Cost Center Strategic Planning For Small Business Service Contractors

A growing small enterprise can enhance competitive rate development and cost management by effective cost center utilization in federal government contracting.

A cost center is a single, pricing, accounting, and billing entity within a company, organized for a group of business lines and clients with close similarities for technical and management purposes. It has its own unique overhead rate and houses the projected direct cost labor dollar base and associated expenses for that base.

A cost center is also a financial consistency template that runs from long range planning through proposal pricing, accounting, billing and closeout for the contracts it houses.  It is the way DCAA and contracting officers view major aspects of your business and your rates for that business.

INITIAL COST CENTER EXPERIENCE

Enterprises that have not experienced federal government contracting typically base their initial proposals and bid submissions to the government on their commercial quotation approach and related market rates.  This usually involves a single company cost center approach with both government and commercial work together at the general ledger level. 

When the company gains experience in government contracting through audit exposure during proposal fact finding/negotiations, as well as accounting and billing, it becomes apparent that government cost accounting standards (CAS), job cost accounting and cost management at lower levels than the commercial general ledger are necessary to succeed.  At that point a business system to support the new requirements begins to take shape. 

Below is a typical graphic overview of the processes necessary.

PLEASE CLICK ON IMAGE TO ENLARGE

Note the long range planning and cost center blocks in the graphic.  The remainder of this article will focus on those two elements of the company business process. 
 

GROWING INTO MULTIPLE COST CENTERS

The time to consider separating government from commercial work and/or establishing new cost centers for bidding, accounting and billing purposes is when the enterprise is generating a long range marketing plan to determine rates for bidding new long term contracts.

The location of the work (both geographic location and whether performance is in or out of a government facility, its duration, skill set requirements, government-mandated fringe benefits for workers and the competition are all factors to consider).

The government will not question your setting up a new cost center and projecting a direct cost business base within it together with associated expenses and the resultant forward pricing rates.  The reality you must remember is that the business in the cost center must materialize as a contributor to the company G&A base for the firm’s rates to remain consistent.   DCAA will check the math during a proposal audit.  You must make the projections happen to succeed if you win the work.  Please see the following article for the details on these relationships:

Establishing FAR and CAS Compliance

Setting up a new cost center retroactively for contracts that are already in process with pricing, job cost and billing records supported elsewhere in the plan, and the business system is extremely difficult.  Looking ahead during the bid process pays big dividends.

PROBABLILITY FACTORS IN COST CENTER FORECASTS

Probability factors reflect the likelihood of contract awards.

Place into the projected base for a cost center only that amount of forecasted direct cost base deemed likely to occur and then market and manage to make your forecast happen.  If major projects in the forecasted business do not materialize your actual, realized base will be too low and your overhead rates will go up during cost center operation unless expenses are cut. That means higher bidding and billing rates to your customers.

Probability factors are usually applied by forecasting the direct dollar labor content for the job in dollars and factoring it based on marketing intelligence relative to competition, the company capability statement, past performance with the agency and how well the firm is known to the customer.  Proper modeling of probability factors avoids unrealistic cost proposals and cost overruns under contracts while permitting flexibility in risk taking to beat the competition. Please see the below article for further details on this practice:

Provisional Indirect rates

SUMMARY

Projects performed in government facilities may require a separate cost center, since many of the associated expenses for such operations are born by the government, who in turn expects a lower overhead rate as a result.

For accounting purposes cost centers usually have individual subsidiary ledgers, balance sheets and profit and loss statements. They are summarized monthly to a company total. Each cost center must have job cost accounting for the contracts residing there and a cost-center-unique overhead rate. 

The sum of the direct and indirect costs in the company cost centers forms the G&A base to which corporate level expenses are applied when calculating the G&A rate that is further applied to all projects residing in all centers after labor, labor overhead, material and other direct costs (travel or like expenses) have been summed.

Assuming your competition pays a generally similar labor rate to employees as you do and that fringe costs about the same for everyone, then cost center overhead, coupled with the company G&A rate, are often what wins and loses price evaluations during source selection. 

For more on cost centers and attendant business system considerations, please see the PRICING, BUSINESS SYSTEMS, FINANCE & ACCOUNTING section of the free book offered at this site as well as the long range plan and estimating and pricing examples in Appendices A and B to the book. 

