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government agency past performance projects to site in meeting the requirement in requests for proposals (RFP’s) for historical references to similar projects in terms of size, duration and complexity.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 It cannot site historical references to performance of individuals now in the company when they were with other firms, achievements by predecessor companies or successful projects that the current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.

Contract Line Item Structure - The Heart of Your Federal Government Business Deal

Contract Line Items (CLINs) specify products or services being procured and the negotiated prices for them. 

Carefully review (CLIN) relationships to other critical elements of your contract for consistency before proposing, accepting and signing your deal.

Housed in Section B of your contract, contract line items are critical for reporting and billing purposes in your accounting system. Invoices to the government for supplies or services delivered must reference the associated CLIN. 

For service contracts that are cost-based such as Time and Materials (T&M) or Cost Plus and for progress billings under fixed price contracts, your job cost accounting system must be able to track labor, material and other direct costs at the CLIN level or below to provide auditable details for payment approval.

Government requisition and appropriation data against the CLIN are carried throughout the government finance and accounting system that makes payment on your invoices. CLIN’s form the backbone upon which all the other contract sections are built. If the CLIN structure is defective, it is likely many other areas of the contract will also be deficient.

During the “Sources-Sought”, “Pre-solicitation” or “Draft RFP” stages of a procurement the government often invites industry to comment on the evolving solicitation. The CLIN structure should be evaluated in relation to such items as the Work Breakdown Structure (WBS), the Statement of Work (SOW) and the contract schedule from the perspective of visualizing the work underway, tracking and reporting the status and finances of deliverables, inspection and acceptance and accurately billing the deliveries on invoices.

If the agency is establishing a poorly integrated CLIN structure you should comment appropriately to the contracting officer, suggesting corrections and additions to establish a framework against which your enterprise can estimate effectively, operate efficiently, report accurately and bill without experiencing delays. Most agency contracting shops appreciate such contributions.

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

As you read the narrative in this section, carefully establish that it adequately covers all the CLIN's in Section B. During the proposal process it is wise to matrix each paragraph of the SOW to its associated CLIN so you are sure your CLIN level prices have adequately covered the scope described in the SOW and that the SOW addresses each of the CLIN's identified in Section B. If there appear to be omissions point them out. Note where the SOW conflicts with or does not adequately describe the applicable CLIN's in Section B. Also note where there may be missing CLIN's. Then offer either a revision to the CLIN structure, a revision to the SOW, or both.

SECTION D - PACKAGING AND MARKING

Insure that the instructions in this section cover each of the CLIN's in Section B and that your company can comply with any specifications referenced.

SECTION E - INSPECTION AND ACCEPTANCE

Review the criteria for accepting the products and services to be delivered by CLIN as well as the location where deliveries will take place. Insure your company can comply with the criteria for acceptance. A payment will not be made without government acceptance of your delivery.

SECTION F - DELIVERIES OR PERFORMANCE

This section will replicate Section B and specify the due dates for deliveries by CLIN. Insure you can comply with the dates indicated.

SECTION G - CONTRACT ADMINISTRATION DATA

The accounting and appropriation data in this section must be replicated where necessary in your bill to the government by CLIN. Please see the article at this blog entitled, "Government Contract Billing":

http://smalltofeds.blogspot.com/2008/06/small-business-federal-government.html

SECTION H - SPECIAL CONTRACT REQUIREMENTS

Check for any special requirements, such as Earned Value Management Systems, the requirement for a Work Breakdown Structure against which to report cost and schedule data and other clauses such as Design to Cost/Life Cycle Cost, Reliability, Safety and Failure Analysis reporting requirements and similar specifications. If you find such requirements, carefully review the reporting structure therein for consistency with the CLIN structure of the contract and point out any disparities to the Contracting Officer.

SECTION I - CONTRACT CLAUSES

Carefully review this section in the same manner as Section H.

SECTION J - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

The Contract Data Requirements List (CDRL) will be in this section. Insure there is a separate CLIN for data items. Most contracts price data at zero cost and include the cost to prepare the data in other CLIN pricing. Determine which of the CLIN's will be affected by the data items required in this section and insure the pricing for those CLIN's includes that cost. Perform an identical review of any other documents contained in this section.

SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS

Insure that all information provided in this section is consistent with the data specified in each of the sections above.

SUMMARY

By conducting a thorough review of the CLIN structure against all other sections of your prospective contract you will establish a consistent framework and an integrated approach to tracking and reporting the status and finances of deliverables, inspection and acceptance of same and billings that will be promptly paid.  

