


Standard 9904.406, Cost Accounting Standard—Cost Accounting Period  Standard 406


Modified, rather, than full, CAS coverage may be applied to a covered contract of less than $50 million awarded to a business unit that received less than $50 million in net CAS-covered awards in the immediately preceding cost accounting period.
 

The following article contains practical business system guidance regarding building a Modified CAS Coverage Small Business System for federal government contracting:
Managing Risk In Business System Development

Read the above government requirements and business system development guidance, and then give your selected method of business management the Modified CAS litmus test. Make a judgment that is the best for your company and try it out on DCAA. If they have problems with the approach you can adjust it.

The bottom line objective is that you wish government approval going forward so that your rates are accepted in proposals, your audits have a satisfactory outcome and you get paid when you submit a billing. Without those critical success factors the business cannot operate.

Your Federal Government Contracting Past Performance Record

FAR 42.1501

“Relevant information for future source selection purposes, regarding a contractor’s actions under previously awarded contracts. It includes, for example, the contractor’s record of conforming to contract requirements and to standards of good workmanship; the contractor’s record of forecasting and controlling costs; the contractor’s adherence to contract schedules, including the administrative aspects of performance; the contractor’s history of reasonable and cooperative behavior and commitment to customer satisfaction; and generally, the contractor’s business-like concern for the interest of the customer.” 

As a small enterprise enters the government contracting venue, the phrase “Past Performance” almost immediately comes to the fore. When examining government Requests for Proposal (RFP’s) a section of the award criteria is almost always specified for past performance ratings on previous similar government work.

We have discussed meeting the initial past performance challenge for companies new to government contracting in the following discussion:

The Small Business Government Contracting Past Performance Challenge

The primary purpose of past performance evaluations is to ensure that accurate data on contractor performance is current and available for use in source selections. A past performance evaluation report provides a record of a contractor’s performance, both positive and negative, on a given contract during a specified period of time.
This article will focus on accessing your past performance record, and explain how the government rates a contractor’s past performance:

ACCESS

The following is an extract from the Contractor Past Performance Information Retrieval Web Site on obtaining information on your company information there:  Contractor Past Performance Assessment Reporting System

CLICK IMAGE TO ENLARGE 

PAST PERFORMANCE REVIEW CONTENTS BY KEY ASSESSMENT ELEMENT

Below are the key assessment elements required for contractor reviews of major procurement sectors in federal government contracting. 

Assessment Elements for the Systems Sector

Technical (Quality of Product) —This element is comprised of an overall rating and six sub elements.

Activity critical to successfully complying with contract requirements must be assessed within one or more of these sub-elements. The overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's technical performance or progress toward meeting requirements. It is not a predetermined roll-up of the sub-element assessments.

Product Performance—Assess the achieved product performance relative to performance
parameters required by the contract.

Systems Engineering—Assess the contractor's effort to transform operational needs and
requirements into an integrated system design solution.

Software Engineering—Assess the contractor's success in meeting contract requirements for software development, modification, or maintenance. Results from Software Capability Evaluations (SCEs) (using the Software Engineering Institute {SEI's} Capability Maturity Model {CMM} as a means of measurement), Software Development Capability Evaluations (SDCEs), or similar software assessments may be used as a source of information to support this evaluation.

Logistic Support/Sustainment—Assess the success of the contractor's performance in accomplishing logistics planning.

Product Assurance—Assess how successfully the contractor meets program quality objectives (e.g., producibility, reliability, maintainability, inspectability, testability, system safety) and controls the overall manufacturing process.

Other Technical Performance—Assess all the other technical activity critical to successful contract performance. Identify any additional assessment aspects that are unique to the contract or that cannot be captured in another sub-element
.
SCHEDULE—Assess the timeliness of the contractor against the completion of the contract, task orders, milestones, delivery schedules, administrative requirements, etc.

COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.

 Management—This element is comprised of an overall rating and three sub-elements. Activity critical to successfully executing the contract must be assessed within one or more of these sub-elements. This overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's performance in managing the contracted effort. It is not a predetermined roll-up of the sub-element assessments.

 Management Responsiveness—Assess the timeliness, completeness, and quality of problem identification, corrective action plans, proposal submittals (especially responses to change orders, engineering change proposals, or other undefinitized contract actions), the contractor's history of reasonable and cooperative behavior, effective business relations, and customer satisfaction.

Subcontract Management—Assess the contractor's success with timely award and management of subcontracts, including whether the contractor met or exceeded small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.