Insights to Succeed In Small Business Federal Government Service Contracting

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.

Small enterprises in the commercial services market are tempted to immediately begin bidding jobs in federal government contracting, approaching them like commercial efforts. They quickly find there are major differences in the way the government contracts are marketed, proposed, priced and performed. These differences are not “Rocket Science” but it is necessary to learn about them and plan for success.

Here are 8 insights for planning your success in small business federal government service contracting:

1. UNDERSTAND THE LENGTHY SALES CYCLE

What immediately becomes apparent to the commercial small business when entering the federal contracting service contracting market is that the sales cycle is a long one and the preliminary steps are often hidden from public view.

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 The System for Award Management (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 the requirement long before it became formally announced at SAM. For additional details please see:

What Small Business Should Know About SAM Opportunities

Even if a company has had exposure to an agency, marketed on a program in advance of its announcement or become a member of an industry team to bid the job, the proposal and award process, to include negotiations and start up, can easily consume 90 to 120 days as a minimum. For major programs the process often exceeds 6 months in duration. Planning must occur for the expense associated with supporting such lengthy marketing efforts before any cash flow results.

2. APPRECIATE APPLICABLE DEFINITIONS, ROLES AND REGULATIONS

Participation in the government contacting market can involve participating as an individual, becoming a subcontractor as a company or seeking a prime contractor role. Those with product research and development support needs can participate in venues like Small Business Innovative Research (SBIR) and Mentor/Protege Programs. A GSA Schedule also provides opportunities for those in finished product sales. Please refer to the following articles for explanations of these roles and program definitions:

What Is A Small Business Federal Government Contractor?

Techniques For Product Development

Small Business Government Grants Versus Direct Contracts

Achieving and Utilizing A GSA Schedule

3. CONDUCT MARKET RESEARCH

If you are relying on SAM or like sites for new business you will be very disappointed. Pre-solicitation notices do have promise, but you have to get inside an agency to find out who has the funding, the need and the decision-making authority.  It is rarely the contracting officer who posts the notice who has these responsibilities.

 Pre-solicitations are alerts to industry, attempts to gauge industry interest or a way of "Kicking the Can Down the Road" until funding becomes available.  These notices are an indirect way of saying, "Come Visit Me and tell me about your company", or “Send Me your CAPE”. The full formal notification will come out at a time to be determined by when the agency gets the funding and how much interest there is in the contractor community. A schedule for when the formal bid notice will occur is rarely posted.

4. PROMOTE CAPABILITIES

Develop a capability statement (CAPE) to respond to government postings and mail directly to government agencies and to large corporations doing business with the government.

A capability statement is a necessity as a standalone marketing tool for dealing with government agencies and contractors. It should be short (no more than 2 pages) and hard hitting, containing all the information necessary for a government contracting officer or company buyer to place an order, as well as your registration information at local, state and federal web sites, your NAICS Codes and contact information.

Insert your CAPE in the tab at your web site where you discuss your background information and your government registrations.

See the Box Net “References” cube in the right margin of this site for an example of a good service contractor capabilities statement in the public domain.

5. ACQUIRE PERSONNEL STRATEGICALLY

Start up service contractors face the dual problem of establishing the enterprise with the one-time, non-recurring activities necessary to get the operation underway and at the same time acquire the core management talent and subsequent help as the business grows.

Even established companies who enter government service contracting find they cannot sustain a work force for large scale agency programs until the contracts are in hand to finance them.

A core team is an absolute necessity; it may be small and the business proposals may be few at first. But the core team product must be strategic in terms of high probability marketing to build the company base.

Supplementary help can be acquired by permanent ads at the company web site for generic skill sets, contingent hire agreements with prospective employees and similar techniques that position the resources on deck for business growth.

Small businesses commonly utilize contingent hire agreements to locate promising individuals who can bring projects or contacts with them when they join the firm. They are willing to negotiate a prospective wage and salary arrangement in advance of a proposal submission and commit to an offer of employment with benefits and commission should the program be won. They further offer to reimburse the participant for expenses and business related costs during the proposal period, if pre-approved.