The following is an example of a typical federal government contract CLIN structure:

SECTION B - SUPPLIES OR SERVICES AND PRICES

ITEM NO SUPPLIES/SERVICES

0001 SBIR RESEARCH AND DEVELOPMENT

Firm Fixed Price

The contractor shall perform research and development efforts in

accordance with Section C and the Contractor's SBIR Phase I

proposal dated September 2002 in response to SBIR Topic N02-140

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AA Monthly Status Report 1 LOT $11,000.00

The contractor shall perform research and development efforts and

provide the First Monthly Status Report in accordance with CDRL AO01.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AB Monthly Status Report 1 LOT $11,000.00

The contractor shall perform research and development efforts and

provide the Second Monthly Status Report in accordance with CDRL A00I

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AC Monthly Status Report 1 LOT $11,000.00

The contractor shall perform research and development efforts and

provide the Third Monthly Status Report in accordance with CDRL A001.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AD Monthly Status Report 1 LOT $11,000.00

Phase 11 Program plan

The contractor shall perform research and development efforts and

provide the Fourth Monthly Status Report in accordance with CDRL A001

and the Phase 11 Program Plan in accordance with CDRL. A002.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AE Monthly Status Report/ 1 LOT $11,000.00

Preliminary Report

The contractor shall perform research and development efforts and

provide the Fifth Monthly Status Report in accordance with CDRL A001

and the Phase I Preliminary Report in accordance with CDRL A003.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0001AF Contract Summary 1 LOT $13,587.00

Report

The contractor shall perform research and development efforts and

provide the Phase I Final Report in accordance with CDRL A004.

CLIN 0001 TOTAL $68,587.00

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0002 DATA 1 LOT *NSP *NSP

DELIVERABLES

Firm Fixed Price

The contractor shall provide the data deliverables in support of

CLIN 0001 in accordance with attached CDRLs.

* - Not Separately Priced

ITEM NO SUPPLIES/SERVICES

0003 OPTION CLIN

SBIR RESEARCH AND DEVELOPMENT

Firm Fixed Price

The contractor shall perform research and development efforts in

accordance with Section C and the Contractor's SBIR Phase I proposal

dated September 2002 in response to SBIR Topic N02-140.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0003AA Monthly Status Report 1 LOT $9,000.00

The contractor shall perform research and development efforts and

provide the First Monthly Status Report in accordance with CDRL A001.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0003AB Monthly Status Report 1 LOT $9,000.00

The contractor shall perform research and development efforts and

provide the Second Monthly Status Report in accordance with CDRL AOO1.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0003AC Contract Summary 1 LOT $11,490.00

The contractor shall perform research and development efforts and

provide the Phase 1 Final Report in accordance with CDRL A004.

CLIN 0003 TOTAL $29,490.00

-

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NO

0004 OPTION CLIN 1 LOT *NSP *NSP

DATA

DELIVERABLES

Firm Fixed Price

The contractor shall provide the data deliverables in support of

CLIN 0003 in accordance with attached CDRLs.

* - Not Separately Priced

CLINS 0001 - 0004 TOTAL $98,077.00

Your Small Business Government Contracting Business Plan

Infrastructure funding, world events and the fast pace of technology are venues in which federal funding programs are enacted, grown and made part of the culture.  

They are on the way.  There will be dramatic roles for small business. 

INTRODUCTION:


 When visiting the SBA website on business planning, there are major topics in the business planning process which, when addressed in a plan, will insure the success of an enterprise and assist  in determining and supporting the amount of funding needed. SBA Write a Business Plan

This discussion addresses the unique aspects of federal government contracting that will yield a successful plan and more importantly a successful execution of that plan in the federal contracting venue.  

Marketing, advertising, competitor analysis and financing must be addressed.  Free articles on strategic planning and developing a marketing plan are at the “References” Box Net Cube at the top right margin of this site. They address evolving an operations vision for an enterprise showing its potential to present to a banker or to an investor.

Here is a site with free business plan samples:

Business Plan Samples

It may assist in visualizing business growth to look at an example of how someone else addressed a given topic.

NICHE DEVELOPMENT

Product entrepreneurs all face the same challenges. Those who succeed recognize they need to visualize themselves in the product development business, structuring an enterprise, generating a business plan, protecting intellectual property and then seeking industry partners and investors to bring the product to market.

