Just like the changing seasons in nature, federal buying cycles have distinct government contracting seasons that contractors should know. Being aware of this seasonality allows contractors to be better prepared for any weather and avoid being left out in the cold.
At Collaborative Compositions we love fall. Not just for the corn mazes, the pumpkin patches, or the warm apple cider. We love the colors of changing foliage (which you can scope out nationally here thanks to our friends at thefoliagereport.com) because it reminds us of the changing seasons of government contracting. Perennial contractors recognize the signs of the changing government contracting seasons but what about new market entrants? Those who are unfamiliar with the nuanced dependencies of the government buying cycles are likely to be surprised by the seasonality of the federal market. To avoid getting lost in the corn mazes of contracting, contractors must do more than shift to pumpkin spice and sweaters. Successful government contractors must come to truly understand the federal buying seasons.
Contractors can correlate the federal buying seasons with seasonal shifts that are seen in nature. For instance, as the leaves are starting to fall in the autumn the federal government is taking a chance to step back and evaluate. During the fall, the government is generally reviewing contracts and assessing contractor performance.
Agencies spend this time reviewing past procurements, making any necessary modifications, and preparing for re-competition of finite contracts that end in the spring/summer timeframe. Importantly, the government fiscal year begins October 1st at which point Congress and the President should have reached agreement on spending levels and enacted regular appropriations. Unfortunately, an ongoing trend of continuing resolutions delays new start projects and leaves spending at prior year levels. This trend is also why the government buying season slows down substantially later in the fall.
On the industry side during the fall, companies with government contracts should prioritize exceptional performance on the contracts they hold. Contractors that don’t currently hold government contracts and those looking to expand should focus on building teams to pursue opportunities in the coming calendar year. They should also be seeking feedback and insights from contracting officers to ensure alignment between agency missions and emerging priorities. This is also a great time for subcontractors to evaluate their current teams and build relationships with government customers.
When fall transitions into winter, the federal market slows and becomes much quieter. Just as nature takes time to rest and reset in preparation for the coming spring, so does the federal workforce. During this time the government is engaging in strategic planning, analyzing lessons learned, and preparing the landscape for the spring ahead. The trend of continuing resolutions impacts the amount of federal presence during the winter and usually results in a sort of government hibernation with substantially less procurement activity.
Winter provides a time for companies to refine their business strategies and take stock of their internal capabilities. Firms should be prepared to go to industry events and conferences to stay informed and maintain their networks. They should also be keeping an eye out for movement in agency procurement forecasts and remain tuned into budgets. Maintaining relationships and communication during the slower winter months will be key for companies to emerge in the spring with a fertile opportunity landscape.
As spring emerges from the slower winter season, the federal buying cycle begins to blossom. Spring is a time of renewal when federal agencies begin to solidify their procurement needs for the rest of the year. This is when we see requirements drafted, budgets allocated, and forecasted opportunities come to fruition. The government is often bustling during the springtime with a workforce busy as bees. Spring is often when we see a flurry of market research efforts in the form of sources sought, requests for information, and industry briefing opportunities.
During the spring bloom companies should stay attentive to agency communication channels, procurement portals, and forecasts. It’s critical that companies emerge in spring with market research and competitive intelligence that is up to date. They should be sure to attend industry briefing and engagement opportunities to network and engage with procurement officers. Companies should plant the seeds to ensure comprehensive understanding of agency needs, mission priorities, and upcoming requirements. Finally, Spring is when companies should begin refining their capabilities and solution offerings to align with upcoming opportunities.
Emerging from spring fully thawed, the federal season transitions into the summer heat. Summer is when things really heat up in federal contracting. During the summer agencies are actively seeking goods and services, issuing solicitations and procurement notices, and awarding contracts. Summer is arguably the busiest and most competitive season of federal contracting. It represents a season of growth and productivity and gives government contractors a time to shine.