Program Management and Other Management—Assess the extent to which the contractor discharges its responsibility for integration and coordination of all activity needed to execute the contract, identifies and applies resources required to meet schedule requirements, assigns responsibility for tasks/actions required by contract, and communicates appropriate information to affected program elements in a timely manner. Assess the contractor's risk management practices, especially the ability to identify risks and formulate and implement risk mitigation plans. If applicable, identify and assess any other areas that are unique to the contract or that cannot be captured elsewhere under the Management element.
Assessment Elements for the Services, Information Technology, and Operations Support Sectors

QUALITY OF PRODUCT OR SERVICE—Assess the contractor's conformance to contract requirements, specifications, quality of software product and development, and standards of good workmanship (e.g., commonly accepted technical, professional, environmental, or safety and health standards).

SCHEDULE—Assess the contractor’s timeliness against the completion of the contract, task orders, milestones, delivery schedules, and administrative requirements (e.g., efforts that contribute to or effect the schedule variance).

COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.

 BUSINESS RELATIONS—Assess the integration and coordination of all activity needed to execute the contract, specifically the timeliness, completeness, and quality of problem identification, corrective action plans, proposal submittals, the contractor's history of reasonable and cooperative behavior, customer satisfaction, timely award and management of subcontracts, and whether the contractor met small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.

MANAGEMENT OF KEY PERSONNEL (for Services and Information Technology business sectors only)—Assess the contractor's performance in selecting, retaining, supporting, and replacing—when necessary—key personnel.

SUMMARY

Regular review of your past performance information system data is vital to your future marketing efforts. Please feel free to download the Guide to the Past Performance Retrieval System in the second, vertical Box Net "References" cube in the right margin of this site.

Meeting The Small Business Federal Government Contracting "Past Performance" Challenge

As a small business begins the proposal submission process to federal government agencies or to prime contractors the past performance requirement is a major challenge. By definition a start-up company in government contracting has no direct government agency past performance projects to site in meeting the requirement in requests for proposals (RFP’s) for historical references to similar projects in terms of size, duration and complexity.

Past performance data must be specific to the enterprise bidding a contract. It cannot site historical references to performance of individuals now in the company when they were with other firms, achievements by predecessor companies or successful projects that the current company did not perform as its current entity. The purpose for this rigid perspective by the government is to avoid "Fronting" a new enterprise with misleading information to obtain a high past performance rating.

So how can a startup or a small business new to government contracting meet the past performance challenge?

The answer lies in historical projects that may be similar in the commercial arena and a high quality proposal that clearly demonstrates an understanding of the requirement at hand, a unique and cost effective project plan and high performing personnel and/or products tailored to the statement of work to offset an interim, light past performance record.

A past performance reference sheet usually accompanies an agency RFP. It normally requires the bidder to fill it out with references to historical projects the company has performed and the contact points for confirmation. The government may request these forms in advance of the main body of the proposal to allow enough time to send them to the references. The past performance form is sent by the government to the references and you never see the result. The input goes directly from your past performance references back to the government.

For details on past performance formats and records processes please see Your Past Performance Record 

Many small businesses work through prime contractors to "Grow" past performance history (subcontracts count). By teaming with a sizable firm a small entity can relate its participation to larger projects and ultimately graduate to a good library of references, carefully maintained and kept as a living, growing data base of good customer service records that can be sited again and again in proposals.

It is wise to keep customer perceptions of your professionalism and products or services alive by constant vigilance, visits, surveys and other feedback mechanisms so that you are not surprised at a proposal debriefing when you find that a client you thought rated you highly did not.

The major services maintain past performance records by contract that you can access. Inquire with them as to a membership at the appropriate web site and review them regularly. The GSA utilizes service companies to rate contractors. You can get your rating by inquiring with them, much like a credit rating, except pertinent to cost, schedule and technical performance. Monitor your D&B report. It is always out there for prime contractor and government assessment of your financial health, your vendor payment history, your organization profile and your rating.

The U.S. Federal Contractor Registration System for Award Management  has a narrative to profile your company. Check your registration and insure you have a current and complete description of your supplies and services available to all who use the Dynamic Search Mechanism Dynamic Small Business Search (DSBS)

Insure your web site, your capability statement and your marketing plans are maintained current alive and dynamically reflective of your successes as you pursue new business and carefully develop your library of past performance records by project with accessible profiles to use in your government proposals.

Are Startups Missing Out By Not Bidding On Federal Contracts?

By Kayleigh Alexandra

It isn’t easy to acquire a government contract, especially if your business is just getting started, but it isn’t impossible, and the benefits can be substantial.

If it’s an option you’d like to pursue in the future, make an effort to begin preparing your organizational structure to meet federal requirements, and seek out subcontracting work to help you establish the connections that could help you in the right direction.”

If you run a startup, the thought might never have crossed your mind to seek out contract work with the government. After all, it isn’t the conventional way forward, and you might well figure that federal contracts will invariably go to companies with well-established government links.