In the process, copyrights, patents and royalty issues may come into play and development and distribution agreements are formed. Pricing is finalized based on cost and expense projections and competitive factors unique to the company as negotiation results are achieved with industry teaming partners, developers, manufacturers and distributors.

Product Development Insights

Service contracting to the federal government is a natural venue for small business. It does not require a product with a niche market or capital intensive manufacturing facilities. Service contracting does require skilled management and labor resources capable of performing a scope of work for which the government has identified a need and for which outsourcing to an industry contractor has been selected as the means to fulfill that need. The venue demands strong human resources management, industry teaming and an enhanced business system to price, account and bill on a job cost basis under government service contracts.

Service Contracting Insights for Success

REGISTRATION

Utilize the below link to register your company.  It provides excellent guidance and background, as well as access to the PDF file on NAICS Codes which are critical for you to choose before you begin the registration process.  Give these some careful thought when selecting them.  If there is a chance your firm may wish to be involved in a field, put the code in your registration.  No one will question your qualifications at this point.  That comes later during proposals. 

When you have completed your registration at the link below you will received a Government CAGE Code, uniquely identifying your firm and its location as a government contractor. 

Registering for Government Contracting

MARKET RESEARCH

As a small business becomes known in the federal government contracting community, successful marketing of sole source or group-designated business becomes easier, but it is always a challenge due to the need for taking early action in windows of opportunity. 

Find those windows and communicate capabilities to the decision makers and industry team members who can help you.  

If you are eligible for set aside designations make small business set asides or sole source procurements key elements in your marketing plan. 

Marketing to Achieve a Federal Contract

TEAMING

Be straight-forward and honest with  industry teaming partners.

Do not violate share arrangements, teaming agreements or non-disclosure agreements. Such violations are a death knell for your reputation in the business.

Do not become known as a resource raider by hiring away from other firms with whom you have teamed.

Give it a best shot as a prime or a sub but involve the government contracting officer to resolve industry teaming disputes that may damage a past performance record.

Exclusivity is the practical way to go on any given program. Team early and exclusively and be a winner. 
Reputation is key, ethics count and  customers as well as the industry are observing.

Managing Industry Teaming Relationships

BUSINESS SYSTEMS DEVELOPMENT

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 his business environment is understood.

If one is not prepared in advance and one is fortunate enough to win, then in a very short time frame one will have to evolve a business system to perform on the 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.

Government Contracting Business Systems Development

PROPOSAL PREPARATION

Government contract proposal preparation is time consuming and can be costly. Meeting the agency Request for Proposal (RFP) requirements with a responsive proposal can be well worth the effort if a winning strategy can be formulated. When considering submitting a proposal to a given government solicitation, conduct a bid/no bid exercise.

By going through that process  a company  begins formulating your win strategy or it will discover that it should not bid this job for lack of such a strategy. The elements of the process are discussed below in the form of questions to ask  against topics for key consideration

This article offers guidance as a template to apply marketing operations for accommodating federal government contract proposal preparation. Proposals are special, sometimes exhausting projects, but a necessary part of doing business with government agencies. Like many other aspects of business, the more proposals that are prepared, the more that is learned and the more one can borrow from past practice for the next one.

Government Contracting Proposal Preparation

PROJECT MANAGEMENT

Strategic thinking must be applied to structuring a government service contract project management capability in your company. It must involve long term planning and designing a business system as well as establishing rates and factors to bid new work and control it while interfacing with the customer.

When one plans in detail to define the product or the service one reduces performance risk. 

The project management challenge is not to launch significant and costly resources before the specification for the product is sufficiently defined, obviating the need for costly revisions or abandonment, yet knowing when the product definition and plan are suitable for release.

Good project management starts early.

Vital Tips for Project Management

SUMMARY

Consider the advice herein when developing and maintaining your business plan. Overlay approaches unique to the company against the guidance offered and place it in the standard format for business planning.  It will yield a road map for success and can be further evolved for growth.

For additional  details on these topics and other important information in developing and executing a government contacting plan, download the free books and supplements available in PDF format at the “Box” in the top right margin of this site.

Seizing the Moment

Acquiring An Incumbent Work Force As An Element Of Winning A Government Contract

INTRODUCTION

During the course of marketing to the federal government the small business will encounter opportunities involving potential for acquiring an incumbent work force as an element of winning a contract.  The acquisition of existing personnel already performing on a service contract is a way to exponentially grow a small enterprise. 

The purpose of this article is to discuss the acquisition of an incumbent work force and effectively managing the associated potential and challenges.