During the summer contractors should be actively pursuing work on their existing contracts and keeping an eye out for opportunities on the various government entry points. Companies will want to leverage the relationships, networks, and any past performance developed throughout the rest of the year to stand out as much as possible in the broader competitive landscape. To succeed in the hot federal summer, contractors should be prepared to submit well-crafted responsive proposals that demonstrate an understanding of agency needs and an ability to achieve their mission objectives.
Understanding the unique seasonality of the federal market is necessary to succeed. Just like the seasons we have in nature the federal buying seasons display predictable patterns and phases. By learning those seasonal patterns companies can navigate the federal sector more effectively and capture opportunities that arise in each new season. As the leaves continue to fall this autumn and the seasons continue to change, draw parallels between what you see in nature and the federal market to prepare for better weather.
It’s that time of year again; we’re talking about the federal budget. Ensuring our armed forces are ready and modernized requires a hefty and well-allocated budget, which makes the ongoing challenges posed by the Planning Programming Budgeting Execution (PPBE) process to Department of Defense (DoD) critical to address.
The PPBE process acts as the DoD’s internal process for allocating resources. It results in the Defense budget request, which is included in the President’s Budget (PB) that is submitted to Congress. The PB is submitted generally by the first Monday February for use during the next fiscal year which starts October 1 of that calendar year.
PPBE as it exists currently represents an antiquated methodology for defense procurement. It hinders DoD’s ability to acquire based on need and speed. Industry and defense leaders alike have been clamoring for changes to the process for years and now a formal commission is adding to the push for PPBE reform. The Commission on Planning, Programming, Budgeting, and Execution Reform is rallying for change now in its interim report, acknowledging it will take years to turn the ship. They provide clear recommendations for addressing the challenges of the current process head on and they provide specific actions that can be taken now.
The problems with the existing PPBE process are plentiful. The current micromanagement mentality in Congress paired with the lack of connectivity and communication between Congress and DoD during the budget development process make it hard for real-time change to occur. As the government’s requirements change, acquisition policy and practice struggle to adapt which leads to disparity between what’s acquired and what’s required. When Congress receives its version of the budget it includes thousands of individual and relatively small line items along with classified annexes that contain redacted sensitive materials. Congressional committees are pushed to understand and approve the budget before it’s then brought to the rest of the lawmakers where funding is essentially locked in. Once the budget is locked in, adjustments and changes due to changing requirements or circumstances are essentially locked out.
It’s no surprise that budget approval is often delayed at one stage or another, given the amount of content, the condensed timelines, the politics involved, and the lack of clarity throughout the process. These delays and continuing resolutions cripple industry. Because the process for developing the budget is so opaque it often acts as a barrier to entry for new companies who see the whole process as confusing. For more than a decade DoD leaders and industry members alike have been calling for changes to PPBE. The hope now is that the PPBE Reform Commission will act as the catalyst for a broader set of reforms.
The Interim report outlines 10 potential recommendations and 13 actions that can be addressed now to improve the outcomes of the PPBE process. Some of the key recommendations include:
• Promoting Innovation & Adaptability
• Improving alignment between budgets & Strategy
• Improving the Capability of the DoD programming & budgeting workforce
Some of the suggested actions that can be taken now include:
• Improving PPBE related relationships between DoD & Congress
• Promoting innovation & adaptability (essentially transitioning to a portfolio-like approach)
• Improving alignment of budgets to strategy- improving understanding of private sector practices
• Improving business systems & data analytics
• Improving the Capability of the DoD’s programming/planning workforce
Implementing these actions would simplify the process and enable greater transparency across the budgeting functions which would ease the management and oversight strains for government and lawmakers alike. It would streamline the acquisition process and allow lawmakers to comprehend what the budget holds. The reforms would also make it easier for industry to understand the process, which would improve industry relationships and strengthen the industrial base.
All stakeholders are looking for improvement, though concern remains regarding oversight. Congress and the rest of lawmakers want to have sufficient oversight and management of the massive DoD budget. If they aren’t satisfied that they will have enough input into where the money is spent and how, they aren’t likely to implement any changes. The key will be to satisfy those seeking sufficient spending oversight as well as those seeking sweeping reforms.