The key to these arrangements is to identify target projects that both you and the candidate can go after, where the candidate is uniquely qualified to :

(1) Help win the job

(2) Contribute heavily to the proposal. Just bringing someone on who has no ability to offer targets usually does not work.

Contingent Hire Agreements

6. MAKE ASTUTE BID/NO BID DECISIONS

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 you will begin formulating your win strategy or you will discover that you should not bid this job for lack of such a strategy. The elements of the process are in the form of questions to ask yourself against topics for key consideration at the following link:

Federal Government Contracting Proposal Preparation

Affirmative or non-affirmative answers to the topical questions and ability to fill in the blanks will drive your decision to bid or not bid a solicitation.

7. PREPARE YOUR BUSINESS SYSTEM FOR PRICING, ACCOUNTING AND BILLING

To effectively market a federal government contract a small business must sell on the basis of having a business system as well as technical performance infrastructure ready to run the job when a contract proposal is submitted. This dual requirement is where many small businesses fall short in their federal government contract start up planning.

Parallel thinking is required to plan for government project technical effort against a template of necessary business process infrastructure, driven by introducing Federal Acquisition Regulations (FAR) into the company. Key elements of the necessary business system infrastructure are discussed in the following articles:

Establishing FAR and CAS Compliant Small Business Systems

Managing Risk In Small Business Systems Development

8. PROPOSE TO WIN BY MEETING THE PAST PERFORMANCE CHALLENGE

As a small business begins the proposal submission process to federal government agencies or to prime contractors, the past performance challenge is major. 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

So how can a new organization or one that is new to government contracting muster a response to 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.

For further details see the following article:

The Small Business Federal Government Contracting Past Performance Challenge


This writing has conveyed insights for planning participation strategically in the small business federal government service contracting market.
Consider the lengthy sales cycle and the roles your enterprise can best play in the venue. Conduct thorough market research, promote your capabilities endlessly and make astute bid/no bid decisions.

You must acquire core and supplementary help as business growth permits by using methods to preposition human resources. Prepare dynamic proposals with unique project plans to meet the past performance challenge, then execute your project plans to succeed.

Techniques for Small Business Product/Services Development in Government Contracting

INTRODUCTION

This article will suggest approaches in developing a product and/or a service to the point where it can be marketed in the small business federal government contracting venue. Individuals usually succeed at such an endeavor by forming a company, separating it from their personal assets and then developing the company and its product(s)/service(s); even if it is only a one-person operation at the start.
There are techniques for small business to gain government participation in growing an idea into a company.

Service contracting is a form of gaining entrance into the market, creating opportunities for introducing products by selling skilled labor under a government agency service contract or prime contractor teaming arrangement.

A GSA schedule affords a platform for products and services but sales must have been achieved historically in the commercial or government markets before applying because GSA relies heavily the most recent 2-year pricing data in negotiating a schedule.

The government contracting product and services venue is competitive and requirements by federal agencies are often bundled into larger systems procurements. Therefore, it is necessary first to position a small enterprise and its product offerings before tapping the federal market for development support.

GENERAL OVERVIEW

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

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.

Financing is always a factor and can be achieved through loans or investors with a good business plan. The remainder of this article will address the basic elements of a framework within which to succeed with your product development for federal government contracting. 

BUSINESS STRUCTURE

For the majority of individuals who are starting single person or no more than 2 or 3 person operations, a Limited Liability Company (LLC) registered with the state and with the federal government is recommended.

It will separate personal assets from company assets and protect them. When product or services sales begin generating revenue an LLC has many tax advantages. It can be registered as Sub Chapter 'S' for tax purposes and revenue and the expenses can be passed through to personal tax returns, paying no taxes as a company. The double taxation issue prevalent with many of the other types of incorporation is avoided with a Sub chapter “S” LLC. An LLC assists in limits your personal liability for debt and court judgments that may not fall in your favor.

Representing the business as a company allows pursuing financing as an enterprise. You can think of a creative name for your LLC and you can complete the articles of incorporation necessary to bring your enterprise into existence. The term, "LLC" must conclude the name of your company if you decide to form such an organization.

Instructions for registering in your state and federally with the IRS are available at your state web site and at the IRS site. You will receive tax and employer identification numbers by registering your business.