BACKGROUND

We have previously discussed planning and business systems for service contracting at the following postings:

Insights to Succeed In Service Contracting

Cost Center Strategic Planning

The above articles discuss basic business organization and systems necessary to support the service contracting environment and bring an incumbent workforce into a company.

HOW INCUMBENT WORK FORCES ARE PROPOSED

Your market research into future acquisitions in the service contracting industry to the federal government will lead you to existing work forces subject to assumption by a winning contractor.

Base operations contracts, long term service contracts of an IDIQ nature and similar programs have competitive phases or are re-designated for a small business prime contractor if the government deems a pool of qualified companies is available to compete. Researching potential programs of this nature and marketing them is discussed in the following article:

Marketing to Achieve a Small Business Set-aside Contract

In some instances a larger contractor holding the existing work force is displaced from a program to meet agency statutory requirements for contracting to small business or because the existing contractor has grown to exceed the size standard for a small business on the program.  

Under these conditions a teaming arrangement may be possible with the departing contractor,resulting his assuming a lesser role in the effort (we suggest no more than 40%) as a subcontractor to you.  Do so only if the company is highly regarded by the customer from a past performance perspective and when you can negotiate an exclusive arrangement with him during the proposal phase of the program. Teaming arrangements are discussed at the following posting:

Small Business Teaming

If a teaming arrangement cannot be achieved with the existing incumbent you must gain access to the incumbent personnel salary history and benefits to effectively bid the program for the out years in response to a solicitation.  Speculating on what the personnel make or relying on the government or the incumbent to provide the data is risky. Although some solicitations will provide a government “Wage/Rate Determination”, that document is the minimum and seldom represents the actual salaries of the employees. The only other meaningful document commonly provided is a union bargaining agreement still in force. 

Some companies will publish a help wanted advertisement in the local paper and invite the incumbent personnel to attend an off site open house, asking for sign offs on contingent hire agreements for use in the proposal, together with resumes:

Contingent Hire Agreements

It is important to remember that although the RFP may go so far as to say incumbent personnel have first rights of refusal for future positions, you are not legally obligated to hire what you feel are poor performers. You will, however, have to specify your criteria for personnel selection in your proposal and, especially for personnel the government has listed as “Key” in the RFP, explain how you intend to utilize existing people or bring in new ones. 

The competitive environment on a given procurement will drive how much you disclose in the way of openness in terms of publicly announcing your intentions to bid and acquire the personnel data you need to do so effectively.  You must conduct effective research and propose a winning wage and fringe package that appeals, not only to the personnel you wish to retain, but also to your customer.

Do not count on gaining access to incumbents through the government or being able to go on government property to interview them.  In most instances you will not be allowed to do

so or it would compromise your proposal from a conflict of interest perspective if you did. 

 A TRANSITION PLAN IS KEY

A winning proposal will have solid plans for recruiting and retaining the existing work force, executing a transition plan and insuring that the government does not encounter an interruption in services.

 Carefully analyze the solicitation requirements for elements for which the government expects to see a response pertinent to incumbent personnel. Prepare a graphic schedule and specific set of activities to transition the incumbent personnel to your company after contract award. Make sure the activities are overlaid upon the technical and management schedules elsewhere in your proposal and supports them. 

Your transition plan topics should address administrative, human resources, training and similar factors to insure a seamless process.  

SUMMARY

Acquiring an incumbent work force poses both opportunities and risks for a small enterprise.  Understanding the above factors and assessing your ability to manage the challenge will best prepare you for the decision whether or not to bid such a program. 

Managing Risk In Small Business Federal Government Contracting

The challenges and difficulties for the small business in government contracting are not so much in the areas of barriers as  they are in lack of knowledge (which I concede is a form of barrier but one that can be dealt with).

Successful Traits in Government Contracting

Large business and government agencies indirectly take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows about the Federal Acquisition Regulation (FAR) and associated Cost Accounting Standards (CAS). This leads directly to abusive practices.

A prime example of an abusive practice is large corporations signing  teaming agreements during proposal efforts and then not awarding  subcontracts to the small enterprise as agreed, keeping the majority of work for themselves.

Managing Teaming Relationships

Agencies can take extended periods to put in place actual prime contracts after source selections and award to a small business. They do not realize that a small enterprise does not have deep pockets and must have cash flow to sustain a new program with new employees.

Funding levels on IDIQ and Omnibus programs are insufficiently committed and the small enterprise is not adequately informed about limitation of funds and  funding exposure. 

