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

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

Managing Teaming Relationship Risk in Small Business Federal Government Contracting

Most small businesses, particularly those selling services, will encounter the need to team with industry partners in small business federal government contracting. 

As a prime contractor, a supplier or a subcontractor, the need to carefully develop stable relationships is a prime driver for success in the government contracting venue. 

Small Business Teaming

Managing Subcontractors And Independents As A Small Business Prime Contractor

HARD FACTS ABOUT THE ENVIRONMENT

Be prepared to encounter challenges in the areas discussed below. They are presented because they occur enough that you should be aware of them.  It is astute to manage the associated risks.

Initial challenges for the small business in government contracting are not so much in the areas of barriers as they are in lack knowledge (which I concede is a form of barrier but one that can be dealt with). In short, be aware of what you do not know you do not know.

Lack of knowledge goes all the way from local and state employment law to federal  contracting rules. Enough small businesses have succeeded in the venue that it has proven small enterprise education, with trained personnel in government and prime contractors to do so, greatly enhances success.

Contracting officer's, either government or corporate, and their staffs are often not equipped in the skills necessary to guide the small business. 

Large business and government agencies often inadvertently take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows. This can lead 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.  They then recruit the help away the small enterprise.

Agencies often take extended time frames to put in place prime contracts after source selection 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 programs are often 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

One of the most common traumatic situations is newly established enterprises having no job cost government compliant business system in place. The industry partner(s) or the government have assumed that capability will materialize and when it does not the government audits the bills, finds no backup and shuts down the cash flow until the system is fixed. At that point the business can fail. The company should have become 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 government contracting officer 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. 

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 all great education sources but do not come close to filling the complete requirement and cost time and money.

PROTECT INTELLECTUAL PROPERTY, RATES AND PERSONNEL

The nature of the government contracting venue is that you may very well find yourself teaming with a company on a major, long term project and competing against them on another project where the team makeup is different. It is therefore essential to protect your intellectual property, your rates and your personnel.

Practical Intellectual Property Management for Small Business Federal Government Contractors

VET PROSPECTIVE INDUSTRY PARTNERS CAREFULLY

Not every company that approaches you with a suggested teaming arrangement will be ethical, straight forward and honest. Vet them carefully through the Better Business Bureau, a Dunn and Bradstreet Report, references and searches on their prior business arrangements, contract awards, business activities, subsidiaries and history. 

How Crazy Subcontractors Can Kill Your Bid

ACQUIRE ADVISERS AND SPECIALIZED HELP WHEN YOU NEED IT

There are free or very low cost resources through local government organizations who can assist the small business in understanding the government contracting venue.

Small Business Administration (SBA)

SCORE - Free Small Business Advice

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 is the practical way to go on any given 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.

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. 

Your Capability Statement For Small Business Federal Government Contracting

INTRODUCTION

Federal government contracting is all about relationship development.  Marketing to influential agency personnel, industry partners, prospective team members, employees, associate contractors and others who can help you requires a hard hitting synopsis of what your firm brings to the table.

Place into a capability statement (CAPE) the specific information others need to know for a sound decision about your company qualifications. This information includes such items as a D&B Number, government registration numbers, North American Industrial Classification System (NAICS) codes and the like. These items are elected or determined when you register your company for government contracting.

KEEP IT SHORT

An electronic capability statement (CAPE) for government contracts should be short and hard-hitting. It should be 1 -2 pages and should highlight the salient points of products and offerings, personnel and qualifications.

Below are examples of two good capability statements in the public domain.  The first is a services company, the second example is for a company selling off-the-shelf products.

CLICK ON IMAGES OR DOWNLOAD TO ENLARGE 

CLICK ON IMAGES OR DOWNLOAD TO ENLARGE

MAKE IT PROMOTIONAL

A good CAPE  will be a promotional brochure that on paper and through the electronic media advertises who you are, what you do and why the government or prime contractors should buy from you. Major elements of your capability statement, in addition to your small business designation and certifications, are as follows: 

(1) Company overview

(2) Supplies and services description couched utilizing your marketing ideas and strategy.

(3) Past performance of your enterprise or your personal background and qualifications 

(experience, education, etc.).

(4) Facilities or capabilities overview (How you perform your service couched in a manner that will appeal to your target market).

(5) Explanation of the positive results the client should expect.

(6) Points of contact and ways to contact you for meetings, placing an order and contracting your services. 

INCLUDE GRAPHICS

The document itself should be created with graphics, photos, themes and sales pitches. A picture of your product and your personnel adds dynamics. 

DISTRIBUTION

Your capability statement should be distributed on paper to your target market as a brochure, emailed as an attachment and linked into related industry web sites or partner marketing to get the word out about your product or service. Your CAPE targets contracting officers and prime contractor buyers who are seeking to fulfill their small business buying goals. It is a way to get you in the door and speak to, or correspond with, the management and technical personnel who are the decision makers in sourcing small business buys. 

SUMMARY

A good quality CAPE is the spearhead of your marketing campaign and your visual image;  focused and direct, it must be informative, concise and a snapshot of the very best you can offer.

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.