PROTECTING INTELLECTUAL PROPERTY

Patents and copyrights for your idea may ultimately protect you to a degree but the government agencies granting them have no enforcement arm so you must discover a violation yourself, retain a lawyer, bring a court proceeding against a violator and then hope to recover your costs and a reasonable settlement if you win. 

 The U.S. Patent System

Therefore, most of my clients use non-disclosure agreements (NDA’s) in dealing with other companies. Teaming is a practical fact of life in pursuing the larger federal government contracts.

You can download an NDA from the “References” Box Net Cube at the right margin of this site. Fill in the blanks as appropriate for a given exchange with outside individuals and companies. Before you meet to disclose details with a potential teaming company or investor, for instance, ask them to sign the document with you up front, put a serial number on it and reference the serial number and the agreement and date on any written materials you give to them.

After the meeting draft a short letter, documenting the minutes of the meeting, what was discussed and stating that the verbal disclosures and materials in the meeting are subject to the agreement and reference the agreement by number and date. Put an acknowledgment line on the letter and ask them to return a signed copy to you. This confirms their receipt of your proprietary information and their agreement to protect it in accordance with the NDA.

There are certain exceptions with regard to individuals or companies you may be dealing with on investing where you may not choose to use an NDA. Some Angel and Capital Investors are sensitive about being asked to sign them. You will have to trade their objections off against the value they represent to your company and conduct your risk analysis on a case-by-case basis.

For detail information asserting rights in technical data and software to government agencies and protecting intellectual property with other companies please see the following article:

Protecting Intellectual Property 


BUSINESS PLANNING

Visit 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 your enterprise and assist you in determining and supporting the amount of funding you need. Such topics as marketing, advertising, competitor analysis and financing are covered there. You will find a presentation and examples that you can follow in improving your plan or in generating a plan if you do not have one. The link to the site is below:

Writing a Business Plan

Articles on strategic planning and developing your marketing plan are also at the “References” Box Net Cube at this site. They address evolving an operations vision for your 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 you in visualizing your own business growth to look at an example of how someone else addressed a given topic. I have learned from having worked with many new business owners that it is best to have you examine the material and continue your plan, contacting me with issues and questions as they occur.

THINGS TO THINK ABOUT WHILE PLANNING

 Locate teaming companies to further the objective that they would market your product as part of their offerings with your company licensing and sharing in the proceeds.

A business plan and the guidance above for its generation is the road map for developing ideas, laying out how to expand the sales of your product and researching your market to do so. It will also assist in developing pricing to considering the direct costs of product development, service implementation and distribution as well as the indirect costs of the enterprise itself (operating expenses)must be considered and financed.

A negotiation position for a given product will be driven by certain strategic factors:

1. Does a developer or teaming partner have a strong but realistic incentive to actively make the product a part of the marketplace?

2. Does market research indicate the idea will have strong sales volume once it is developed and distributed?

3. How much will a prospective teaming partner or investor have to invest in the product to get it to market? Does the product require testing?

4. Which is the better deal? Is it better to receive a 7% royalty on $5,000 worth of sales or a 1% royalty on $500,000 of sales? Even though 1% does not sound too impressive, of course it’s the better choice in this example.

A negotiation position should be based on support for the argument that a concept will experience a certain level of sales and the royalty should be based on a % of estimated end user volume sales, discounted for the investment that the developer and distributor must make to get it to market.

The royalty should be outside of the distributor cost breakdown and the end user cost breakdown. It is simply a deductive factor the manufacturer will have to introduce into their profit equation after the costs have been tabulated. They should not view royalties as a cost factor; they should view them as a share of the profit on the total estimated sales.

Chances of succeeding with a negotiation with a developer and/or distributor are increased by showing an understanding the prospective market for the product and drawing some comparisons between the product and other similar successful products.

Naturally there will be some give and take with the other side about estimated costs to get the product to market. Be forthright in acknowledging their investment but also support a position with some research and comparative data on the product potential.

Lastly, settle on a % of the end user sales volume based on an estimate to which is agreed with the other party and insures that the purchase agreement for royalties entitles the agreed upon % on all future sales.

FINANCING

The SBA assists prospective business owners in completing sound business plans, which can then be presented to a banker in applying for financial assistance.