Managing Government Contract Limitation of Funds and Funding Exposure

Enough small  businesses succeed in the government contracting field that I am  convinced the government needs more active roles in education of  the small enterprise and more trained contracting officers that understand the limitations of a small business.

The most common traumatic situation I encounter is with newly  established businesses who have won their first government contract and  have no CAS compliant job cost accounting system in place to bill it  out. The government has assumed that capability will materialize and  when it does not they audit the bills, find no backup and shut down the  cash flow until the system is fixed. At that point the business can fail. The company should have been educated much earlier in the process about these requirements.
 What Small Business Should Know About FAR and CAS

The number of poorly performing SETA contractors in roles not suited  to them in contract administration support is increasing in federal  agencies. These firms need to be vetted and better managed for the  omissions and commissions they contribute to the above.
SETA Contracting

Not every small enterprise can get  into a class on government contracting at George Washington University,  The Defense Acquisition University or send their personnel to lengthy  and costly seminars conducted by organizations like the National Contract  Management Association. These are  great education sources but do not  come close to filling the complete requirement and they cost time and money.

The contracting officer and his staff as well as larger enterprises need to be upgraded in the skills necessary to guide - not abuse - the small business in federal government contracting.

REMEMBER:

Be straight-forward and honest with your industry teaming partners.

Do not violate share arrangements, teaming agreements or non-disclosure agreements. Such violations are a death knell for your reputation in the business.

Do not become known as a resource raider by hiring away from other firms with whom you have teamed.

Give it your best shot as a prime or a sub but involve the government contracting officer if you must resolve industry teaming disputes that may damage your past performance record.

Exclusivity in teaming is a practical way to go on any given large scale program. Team early and exclusively then give it your all and be a winner. Your reputation is key, ethics count and your customers as well as your industry are observing you.

Procurement Integrity and the Law

FEDERAL ACQUISITION REGULATION 3.104

In dealing with government officials the small business owner must be aware of regulations regarding procurement integrity. This body of law has come into being through trial and error in dealing with conflict of interest and undue influence by industry on government officials and vice versa. 

The section of the Federal Acquisition Regulation dealing with these matters is 3.104, "Procurement Integrity". It is recommended reading for every small business growing into government contracting:

Procurement Ingegrity

FAR Section 3.104 defines the roles of government officials in the source selection process that are subject to procurement integrity regulation. Setting out definitions of standards of conduct, conflict of interest and specifies restrictions on gratuities to government employees (permitting virtually none). It details restrictions on dialogue regarding employment with officials prior their leaving their government jobs and further restricts where an official may work in industry and in what capacities relative to prior government service.

Penalties for violating these rules are significant and are specified. They range from criminal prosecution for government and industry personnel found guilty of violations to debarment of companies and individuals from government contracting.

The rules, which define procurement integrity regarding prime and subcontractor relationships, are defined under the topic heading, "Subcontractor Kickbacks".

10 Misconceptions About Small Business Federal Government Contracting

1. It is easy to become established in the federal marketplace by founding a start up in small business contracting to the federal government

Very few do so. The principle reason for this is lack of past performance records either commercially or as a registered government contractor.  Past performance is a major factor in awarding government contracts:

The Small Business Federal Government Contracting Past Performance Challenge

Small enterprises who succeed in federal government contracting usually have a sustaining commercial business as ongoing support while they learn federal contracting bid, proposal, and pricing, industry teaming and marketing techniques.

Your Entry Points Into Small Business Federal Government Contracting

2. Federal government contracting is just like local and state contracting

It is not.  Every local and state government agency has their own set of rules and contracting techniques.  Although states must meet federal law with regard to interstate trade, EEO and similar matters, they are given wide latitude by the federal government. Most state and local or municipal agencies are very dissimilar in the specifics of how they conduct procurements and are strongly influenced by community ordinances and state law. 

Federal government contracting has its own set of specific rules (The Federal Acquisition Regulation (FAR) and  Cost Accounting Standards (CAS) which cross all agencies.  Small business must understand how these rules affect their doing business at the federal level.

What Small Business Should Know About FAR and CAS

3. Business can be conducted at the federal level without significant process changes from commercial practices

To succeed in federal contracting the small enterprise must implement processes such as GSA pricing, job cost accounting, forward pricing rates and related matters that are not common in the commercial venue. This takes research, time and process/business systems implementation that many firms overlook until they realize, through hard experience, that they must develop them on the fly to succeed.  Federal government contracting is not rocket science but it is different than commercial contracting.