But are you missing out by not making an effort to seek out federal contract work? Let’s go through some reasons why you might want to give it more consideration.

You can’t get what you don’t apply for

The notion that government contracts will always go to giant corporations is something of a self-fulfilling prophecy, as it spurs small enterprises to hold back from applying for them. Despite this impression, it’s generally quite viable, especially since the Federal Government sets a goal every fiscal year for contracting a percentage of its work to small businesses.

In 2020, the Federal Government awarded 26.01 percent or  $145.7 billion in contract work to small businesses, exceeding the yearly goal of 23%  and at a $13 billion increase from the previous fiscal year.

Given this ongoing commitment to diversifying the awarding of government work, now is as good a time as any to pitch for available contracts. If you succeed in getting one, you may be able to parlay it into an ongoing working relationship.

The field is becoming more open

The main difficulties with landing federal contracts are not technical but procedural and organizational, and the problem with high-level bureaucracy is that it’s incredibly difficult to dislodge. The flexibility in approach, then, must stem from the applicants.

While this is undoubtedly a frustrating notion to small businesses everywhere, consider that it also wards off a lot of possible competition, and that the benefits of securing federal work are extensive.

Another thing worth noting for programs set aside for small business is that medium and large businesses are both precluded from assuming prime roles and limited in their participation as subcontractors. The government’s mandate for a small business set-aside contract caps participation by firms other than the small business prime awardee at 49% of the project effort (factoring in work scope, cost, and time). While this does mean that a small business must demonstrate (during the proposal and site survey phases) the ability to carry out 51% of the work internally to win a contract, it does ensure that a majority of the work genuinely goes to small business workers.

The advantages of government work

Even disregarding the intimidating process involved in securing government work, a lot of startups may well think that it isn’t the right fit for them, particularly given the common perception that federal contracts are dull, expensive, or overly complicated. Brand image is very important in the social media age and pitching to popular brands might feel like a better option.

The big advantage to working on government contracts is that it lends your company a great deal of credibility and cache. People understand that it’s a difficult marketplace to operate in, and will view your ability to do so as an indication of your professionalism.

Here are some more advantages:

●     Scheduling Consistency

○     A lot of contract work extends to substantial periods of time, meaning you plan your financial year around it and allocate your resources efficiently.

●     Industry Networking

○     You’ll have the chance to meet people in very important positions in your industry, providing you with the opportunity to network and establish useful contacts.

●     Financial Certainty

○     Government payments will always be issued on time and in accordance with the agreed terms. You will never face the prospect of chasing them for payment.

Meeting the requirements for contractors

There are specific requirements that prospective contract work suppliers must meet in order to be granted consideration, and meeting those requirements is the most challenging part of the process (with the possible exception of formulating the pitch).

Typically, you’ll need to ensure that your business system meets government standards for job cost accounting (each job is unique and must be costed accurately), be fully prepared to deal with thorough audit requests, and have the capacity to produce project proposals of a sufficiently-high quality and that your business system meets government standards

You’ll also want to make sure your company has adequate insurance. Basic likely won’t cut it— you should pursue a suitable custom policy that covers everything needed, such as Defense Base Act insurance if you use overseas employees. The government is very risk-averse in awarding contracts and you won’t stand a chance if your proposition seems a little rocky.

To navigate those murky waters, it’s generally best to consult a specialist. This website offers a great deal of information for free, but there are also paid consultants you can hire to help get your business ready to be viable for contract bidding. Here are a couple you may wish to consider:

●     Judy Bradt: https://www.linkedin.com/in/judybradt/

●     Mark Amtower: https://www.linkedin.com/in/markamtower/

Working with a prime contractor

Given the complexity and expense involved in becoming a government contractor, it’s often worth considering the option of working as a subcontractor for a prime contractor, which is a business that has been granted full control of a government contract, allowing it to delegate parts of the work should it wish to.

If your startup isn’t ready to battle with much larger companies for huge contracts, subcontracting work could be a great first step to take. Most of the advantages we covered earlier still apply, as well, so it gives you the chance to make some influential contacts.

In summary

It isn’t easy to acquire a government contract, especially if your business is just getting started, but it isn’t impossible, and the benefits can be substantial.

If it’s an option you’d like to pursue in the future, make an effort to begin preparing your organizational structure to meet federal requirements, and seek out subcontracting work to help you establish the connections that could help you in the right direction.”

ABOUT THE AUTHOR:

Kayleigh Alexandra is a content writer for Micro Startups — a site dedicated to giving through growth hacking. Visit the blog for your latest dose of startup, entrepreneur, and charity insights from top experts around the globe. Follow us on Twitter @getmicrostarted.