There is no shortage of pressure as the DoD needs to start preparing mid-year updates on its budget proposals now. They need to start making real-time data available so that when those updates arrive at Capitol Hill, the information isn’t stale, and progress isn’t stalled. The PPBE Commission’s suggestions are clear and if implemented should satisfy all stakeholders involved. By confronting budgetary hurdles head-on and embracing reforms, the U.S. can bolster its defense capabilities and avoid continuing resolutions. As the PPBE Commission underscores, the time to act is now. We’re responsible for ensuring our nation has a military that’s agile, adaptable, and ready to face the future.
#PPBE #DefenseBudgetChallenges #NationalDefense #BudgetPriorities #MilitaryReadiness
Goldilocks Government Contracting Equation (GGCE) helps companies find a balanced fit in terms of agencies, partnerships, and contract access to effectively compete for and execute government contracts, without being overwhelmed or overlooked. By looking at these factors during the 4th Quarter instead of chasing everything that pops up, small and new government contractors can set themselves up for success in the next fiscal year that starts in October.
For a quick refresher, the famous children’s story Goldilocks tells a tale of a young girl who ventured into three bears house and sampled their porridge, chairs, and beds until she found the ones that were “just right”; for her. Recall, the bears had options that were too hot, too cold and just right, too hard, too soft, and just right, and too big, too small, and just right.
Government contracting can be a lucrative and rewarding avenue for businesses of all sizes. However, for small businesses and new entrants, navigating the complex world of government procurement can be an especially daunting task. Small businesses and new entrants in the government contracting market are bombarded with a cornucopia of information, jargon, and options.
Compared to the commercial industry government contracting has different rules to learn, more restrictive types of contracting to understand, and exponentially more red tape to navigate. These market factors are amplified during the fiscal 4th quarter when the government traditionally spends more of its budget than in other quarters and releases a higher volume of opportunities.
If you fall into this category and are currently feeling the pressure to pursue every opportunity that comes across the desk, I encourage you to take a step back and consider what I refer to as the Goldilocks Government Contracting Equation.
The Goldilocks Government Contracting Equation (GGCE) helps companies find a balanced fit in terms of agencies, partnerships, and contract access to effectively compete for and execute government contracts, without being overwhelmed or overlooked. By looking at these factors during the 4th Quarter instead of chasing everything that pops up, small and new government contractors can set themselves up for success in the next fiscal year that starts in October.
While most small and new government contractors don’t have the runway to pursue a trial-and-error strategy like Goldilocks did at the bears house, there’s a simple yet effective equation and directly applicable lessons that can be extracted from the story.
Too Cold: Not Enough/The Right Partnerships:
One of the key factors in government contracting success is forming strategic partnerships. Small businesses and new entrants that lack the appropriate teaming partners undoubtedly find themselves at a disadvantage when pursuing government contracts. Contracts have increasingly consolidated requirements, necessitating teaming strategies that allow companies to tackle more capabilities on fewer contract actions. Companies that lack equitable teaming relationships face difficulties in fulfilling project requirements and challenges competing effectively. Without a well-aligned team, it can be challenging to gain a competitive edge.
Too Hot: Too Many Teaming Partners/Too Much Distraction:
On the other end of the spectrum, having an excessive number of teaming partners can also hinder small businesses. Juggling multiple partnerships can lead to distractions, diluted resources, and conflicting priorities. It is crucial to strike the right balance by carefully selecting teaming partners that align with the business’s capabilities, values, and goals. Engaging with too many partners may result in divided attention, increased administrative burden, and reduced efficiency.
Government contractors need to find partners who complement their strengths, compensate for their weaknesses, and create a mutually beneficial alliance that enhances competitiveness. The rule of three
isn’t just applicable to the tale of Goldilocks, it’s well applied to supply chain and teaming resiliency. Having at least three teaming partners for each capability gap ensures that if one firm can’t perform there are two backups. Small businesses can seek to ensure they’re on three different teams for bid opportunities to ensure they have the highest likelihood of success if one or more isn’t awarded.
