Search This Blog

Wednesday, May 18, 2022

How Crazy Subcontractors Can Kill Your Bid


The following article by Bob Lohfeld in “Washington Technology” a few years ago is still an excellent primer on the challenges associated with subcontractor management when teaming with other firms in small business federal government contracting. I work with clients regularly who are encountering these risks.  Ken Larson


"Have you ever had a subcontractor kill your bid? Surprisingly, it’s not all that infrequent that a subcontractor can do you in. 

Here are some of the situations we have seen this year from companies  who have called us for help, generally after it is too late to fix the  problem. Since many of these teaming nightmares could have been  prevented with some good counseling earlier in the bidding process, I  thought I would share some of these with you and also offer advice that  you can use to keep these problems from happening to you.

Subcontractor teaming restrictions
A recent government solicitation stated that prime contractors were  encouraged to team with multiple smaller businesses in order to fulfill  the socioeconomic goals of the procurement. The request for proposals  further stated that subcontractors shall be limited to teaming with only  one prime contractor and cannot be a subcontractor on multiple teams.  I’m sure you have seen this kind of restricted teaming language before.

The prime contractor who called said they selected their small  business subcontractors and executed teaming agreements with each, wrote  a fine proposal which was submitted on time, and then got a letter back  from the government saying their proposal had been rejected.

They explained that apparently, their subcontractor thought that if  teaming with one prime contractor was good, teaming with multiple primes  was better. Even though the subcontractor signed an exclusive teaming  agreement with the prime contractor, they teamed with multiple companies  in order to increase their chances of winning. All prime contractors  who teamed with this subcontractor had their proposals rejected.

We told the prime that in the future, when an RFP contains specific  language restricting subcontractor teaming, we recommend that this  language be included in an addendum to the teaming agreement and the  addendum be signed by an executive of the subcontractor certifying that  they have teamed in accordance with the teaming restrictions.

Regrettably, in this case, it was too late to correct the problem.

Subcontractor conflict of interest
A solicitation required the prime and its subcontractors to  individually certify that they had no organizational conflict of  interest (OCI). Less than one week prior to submission, the  subcontractor’s contracting officer (CO) on a related contract indicated  he thought the subcontractor had an OCI on the job the company was  bidding.

The subcontractor communicated the news to the prime and indicated  the issue was resolved. The subcontractor signed the OCI certification,  and the prime contractor submitted the proposal. Shortly after the  proposal was submitted, the contracting office notified the prime  contractor that their bid had been rejected due to the subcontractor’s  OCI.

The prime contractor challenged the rejection by asking the CO to  evaluate the bid without the subcontractor’s input, and while the CO  sympathized with the prime contractor, the decision rejecting the bid  stood.

Clearly this subcontractor wanted to run from its OCI problem and  signing a statement that a conflict doesn’t exist does not make the  conflict go away. We advised that the prime to get an OCI determination  directly from the government before submitting its proposal and if this  could not be resolved prior to submission, the prime should either  submit an OCI mitigation plan with its proposal or submit an alternate  proposal without the subcontractor rather than risk its entire proposal  being rejected because of an unresolved OCI problem.
Getting the subcontractor to certify that an OCI problem does not  exists is not sufficient since it is the government who is the final  arbitrator of whether or not there is an OCI issue.  Relying on the  subcontractor’s certification statement cost the prime contractor its  bid.

Subcontractor poor past performance

A prime contractor identified several small businesses that had  direct contract experience with the customer and invited these companies  to join their team. The sales reps from the small businesses boasted  how well they knew the customer, how strong their relationships were,  and how insightful they were about the work being competed. It was a  perfect match, and the prime signed up the subcontractors.

The prime and the subcontractors worked hard on the proposal. The  prime submitted the bid, and shortly thereafter was told they lost. In  the debriefing, the government indicated the subcontractors’ past  performances was marginal and was overstated in the proposal. As a  result, the government down-scored the proposal based on the poor  subcontractor past performance and overstated claims.

I suppose no sales rep has ever told a prime contractor that his/her  firms performance was marginal and they had a lousy relationship with  the customer. After all, sales reps wouldn’t last very long in that  position if they didn’t put a positive spin on a marginal situation.

Subcontractors with extreme incumbentitis
The government changed the size standard on the recompete of a  contract, forcing the incumbent to look for a company with the right  size standard and socio-economic certification to prime their contract.  After careful deliberation, they identified a partner who had a  long-term history with the client and an outstanding reputation. The  teaming agreement was signed and the proposal was begun.

Next, the incumbent proceeded to make the new prime’s life miserable.  They developed an extreme case of incumbentitis, could not understand  the necessity of improving their processes on the new contract, thought  every benefit rested on the argument that they were the incumbent, and  were extremely cautious sharing information with the prime contractor  even to the detriment of the bid.

The incumbent insisted that the proposal only had to conform with  section C (statement of work) of the RFP, not section L (proposal  instructions) and M (proposal evaluation criteria). According to  subcontractor, they never paid attention to L and M, only the SOW. They  were quite adamant and disrupted all review meetings.