A Framework For Federal Government Service Contracting Small Business Systems

4. Federal government contracting can begin immediately after registration

This is a hypothetical possibility but not realistic.  Registration simply self-certifies a small business to compete, establishes a Registration Number and a Federal CAGE Code for the firm.  Agencies do not go looking for registered firms to do business with them.  A niche must be located by the prospective contractor in the form of an agency requirement that fits the company. Or the company must locate industry team member (s) that can use capabilities available from the newcomer.  Very small enterprises achieve these objectives to a large scale degree within their first year of pursuing contracts with the federal government.

Marketing to Achieve a Small Business Set-aside Government Contract

5.  All federal government contracting agencies are the same

Not so. Department of Defense (DOD)  contracting, for instance is very different than contracting with  civil agencies like the FAA.  The technical requirements, environment and security factors vary dramatically even though they use the same contracting rule book. The seller must market to the agency that has the greatest need for the product or service offered and team with industry partners who can enhance the potential of the small business in collaborative efforts. 

6. Small Business set aside designations will yield immediate business

Self-certifying as a minority-owned,  woman-owned, veteran-owned or disabled, veteran- owned business allows a firm to compete with other companies who have the same designation. At times this involves substantial competition.   Achieving a government certification as a small-disadvantaged 8(a) or HUB Zone enterprise may allow set-aside contracts without competition, but such awards are becoming rare, harder to justify by the government and are monitored closely for competitive possibility by oversight functionaries.

Federal Government Contracting Small Business Set-aside Designations 

7. Federal government contracting can be undertaken by a company on a stand-alone basis

This is only true for companies with very unique, off the shelf products involving small buys.  Even then, knowledge of the industry and networking with other firms dramatically increases the possibility of expanding sales.  Relationships must be developed with primes and other small businesses that can help the small firm, team by teaming with it and keeping it in mind as they search for success. That takes time, patience and open-minded, out of the box thinking.

Synergism is paramount in teaming with any size company, whether in a lead or subcontracting role. There should be technical, management and market segment similarities between the small business and any company with whom it  is considering teaming. A prospective team member ideally will not be a direct competitor; rather a business in a related field with whom the small enterprise shares a mutual need for each others contributions in pursuing large-scale projects.

Small Business Teaming in Government Contracting

8. Small Businesses receiving set aside contract awards from the federal government can subcontract all the work to other, larger and established enterprises

Companies obtaining small business set aside awards must be capable under the law of performing a minimum of 51% of the required effort internal to their organization.The quantitative measurements the government uses to gauge this rule are the work scope, hours and dollars content of the prospective contract.

9. Obtaining a GSA schedule guarantees new business

A GSA schedule permits a quick ordering process for  federal and state clients. In dealings with prime contractors to which the small firm aspires to subcontract a GSA schedule is valid pricing which can be readily included in proposals to government agencies. A GSA schedule facilitates teaming with other synergistic small companies in proposing large scale efforts.

However, a GSA schedule does not guarantee new business will come. Very few companies await government agencies to find them by searching the GSA data base. To succeed, small businesses must actively market their schedule to targeted agencies as an expedient way to contract with them or as a qualification criterion for new business awards.

Achieving and Utilizing a GSA Schedle

10. The System For Award Management (SAM) Contract Opportunities Web Site  is the best way to identify, bid and obtain federal government business 

Often misunderstood, is that much has occurred in the way of marketing activities by companies in advance of notices formally published by the government on SAM.  By the time the formal, solicitation is published it is too late to market for setting a procurement aside for a small business designation if it has not already been established as such. In addition, formal solicitation publication closes the window on self-marketing by HUB Zone and 8(a) firms for set asides to them individually without competition. In short, businesses have been marketing for a requirement long before it became formally announced.

Finding a solicitation that is ideal for a company for the first time on SAM  is excellent market research insight into what the agency publishing the requirement is buying. However, a careful bid/no bid analysis should be conducted as to whether it is prudent to go through the expense of a proposal if the opportunity has not been a new business target for the firm earlier in the game.

What Small Business Should Know About System For Award Management (SAM) Opportunies)

SUMMARY:

Federal government contracting is not a quick process; but for many it can provide a steady cash flow and potential growth.  

To succeed, a carefully constructed, relationship-driven, marketing and business operations program must be developed, tailored to the federal environment. The program must include adequate research and preparation with respect to bid decisions, teaming, proposal preparation pricing and business system requirements. 

Multiple Front Marketing In Small Business Federal Government Contracting