Ensuring a balance of diversity and resiliency creates a “just right” teaming strategy.
Too Big: Overreaching/Too Much Contract Spread:
In an eagerness to secure contracts, small businesses may sometimes overextend themselves by pursuing too many contract vehicles simultaneously. This is especially tempting during Q4 when there is typically a higher rush of opportunities out of multiple agencies.
This approach can strain resources, hamper efficiency, and dilute focus. Pursuing too many contract vehicles can leave a company overreaching and stretching their capabilities to a breaking point, damaging agency relationships in the process.
Too Small: Growth Limited by Too Few or Too Small Contract Vehicles:
On the other end of the spectrum, limiting business opportunities to only a few or too small contract vehicles can impede growth. Contract vehicles with high contract ceilings, long Periods of Performance typically have higher numbers of awardees.
These tend to be higher in competition and risky for small businesses to depend on entirely. Alternatively, contracts that are issued for a year or less tend not to have the weight to add substantial value to past performance and tend to be for lower dollar values over the lifetime.
It is advisable for small businesses to be strategic in selecting the contract vehicles that align best with their capabilities and target markets. By focusing efforts on a few well-chosen contract vehicles, businesses can maximize their chances of success.
Small businesses should aim to pursue a diverse range of contract vehicles and types, such as sole source/direct award, multiple-award contracts, Government Wide Acquisition Contracts, and Non-traditional sources such as Other Transactions to expand their market reach.
Diversification of contract vehicles ensures a broader pool of potential contracts and a reduced reliance on a single vehicle for revenue generation.
Too Hard: Too Many Agency Relationships, Not Enough Focus:
It’s often tempting for small and new businesses to try to please everyone and this is never a successful approach. Trying to approach every agency that releases an opportunity that seems to fit is a recipe for burnout and burned relationships. Attempting to engage and build relationships with too many agencies simultaneously can lead to a lack of focus and diminishing ability to understand specific agency requirements.
Too Soft: Too Few Agency Relationships, Not Enough Champions:
Conversely, having too few agency relationships can limit a small business’ exposure and access to valuable opportunities. In government contracting, having champions within agencies who advocate for your business is crucial. Small businesses should actively seek out agency relationships, cultivate partnerships with influential individuals, and engage in networking opportunities to expand their reach.
Building strong relationships within agencies can help businesses stay informed, gain insights, and increase their chances of securing contracts.
It’s essential for small businesses to strategically select agencies that align with their own expertise, mission, and growth plans. Focusing efforts on a manageable number of agencies allows for more effective resource allocation, stronger relationships, and increased chances of long-term high value relationships.
By concentrating efforts on no more than three specific agency relationships, companies can develop a deeper understanding of those agency needs and increase their likelihood of success.
By striking the right balance between relationships, opportunity, and capability, businesses can unlock the potential for success in government contracting. It’s crucial to remember that the Goldilocks Equation is not a one-time calculation but an ongoing process. As a company evolves, so too should its evaluation of the government contracts landscape in terms of contract vehicles, agencies, and teaming partners, to ensure continued growth and profitability.
Government contracting presents a wealth of opportunities for businesses willing to navigate the complexities. The Goldilocks Equation for Government Contracting emphasizes the importance of finding contracts that are neither too big nor too small but just right, having a focused but diverse agency footprint, and building a resilient and redundant teaming portfolio. By carefully assessing capabilities, aligning with strategic goals, evaluating capacity and risk, and understanding the competitive landscape, businesses can secure contracts that allow for sustainable growth and success.
Remember, in government contracting, the path to prosperity lies in finding the perfect balance.
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When a small business decides to participate in the SBA 8(a) program matters…..
Upon entering the government contracting market, the runway for receiving the first award is in the range of 12-24 months. This is just the first award and it usually won’t be a prime contracting opportunity, meaning you don’t have direct access to the government customer. With such a long runway, many companies initially try to seek any advantages they can. There are many programs that are advertised as being propitious but beware of the nuanced considerations involved in the decision to pursue any of them.