In the event that 2 banking institutions deny a loan application, a candidate can apply to the SBA for a loan guarantee that may assist in achieving a loan, since it would back up the application to a bank.

Loan officers are interested in a business plan to get a view of the business future and place a value on products and services based on the market, the competition, the sales projections, costs, expenses and profit expectations. The link to the SBA loan guarantee program is below:

SBA Loans and Grants


ANGEL AND CAPITAL INVESTORS

Angel and private investors have two prominent characteristics:

(A) They want a high return on investment (ROI)

(B) They typically want a great deal of control of the operation.

According to the Colorado Capital Alliance, surveys of angel investors show that:

1. Angels are seeking companies with high growth potential, proven management and sufficient information about the company, its management team, and its market to be able to assess a company's value.

2. On average, Angels expect 10 to 15 percent above of the S&P 500 return on equity.

3. Typically, Angels invest in companies seeking between $50,000 and $1,000,000.

4. Angels generally prefer to finance manufacturing or product-oriented ventures, especially in the high-tech fields.

5. On average, Angels are 47 years old, have a postgraduate degree, and management experience in an entrepreneurial venture.

An angel investor may ask for at least ten to twenty times return in just five years. For many angel investors, it’s not just about the money; they want to actively participate in developing your business. They want to act as a mentor and sometimes even to take an active role in managing the company. This often translates into the angel investor having a seat on the company Board of Directors.

Angels are also highly interested in an exit strategy from for a full return on their investment in your business. The closest thing to it is an astute business plan that calls out the specifics of potential ROI, based on sound planning and analysis and addresses the following as possible exit strategies. Remember, investors are very aware that an exit strategy cannot be guaranteed. But they can be offered more than the wishful thinking that an IPO will occur in three years.

It is always good to have a lawyer involved in complex documents or in the development of documents. This will further protect a concept. A lawyer does not necessarily have to be present during the exchanges with prospective companies, but a lawyer review and comment on documents before they are signed.

SUMMARY

This article has conveyed preliminary steps for the small business in product development for the federal marketplace.

It should be noted that much of the process discussed in this article is the same for the commercial product development and a certain amount of commercial success is usually achieved before selling products in the government contracting venue. The exception to that rule is in highly technical product pursuits where the government is funding advanced development.

To consider non-profit grants and direct government contract funding potential please see the following article:

Grants Vs, Direct Government Contracts

Once a company is formed, a product platform established and a position to market a useful product to the federal government is achieved, please see the following articles at this site in developing a marketing plan

Registering Your Business For Government Grants and Contracts

Multiple Front Marketing

Should You Consider Small Business Government Contracting?

Small Business Teaming

With careful structuring, planning and marketing, a product or a service with potential can find its place in federal government contracting.

INSIGHTS - Using Weighted Guidelines Profit Determination In Federal Government Contract Negotiations

                             

    Image: Skyway Acquisition Weighted Guidelines  

The accepted template for negotiated procurements with the government is as follows:

A. Audit

B. Fact-finding

C. Pre-award Survey

D. Cost Negotiations

E. Final Profit Negotiations

F. Contract Award

Although policy in FAR Part 215-404-4 states that contracting officers ….” do not perform a profit analysis when assessing cost realism in competitive acquisitions”, it is wise to understand that during Steps A trough D above, the contracting officer and his representatives are indirectly forming opinions of the risk to the contractor and the mix of cost elements in the proposal. That opinion directly effects profit negotiations and judgments at Step E, above.

Although the above FAR clause allows for 3 methods of profit negotiation, the most common method contracting officers use is the Weighted Guidelines Method.

ELEMENTS

Contractors should be aware that the Weighted Guidelines Method is mandatory for all negotiated procurements except Cost-Plus Award Fee Contracts and exceptions as approved by a higher authority. Contracting officers are to prepare their position using DD Form 1547 with associated backup and file it at the conclusion of negotiations.

Understanding the weighted guidelines method can assist in achieving a higher profit because a contractor can present a profit position in a contract proposal that logically supports the below elements required by FAR Part 215-404-4."Profit" during negotiation. 

• Performance Risk
• Contract Type Risk
• Facilities Capital Employed
• Costs Efficiency

It should be noted that the Facilities Capital Cost Employed (FCCM) factor (a separate DD Form 1861) does not always enter into small business negotiations, because many start-ups and smaller enterprises do not propose it as part of their allowable costs due to elements they cannot demonstrate in capital investment, land, buildings and similar items.