To resolve these issues, we arbitrated a meeting between the top  executives of both firms resulting in the subcontractor changing out the  people supporting the proposal. With new, more reasonable players  involved, progress is being made towards a winning proposal but much  valuable time has been lost in the exercise of forming a highly  functioning team. We’ll have to wait to see how this one turns out.

A positive outlook on teaming
Not all teaming arrangements turn out badly. If you want to read more  about teaming and the characteristics that make teaming successful,  refer to Washington Technology’s articles by Nick Wakeman about the
WT Insider Reports.

However, if you can’t resist telling your story about how a  subcontractor sunk your bid, please add it to the comments section  below. Truth is stranger than fiction so let’s hear what you have to  say."

About the Author:  Bob Lohfeld is the chief executive officer of the Lohfeld Consulting Group. E-mail is

Monday, May 16, 2022

Five Winning Strategies For Small Business Federal Government Contractors



Acquisition officials are speeding up the acquisition process, issuing necessary requests for proposals to companies and executing contract awards quicker.  Marketing must be focused and fine-tuned. 

The sooner the government can receive the feedback from the draft RFP, the more likely it is that the service acquisition teams can adapt the programs to industry and economic realities.

This article will address strategic planning tips for the small enterprise in planning for the future, given the above realities.


1. Operation and Maintenance (O&M) Funds Are a Solid Bet for Service Contractors

Operation and Maintenance (O&M) appropriations are used to finance expenses not related to military personnel or Research, Development Test and Engineering (RDT&E). Types of expenses funded by O&M appropriations include: DoD civilian salaries, supplies and materials, maintenance of equipment, certain equipment items, real property maintenance, rental of equipment and facilities, food, clothing, and fuel. 

O&M funds are more easily justified in appropriations for "Keeping the Lights On" functions and often do not expire at the end of the government fiscal year.  If you are a service contractor target programs with (O&M) funding.  Look for service contracts being considered as set asides for small business on an O&M basis, sharpen your pencil and your best value marketing approach and chase them as a prime contractor or with a highly competitive industry team that needs your contribution to succeed.

2. Sharpen your Marketing Activities in Targeted Agencies and with Industry Teams to Get In Early on Agency Requirements.

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 capabilities statement (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.

Please read the following article carefully for further guidance:

3.  If Your Firm has Small Business Designations, Focus Agency Personnel on Making Their Programs Set asides for Your Designation (Small, Veteran-Owned, Woman-Owned, Minority Owned, Etc.)

Pay particular attention to System for Award Management (SAM) Contract Opportunities "Sources Sought" or “Requests for draft RFP Comment” on programs that have yet to be formally solicited. Obtain an appointment to present your capabilities to the decision makers (not the gate keepers). 

Be courteous to contracting officers but understand they are not the individuals who make source selections. Understand that once the requirement is formally published on SAM the gate closes on informal visits to the customer and the competition begins in the form of proposals by competitors.  It is too late at that point to set the program aside for a sole source or a small business designation if it has not occurred by the publication stage.

4.  Fine Tune Your Marketing Sensitivities to WHAT Agencies are Buying and HOW they are Buying Supplies and Services

You must determine what those needs are through market research, trade magazines, research on what they are buying on SAM as well as postings on their web site that are future-program oriented.

Subscribe to periodicals like "Washington Technology" and other trade magazines.  Observe agency trends and analysis that impact your market segment.  There have been set aside programs marketed by small companies through acquainting agency management and technical personnel with capabilities they were not aware existed in the small business community or fulfillment of needs they in fact did not know they had.

5. Teaming Is Critical 

Federal agencies will continue their natural penchant to bundle requirements to get the most out of their management dollar.  However, the bundles will become fewer and more competitive. Position your company with the best possible industry partners in view of the changing budget scene.

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 you and any company with whom you are considering teaming. Your prospective team member ideally will not be a direct competitor; rather a business in a related field with whom you share a mutual need for each other's contributions in pursuing large-scale projects.

Relationships must be developed with primes and other small businesses that can help you, team with you and keep you in mind as they search for success. That takes time, patience and open-minded, out of the box thinking. It also takes more than a Non-Disclosure Agreement (NDA), a teaming agreement (TA) and a proposal to succeed. It takes dynamic marketing and communication with strong partners and hard, innovative work. Nice buzz words you say - but it is the truth and you have to find what that truth means to you.


Success in the current small business government contracting environment will come through careful market research, focus on funding types that are sustainable appropriations, zeroing in on decision makers early with set-aside marketing techniques and teaming with strong industry partners. 

Saturday, May 14, 2022

Promoting Entrepreneurship To Create A Learning Organization

Involve the employees in the training process and encourage mentoring.