Programs Of Interest
Programs like the SBA 7(j) Management and Technical Assistance Program, small/disadvantaged business certifications, the SBA 8(a) program, and GSA schedules, are often promoted in a way that appeals to small businesses. The programs are all different, they offer different benefits for different businesses at various stages of growth. Missing from the descriptions of these programs are details that interested prospective contractors should consider before participating. To reap the advertised rewards, contractors need to consider not only which program they join but also when they decide to enter.
When considering participating in one of these programs it’s important for small businesses to consider that the 8(a) program has an expiration date, GSA schedules have minimum orders, and small business certifications must be renewed on a regular basis. While it is generally true that having a small business certification can be helpful, it’s equally well known that capabilities matter more than certifications. GSA schedules are not a guarantee of money. Obtaining a GSA schedule without a strategy for identifying and pursuing government customers can easily end up as a negative return on investment. On the surface, while the program itself might not have an entrance fee, each of the maintenance activities requires an overhead labor expense and often other additional unforeseen costs.
The 8(a) program in particular requires participating at the most opportune time to maximize the potential for profit. The 8(a) program has a nine-year life span which is divided into two phases: an initial four-year developmental stage and a final five-year transition stage. The application process is extensive and requires financial, business organization, banking, and personal information to address the eligibility requirements such as proof of ownership and control of the business, social and economic disadvantage statements, business acumen, experience in the government market, and business revenues and number of employees. Generally, companies interested in the 8(a) program should already have worked with the federal government directly or as a subcontractor to a prime. The following discussion addresses the necessity for careful consideration by individually owned businesses of when to participate in the SBA 8(a) program.
The 8(a) program provides business development assistance to businesses owned and controlled by person or persons that are socially and economically disadvantaged, have good character, and demonstrate a potential for success. The program was established for disadvantaged individuals but now includes small businesses owned by Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Indian tribes, and Native American Organizations (NHOs). The three-part test used to determine economic disadvantage sufficient for participation in the 8(a) program is as follows:
- Net worth of less than $750,000 (excluding ownership interest in the applicant’s business, equity in their primary personal residence, and funds invested in an official retirement account.)
- Generally, no more than $350,000 in average adjusted gross income over the preceding three years
- No more than $6 Million in assets (excluding funds invested in an official retirement account)
Risk vs. Reward
Many companies will join the 8(a) program with hopes of receiving a sole source award. For an 8(a) sole-source contract including any options the maximum award for individually owned businesses is $4.5 Million. The threshold for awards to CDCs, ANCs, and NHOs is higher. That’s an attractive number, however, simply participating in the 8(a) program comes with no guarantee of business. The company still has several other hurdles to jump over before being considered for a sole-source contract award.
There is no requirement for companies entering the 8(a) program to have demonstrated past performance with the government. When bidding on contract work companies must demonstrate to the government that they can accomplish the work in the contract and perform successfully. Typically, Contractor Performance Assessment Ratings (CPARs) are the only way for companies to provide evidence of related past performance with the federal government.
These ratings are filled out by government contracting officers at every contract performance milestone and stored in a federal database for other contracting officers to access. Typically CPARS are reserved for prime contractors. If CPARs are unavailable for a company, there are certain circumstances in which the evaluation factors for a contract might allow for another type of past performance but there is no consistency with this consideration. Ultimately being awarded the first contract is the hardest as many opportunities require companies to prove their abilities.
In addition, if the company previously hasn’t received a contract award from the government valued at over $1 Million, they are perceived as being a higher risk bidder by the government. Providing evidence that the company has performed the same type of work that is required by the government is helpful. However, if the work was at a smaller scale the government construes the company’s capacity to handle larger amounts of government work and funding as lower and the risk higher.