UTILIZING THE FORM FOR NEGOTIATION

A DD Form 1547 accompanies this posting. An Excel version with arithmetic formulas and a separate tab for DD Form 1861, FCCM, can be downloaded from the  Box “References” cube in the top right margin of this site.

Study the form and its guidelines at the above link. Apply it to your proposal. This puts your perspective on profit into the same structure as the contracting officer is required to develop his.

When profit discussions ensue and the contracting officer takes a position, ask for a copy of his weighted guidelines analysis form. If he does not provide it, or has not prepared one, give him yours with your position on profit, updated to reflect costs negotiated during steps A-D above.

A reasonable discussion can then occur on the elements of profit negotiation and offers, counter offers and ultimate agreement can be equitably reached with a known structure addressing risk and other required factors.

SUMMARY

The majority of negotiated cost proposal effort involves coming to an agreement with the government via audit, fact-finding, pre-award survey and cost realism. But keep in mind that the government is forming an opinion on the elements of weighted guidelines profit determination during those stages as well.

You can influence the government negotiator (s) on the weighted guidelines profit elements during the early stages of negotiations as you settle on cost factors. You do so by presenting the data and narrative basis of estimate in such a fashion as to identify risk and other key area of weighted guidelines analysis. Insure the technical, management and cost volumes of your proposal, if they are required, are consistent in that regard.

Update your DD Form 1587 in your working file and prepare to use it as you settle on profit to conclude negotiations. Relate your profit position to weighted guidelines cost elements, as agreed upon with the government, supported by your proposal and any other documented disclosures you have submitted during negotiations. Doing so will support your position on profit and give the contracting officer an opportunity to accept it.

10 Tips to Expand Your Small Business Client Base Mix For Stability In Government Contracting

1. A mix of commercial and government business is good. In fact, most small business federal government contractors who move from commercial to government work, remain in commercial business.  They separate government from commercial work in unique cost centers of the company for pricing and cost control purposes, recognizing the market and competitive differences in the two venues.

 Cost Center Strategic Planning 

2. Your marketing efforts must be sensitized to swings in world events, geopolitics, domestic priorities and technology trends. 

 

3. The over 100 federal government agencies all have the same small business contracting requirement under the law. Focus on government contacting applications for your core business by exploring agencies other than those with whom you have been doing business.

SAM Contract Opportunities
 
4. Industry partners are an excellent way to move into new fields.

Small Business Teaming 

5. Keep an eye on “USA Spends” and a close view of the domestic vs. foreign emphasis in the federal budget.  (War vs. bridge repairs). 

 USA Spends

6. Remember there is not much agencies of the federal government do not buy and they buy in huge quantities. 

 7. If your high-end navy IT customer requires support, security or related services, it is likely his or her counterpart in the Department of Agriculture or Health and Human services requires the same expertise.   This rule holds true for other services as well.

8. Maintain Your Capability Statement current with evolving trends and your growth. Seek to utilize it as a vital tool in your company marketing program.

Your Capability Statement

9. Preserve your credit rating and your finances in top shape to respond effectively when opportunities arise. Government contracting contains certain front-end loaded risks that must be anticipated and managed. Many of these are addressed in the following article.Managing Risk.  Federal government agencies do not always appreciate the cash cash flow and financing challenges for the small enterprise in the timing of awards and funding.The wise small business manages this risk with a solid credit rating and lines of credit to buffer those types of challenges.

10. Remember market research is a continuing and ongoing process.

 Values Based Market Research

Small Business Federal Government Contracting and You

 

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About Ken Larson  – Consultant, Counselor and Micro Mentor

Over 40 years in the Defense Industrial Complex. Veteran 2 tours US Army Vietnam. Subsequently spent 36 years in federal government program and contract management and 10 years in small business consulting.  As a Micro Mentor Volunteer Counselor,  Ken Larson assists many small businesses with their planning and operations processes. Receives many inquiries from small companies wishing to enter or enhance their position in federal government contracting. Volunteer time, books, articles, and resources are 100%  free, maintained exclusively for small business on the above subjects.