The organization mission is conveyed by continuous organization training. Internal experts can be very entrepreneurial in training approaches. Recognize and reward them for doing so and place them in lead positions in training programs. Organization training in business is a form of communication. It is not an academic pursuit, although elements of it may include learning new information. Still, it is not schooling in the sense of personal improvement as much as it is communication of company policy and expectations.

The most successful organizations pair experienced personnel on a staff basis with junior ones as models. Each has individual assignments and reports to the boss but the senior party is the example in the process/experience-driven aspects of the job and is available to answer questions. The younger individual infuses the older one with energy and new ideas much like osmosis. The result is a hybrid of old and new that works and has been put together by a team. The approach works extremely well, imposes on no one, results in the young and old learning by observation, satisfaction and recognition for collective efforts and reduction in the boss’s work load. A win-win all around.

Monday, May 9, 2022

Maintaining an Ethical Company Image In Government Contracting

                           Photo Courtesy “We Pay Dot Com”


In the age of modern communications, lighting fast news, social media and exposure to world events, an ethical company image is vital.  

This article recommends several key actions in the small business contracting venue that you can take to favorably maintain your company ethics image.  


OCI can lay waste to the best planned marketing strategies. Careful screening of new hires, procurement types and the business environment is necessary to preclude wasted time, expense and legal implications in the event such conflicts occur.  

OCI clauses in solicitations and contracts require that companies certify their organizations and personnel as not having a procurement integrity issue with regard to a pending contract award or disclose what may be deemed an issue and provide mitigating factors to still be considered.  For more on this matter please see the following article:


A reputation for defective pricing leads to accusations of waste fraud and abuse in government contracting.  DP is mostly about what a contractor knew regarding company prices at the time a bid was submitted and what the contractor did not disclose in the supporting data regarding the likely cost outcome of the contract. 

Actions taken by the government and litigation resulting from defective pricing become part of the contractor past performance record and must be disclosed during competition for other programs. Read more about defective pricing at:


There are occasions when protests are warranted.  However, in recent years they have become a culture within federal contracting and a costly disruption to procurement.  

Reduce the likelihood of a protest being filed against your winning proposal effort at award by carefully scrutinizing conflict of interest, ethics and small business qualification credentials. Do not maintain you are what you are not. You will be audited and discovered. 

Do not develop a reputation within the contracting community for filing protests.  It may work against you indirectly during source selection and directly in terms of companies not wishing to team with you. No one likes a sore loser. 


Companies seek industry partners who know the rules and who keep their commitments.
In addition to technical, management and product synergism, astute and valuable teaming partners respect and understand your intellectual property rights. They expect the same knowledge and respect from you. 

Negotiate thorough and well understood non-disclosure agreements and teaming arrangements.   Perform in accordance with your obligations; your reputation for doing so will follow your small business.  

For more on this factor please see the below links:

Small Business Teaming

Practical Intellectual Property Management


Stay attuned to your customer's perception of your business.  Insure your top management visits and stays in contact with your most important customers, accompanied by your project managers and marketing personnel. 

Process a survey to your key clients requesting feedback and constructive suggestions.  Review your past performance data base information regularly and take corrective action where you have been rated low or received negative marks.  Demonstrate improvement and broadcast the achievement to the functional heads of the agencies you serve.  Please see the below articles for more details in this vital area:


Your management and employees are your emissaries to the public.  Convey your behavioral expectations and, to the extent you can budget for them, encourage  participation in community charitable events to increase company visibility.

If you can technically support social services organizations, do so and seek contracts where your technical expertise may be brought to bear on their challenges. You company will be recognized for it. 


Establish policies and focal point control for review and approval of announcements on the Internet of a public relations nature.  Never release a press announcement regarding a contract award until you have signed the deal. 

Insure employees in the social networking, marketing/sales and customer relations venue understand the line between regular communications in their jobs and making an enterprise business commitment or formal announcement.  Errors in this area are hard to retrieve. 


Company ethics go beyond decrees to personnel regarding professional conduct and honest business practices.  Business ethics must be tailored to the company service or product venue, relationships with clients, industry partners and suppliers. 
Training in company ethics is vital. It is a form of communication. It is not an academic pursuit, although elements of it may include learning new information. Still, it is not schooling in the sense of personal improvement as much as it is communication of company policy and expectations on the topics discussed here and others like them.

The best organizations make sure everyone from the chairman of the board to the janitor understands that training is a privilege, a right and a requirement and that it will be conducted as a matter of record for everyone.

Some training will be global, such as policy, corporate ethics and human relations. Other training will be specialized, such as changes in law, company policy or technology implications by functional areas.

Training must be sophisticated, interactive, and responsive to changing times and contain feedback mechanisms to gauge effectiveness.

A small business ethics image is different than a product or service "Brand Identity". The latter focuses on that which the customer receives from you in the way of products and/or services. 

A company ethics image is how the organization is viewed in general from a public perception as positive or negative.  That view is held by customers, your industry partners or prospective partners, regulators and the average citizen. 

If carefully sculpted your public ethics image can be a vital element in business success; if neglected it can pose a high risk to your enterprise.