The path to a $4.5 Million Sole-Source contract under the 8(a) program is not short nor is it without competition. Without adequate planning and relationship development ahead of time, the beginning of the program can be spent learning and catching up instead of getting the crucial first wins that are necessary to build upon. When assessing the probability of success it’s helpful to identify meaningful statistics. For instance, the DOD awarded 105 sole-source 8(a) contracts on or after March 17, 2020—the date that the increased threshold was implemented —which reflected an increase over prior years. These contracts were all over $22 million Half (50 percent) of the 105 sole-source 8(a) contracts were awarded to firms owned by Alaska Native Corporations; 32 percent were awarded to firms owned by Indian Tribes; and 18 percent to firms owned by Native Hawaiian Organizations.
With a longer than average runway for contract award and half of the sole-source contracts awarded by the DoD ultimately going to other than individually owned businesses, the landscape is still quite competitive and not for the faint of heart. Pursuing the 8(a) program can be helpful for companies with a clear understanding of government contracting processes and an aggressive plan for maximizing the program’s potential for growth. On the other hand, companies that are in the earlier stages of their government contracting journey are unlikely to find the 8(a) program to be an easy button. Early-stage government contractors would be wise to consider getting some experience in the market under their belts before pursuing programs like the SBA 8(a).
Following article appeared in Bloomberg Government March 23, 2023
From SAM to SCAM? Trouble with Procurement Site
Author: Chelsea Meggitt
The alert read, “March 8th SAM.gov Emails Not Malicious.” Chelsea Meggitt talks about the strange emails that went to contractors from the government contracting web site in the most recent saga of SAM.gov technology woes.
The latest hit to the troubled SAM.gov, or System for Award Management (SAM) Government Point of Entry (GPE), came when masses of users recently received suspicious emails that appeared to be phishing attempts from that email address.
The evening of Mar. 7 and the morning of Mar. 8 were much like every other moment since the launch of beta.sam.gov—frustrating. For several weeks leading up to the incident, users had been reporting errors when trying to renew entity registrations, a task that should take minutes for a small business to perform but has plagued the site from the beginning.
In this roughly 24-hour period, it was widely reported that users were experiencing intermittent outages, an inability to access data, and some reported entities were missing entirely from their work spaces. The subtle alert banner at the top of SAM, which is far smaller than the initial banner that warns users of the consequences of misusing the system, informed users of the widespread issues. The banner displayed a brief explanation for the errors: “Issue under investigation, software issue suspected.”
The warning was ominous and vague. For many super-users of SAM, it seemed all too common and cause for concern if any “issue” arose. Count me in that group. As a registered government contractor, I maintain an active SAM.gov registration, and I’m familiar with the system. I’ve had a front-row seat for the troubles that beta.sam.gov (now SAM) has seen since its launch.
I wasn’t surprised when a client called in mid-February and let me know that they could not see their entity registration on the site. Fortunately, I had downloaded their entity information not two weeks before and could confirm it didn’t expire until June. I eased my clients’ fears and let them know I would keep them updated. I decided I would log onto the website myself to see if I could duplicate the issues that my client reported.
I knew the client’s entity was active and wouldn’t expire until June. It should have been there. But when I logged in, I couldn’t see it. I directed the client to the subtle warning banner at the top of the page which stated software issues were to blame for the challenges users were facing.
These issues aren’t uncommon. Users are familiar with a host of annoyances with the system. I assumed this one would get resolved in a matter of days, and if it didn’t, the government would step in with a waiver. I thought back to the entity validation process that caused such an overload on SAM.gov last year that the Defense Department had to extend entity registrations to allow the General Services Administration time to resolve the issue.
Fast forward Mar. 8 of this year, when users wake up to a legitimate looking SAM.gov email that claimed their entity had been assigned a new point of contact. For those who noticed it, the email immediately raised red flags. Although my note came from a SAM.gov domain, the entity referenced wasn’t mine and the body of the email contained links that appeared to be from a .jp Japanese domain.
It wasn’t the first time I had received a scam email from an entity purporting to be SAM.gov, but those usually don’t make it through the spam filter. This email appeared to have come from the official SAM.gov domain. Without clicking any of the email’s suspicious links I promptly navigated to SAM.gov to see if there were any changes to my record. My heart sank. My entity was now missing from my work space as well.
