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Tuesday, January 2, 2007


Link to Ken Larson Counseling Request:

Key Words: "Federal Government Contracting"


One of the biggest challenges for a small business in government contracting is achieving that first major contract. A small business entering the field does not have a government contract past performance record to include in proposals to federal agencies. At the onset, the only qualifications that can be referenced are commercial successes and the individual expertise and qualifications of the owner (s), employees and management. This article offers seven small business management techniques to assist in achieving that first government contract.

1. Contingent Hire Agreements - Recruit prospective employees and associates who have previously worked in government business. Such individuals bring expertise and qualifications with them and lend credibility to your enterprise. A contingency hire agreement is one way to approach an experienced employee with the prospect of joining your firm at a later time when the business base is there to permit professional advancement. Under such an agreement the prospective employee agrees to contribute time and effort on a proposal for a new contract and is assured on paper by your company of a position on the project when it is awarded to your firm. Such arrangements are generally recognized by the government as a credible way for new or start-up businesses to grow and agencies will accept resumes of experienced professionals in proposals from small business contractors with signed contingent hire agreements even though the personnel may not yet be on the company payroll. Prospective employees of this type are often available from the retired or downsized ranks of federal government agencies or prime contractors. Be aware that government procurement integrity regulations apply. Individuals should not be considered who have a potential conflict of interest in the project you are bidding due to a former association with the buying agency in a source selection authority role as specified in FAR Section 3.104.

You can download a recommended draft shell for a contingent hire agreement from the second, vertical, Box Net "Refereences" cube in the left margin of this site. 

2. Seek government solicitations for taking over incumbent work forces. In some cases the government designates base operations contracts, system support contracts and other service contracts at military installations or federal agency locations as small business set-asides. In certain of these contracts the services may have been performed until now by a large corporation which is no longer eligible to compete due to the small business designation of the current procurement. The employees of this large company become available for recruitment since they will lose their jobs at the location if they do not join the winning company. These individuals have built-in technical expertise on the project and government contracting backgrounds. Advertised government solicitations may be examined at the following web site:

Utilize the filters at the above web site to search for solicitations designating Small Business, 8(a), HUB Zone, Women-owned, Veteran-owned set-asides.

3. Build government contract business system infrastructure such as estimating, pricing, proposal preparation, long-range planning and job cost accounting processes. These processes are particularly important if you do not qualify to sell under FAR Part 12, "Commercial Contracting" and you are in the services business. Having these key elements in place enables your company to bid large scale jobs consistently and to forecast, estimate and account for new government business. They also permit the company to pass site surveys and audits by DCAA and DCMAO in connection with proposals and contract awards. Having key infrastructure in place creates a favorable impression to prime contractors and other prospective teaming partners. Articles on building these processes are available from the author at:

Key Words "Federal Government Contracts"

4. Team with large business contractors who have experience in the government contracting field. As part of such teaming arrangements they may be willing to trade-off their expertise and assistance for your particular technical skills and your small business participation as a subcontractor on new contracts. Remember large government contracting businesses are required to buy 23% of their purchased supplies and services from small business and they must develop and submit an annual small business contracting plan to the government. Failure to do so can jeopardize their current government contracts or place in danger the award of a project where a small business plan is required. You have motivated large business prospective partners available to you in the government contracting community. Protect yourself with proprietary data agreements and insure that your company's work scope for a given project is well defined in a thorough written teaming agreement. Large businesses will respect you for your professionalism when you demand a formal business approach. The Department of Defense Mentor/Protege' Program is a logical extension of the large business/small business teaming concept. Under this program, large businesses formally "adopt" a small business under a Pentagon-sponsored program, taking them through the growing process and teaming with them on new government contracts. The large business benefits from the small business statistics and can use the program in their marketing literature. The small business benefits from the expertise provided by the larger partner, as well as the exposure to larger government contracts as a subcontractor. You can read about the program at the following web site:

5. Submit and negotiate a General Services Administration (GSA) Schedule. Pre-establishing pricing and terms and conditions with the GSA lends credibility to your enterprise. Schedule periods can last from 5-10 years and simplify buying for your prospective government customers They can have confidence that the GSA has reviewed and determined that your rates are reasonable and they can be assured that the terms and conditions of your schedule have met the approval of the GSA. All they need to do is place a funded delivery order request for the supplies or services with the GSA against your schedule, negotiate the technical statement of work and delivery requirements with you and the deal is done. You can pursue a GSA schedule at the following web site:

6. Pursue contracts which are set-aside for small business enterprises. If you are a woman-owned, minority-owned, veteran-owned or disabled veteran-owned business, seek government business solicitations which have been set aside with these designations. It is more likely that you will be competing against enterprises at that same developmental stage as your company by taking this approach.

If you are a small business with no other set-aside designations, seek teaming arrangements as a subcontractor with minority-owned, veteran-owned or women-owned businesses. Up to 45% of a project may become yours under such arrangements. Your team members will not usually be your direct competitors but will be involved in lines of work that usually complement your business and enable the team to fulfill a scope that is larger than any single member could undertake alone. Teaming arrangements can result in winning larger jobs that can span a number of years in duration and mean good, solid cash flow for all participants. Check the "Dynamic Search Mechanism" at the Central Contractor Registration (CCR) Data base below for companies in your immediate area who are in synergistic lines of work to your firm and have small business set-aside designations. Everyone in the $79B government contracting small business community is teaming these days to get ahead:

7. Self-market to federal agencies with your capabilities statement and ideas for government programs. If you are a Minority-owned 8(a) or a Hub Zone-located small business, a government agency can sole source a procurement to you without competition under the Federal Acquisition Regulation (FAR). Even if you are not an 8(a) or Hub Zone firm, self-marketing has tremendous potential. There are over 50 federal government agencies with facilities, bases, locations and offices housing contracting officers and buyers all over the United States. Find the nearest locations to you via the agency search filters at FEDBIZOPS (see link at 2., above) and send them a capabilities statement with a request for a meeting with their small business liaison officer. For an example of a capability statement please see the following:

Federal agencies are required by statute to meet with you. Once you are there find out the names and contact information of their technical management authorities who define requirements for acquisitions. Determine what the agency needs through research with the technical decision makers and on the web. Most agencies forecast their long range plans at sites available to the public. Define a creative project in terms of meeting your client's needs and offer it to the agency points of contact as a prospective set-aside contract.
If you are not an 8(a) or Hub Zone Firm and the agency posts your self-marketed project for competition, you will still be in the driver's seat during the proposal stage, having developed the concept and positioned yourself well ahead of your prospective competitors in terms of a solution with your customer.


Try combining a well written business plan with an aggressive marketing campaign and the seven approaches outlined above. For assistance in business planning, please see the following links:

Entering government contracting as a small businesses is indeed a challenging time, but there are many opportunities awaiting you. This article has attempted to reveal some techniques to capitalize on those opportunities and win your first federal government contract.


Eric said...


Great post! Thanks for your insight on contracting with the government.

-Eric Friese

Jon said...


Great blog! I've been working with government contractors for most of my career and I know that your info and advice will be very helpful to the new small biz contractor. Keep it up.

Best regards,

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