Within hours, GSA said repeatedly that the emails were not the result of a hack or breach but a benign software issue. Having been a government contractor for my entire career, I’ve had plenty of exposure to cybersecurity regulations, suspicious emails, and software issues. I was unable to think of a time when a software issue resulted in fraudulent emails being sent from an official domain.
Upon checking with a couple of contacts, I realized the issue was bigger than just me. It didn’t take long to determine that the same email had been sent to hundreds, if not thousands, of SAM.gov users.
Even I could see this was most likely a hack. The clues were in the body of the email. It had references to an entity I had no connection to, suspicious links, and an authoritative reference claiming action was taken on something I value—my company. I knew better than to click on any of the links in the email, but would others?
Claiming the email was caused by a software issue would give GSA more time to investigate the actual causes behind the problem, but would it also abate industry vigilance? The likelihood of ongoing security attacks and data exploitation is substantially higher in the time immediately following a security incident. Does GSA save face by downplaying the issue or take a credibility hit by not acknowledging the situation for what it clearly seems to be?
In any event, it’s clear the SAM’s struggles aren’t over yet.
Subscribers can find related content at Bloomberg Government.
The following article appeared in Bloomberg Government November 4, 2022, Author Chelsea Meggitt
There’s a better way for small business to win big government contract money. Chelsea Meggitt talks about joint ventures, a trending type that small contractors are using to size up the large competition.
Who is the prime, you ask?
“We are” is an increasingly common answer. It might confuse some who are versed in other well-known types of “Contractor Teaming Agreements” (CTAs) such as the prime contractor/subcontractor structure.
There’s another handy teaming tool that’s long been lurking in the shadows. The Joint Venture (JV) is a lesser used CTA that enables the participants to function and maneuver autonomously, a trait that the traditional prime/sub relationship doesn’t offer.
The answer to the question “who is the prime?” isn’t just one company. It’s the entire JV.
The common definition of a JV is an association of individuals and/or concerns with interests in any degree or proportion intending to engage in and carry out business ventures for joint profit over a two-year period, for which purpose they combine their efforts, property, money, skill, or knowledge—but not on a continuing or permanent basis for conducting business generally.
Simply stated, a JV is a group of two or more companies, entities, or individuals that have joined forces under the umbrella of a separate legal entity to pursue work together over a two-year period.
JVs can be formed by any combination of large or small businesses and can include two or more companies. The biggest difference from a traditional prime/sub relationship is that a JV involves the formation of a separate, unpopulated legal entity, often an LLC.
Why Not Just Go With Prime/Sub?
Coming together to form a JV offers measurable benefits over the hierarchical prime/sub relationship, especially for small businesses. Structured like LLCs, the companies participating in a JV are all considered members. They all serve as prime contractor to the government, share the responsibility for ensuring delivery, and reap the benefits of prime contractor past performance.
In a JV, the members are equals. A separate legal entity is established to ensure each member company maintains independent operating authority in the JV and doesn’t rely solely on the JV for work.
Each member company brings its unique offering to the relationship to deliver a complete platform as the JV. The result is a completely modular vehicle that’s cheaper, lower risk, and often delivered faster than the traditional top-down prime/sub system. Utilizing this approach has resulted in some big wins for groups of small businesses teaming up to bid large government contracts.
Of course there are nuances. The composition of the JV matters.
If all member companies of the JV qualify as small businesses under the Small Business Administration, the JV itself is then considered small. That means it qualifies for set-asides awarded only to small businesses.
If one of the small businesses has a socio-economic certification that warrants its own set-aside, the JV also holds that designation.
If each member of an all-small JV holds a different socio-economic certification (like being women-owned, service disabled veteran-owned, or located in an economically underutilized region), the JV retains all of their designations.
In all small JVs, companies can pool their set-aside statuses and compete for bigger contracts as a group while maintaining other operations independently.
Large businesses entering JVs have fewer collective benefits across the board. But they can access set-aside contracts as a large business in a JV by being part of the SBA Mentor Protégé Program. In this way, JVs offer bonus points for large businesses mentoring small businesses in an SBA-approved mentor protégé relationship.
The JV formed between the large company and the small business protégé retains the set-aside status of the small business.
Why Not Use JVs All the Time?
It can be tricky for JVs pursuing set-aside opportunities. If one of the members is a large business, the JV might not be able to pursue set-aside contracts unless the members have an SBA-approved Mentor Protégé relationship.
Also, the rules surrounding the two-year time limit are vague. The two-year period is an arbitrary timeframe put in place to ensure the companies that are entering the agreement don’t intend to rely on the JV alone for revenue.
Even though there is a two-year limit on a legal JV entity, the members can choose to form another legal entity and continue working together. The JV legal entity must be registered in government databases, which means delays in processing registrations can potentially prevent JVs from winning awards.
The two-year time frame can also serve as a helpful exit plan for JV members that have a dispute. Knowing it is only a two-year headache can make unpleasant relationships easier to bear compared to other longer duration, higher commitment prime/subs teams.
The decision to form a JV should be made on a case-by-case basis, but the agreement type offers groups of small businesses flexibility and power of scale. By giving them a chance to play with the bigs, and in some cases compete against them, multi-party JVs are showing the true strength and power that small business collaborations have in the federal market.
Government Marketing Best Practices 2.0: What You Need to Know for Accelerated Success – Kindle Edition
I am pleased to announce the release of Government Marketing Best Practices 2.0 – What You Need to Know for Accelerated Success.
Click here to view on Amazon Kindle.
I am proud to have a chapter in this book, Creating Buzz and Building Relationships Through Events: Chelsea Meggitt
– Chelsea Meggitt –
By Mark Amtower (Author), Sheri Ascencio(Author), Joyce Bosc (Author), Carl Dickson (Author), Stephanie Geiger (Author), Katie Helwig (Author), Larry Letow (Author), Chelsea Meggitt(Author), Chris Parente (Author), Stacey Piper (Author).
The federal government market in the U.S. is the largest market in the world. It is Fortune One. The government buys nearly every product and service imaginable.
It is also one of the most complicated and competitive markets in the world, filled with arcane rules and minutiae, public laws and regulations regarding the procurement of goods and services. These effect the bidding, sales and marketing processes we employ in the arena of government contracting.
Marketing plays a huge role in winning business in the public sector, but marketing here is different and it has to address the market, and the segments of the market, in ways that resonate with buyers and influencers making decisions that impact the lives of citizens and soldiers, civilian government employees and others impacted by the products and services purchased by Uncle Sam.
The book does not have to be read sequentially, as each chapter is designed to be a stand-alone work.
– Annual Strategic Planning: Stephanie Geiger
– Corporate Branding: Eileen Cassidy Rivera
– Thought Leadership in GovCon: Mark Amtower
– PR for GovCon: Joyce Bosc
– Association Involvement: Katie Helwig
– Positioning Your Digital Footprint for Growth: Janet Waring
– The Importance of Content Creation — Owned Media: Chris Parente
– Events: Stephanie Geiger
– Webinars: Sheri Ascencio
– Developing a Marketing Campaign: Stacey Piper
– Email Marketing: Stacey Piper
– Pre-Programmatic Marketing: Why it Matters When you Are Trying to Win Government Proposals: Carl Dickson
– Marketing to the Intel Community: Larry Letow
– Creating Buzz and Building Relationships Through Events: Chelsea Meggitt
– LinkedIn and Social Selling: Mark Amtower
Chelsea Meggitt Govmates member discusses how to acquire government contracts in this podcast.
Govmates, a technology scouting platform, provides amazing new resources and relationship development opportunities. They merge the best practices of technology as well as the human element to promote non-traditional defense contractors within the federal community.
Govmates has assisted with more than 30,000 matches from their system of more than 4,500 government contractors. They are experts in creating valuable relationships within the federal sector.
Chelsea Meggitt Govmates Podcast:
For more information and assistance in acquiring government contract, contact Chelsea Meggitt, Collaborative Compositions