I recently had drinks with a friend who was experiencing this pressure. He was running a federal contracting division of a larger commercial company. The division was doing fairly well and had built up to roughly forty-million dollars of annual … Read More »]]> One of the major challenges for mid-market government contractors – particularly ones that have graduated from the program and are no longer considered small businesses – is finding ways to go head-to-head with larger companies. This challenge has become more daunting as the economy has turned down and major contractors are competing for smaller and smaller pieces of business.

I recently had drinks with a friend who was experiencing this pressure. He was running a federal contracting division of a larger commercial company. The division was doing fairly well and had built up to roughly forty-million dollars of annual revenue. Earlier that day he had been informed that a piece of business he was confident of winning was awarded to a much larger competitor. It was such a bizarre experience, he said. These guys never used to bother with such small pieces of business.

A Matter of Intelligence: As we talked about what happened, the conversation focused on the fact that he was blind-sided by the results. He got quiet for a bit and took a sip of his drink. I guess I should have had one of your advisory boards, he offered.

Advisory Boards that work: He was referring to the Advisory Boards that I build. I wrote a book describing the approach – Amazing Pace How to Make Business Development Work. I noticed that he had his copy which he handed to me. Would you mind signing it for me, he asked. I think we better talk about your building one for my division, he said.
Critical Knowledge: My Advisory Boards are tasked with helping to drive the run-rate of the company. Part of that process involves providing accurate and timely intelligence about the pieces of business that the company is pursuing. Without such intelligence, the company is flying blind. There is no substitute for knowing such things. Only gamblers like the odds of being uninformed and a gamble is a poor offering to the people who have decided to bet on your ability to make the company a success and their lives better.
Quid Pro Quo: It is easier to say that you need such information that to actually obtain it. In this socially networked world, you would like to think that all you have to do is ask. Life may be for the simple-minded but success in government contracting is not. Every successful transaction – including the provision of critical intelligence – requires an appropriate quid prop quo. Much of my book focuses on the nature of the relationships that support such exchanges.
Taking the Shortcuts: Its funny how some memories stick with you. When I was young I remember crossing a stream – walking across a concrete bridge. My sister was behind me. She noticed what looked like a way to get ahead of me – a green mass – and stepped off the path. Well, down she went and my father had to reach down and grab her by the hair. The memory came back to me as I listened to a CEO describe how he had attempted to build one of my Advisory Boards and had failed in the effort. As he described the effort, it became clear that he had neither the experience nor range of contacts to be successful. He was taken back when I became upset at his story. Look, I believed your ideas and tried to put them in practice, he objected. And you would cheer for the man who painted a moustache on the Mona Lisa, I shot back. Most failures come from taking shortcuts or attempting journeys that you are not capable of making successfully. Blame it on bad luck if you must, but professionals know that bad luck is most often indolence posturing.
The Coin of the Realm: The core is the nature of the relationships that support a process that increases your chances of success. Its not about the technology or the value proposition – its about building relationships that help to carry the day. Learning how to build those relationships is not easy. Most learn it from a mentor who guides you through the process until your reflexes take over. If you dont have an experienced mentor, you will tend to make it up as you go along. Not a good idea when you live in the complex world of government contracting.

Dr. Earl R. Smith II

Focus on the technology: Many companies with very good technologies have difficulty in getting traction with federal clients. In fact, the best technology almost never wins out when it comes to government contracts. That may sound strange until you drill down into the process and begin to come to terms with the other factors … Read More »]]> At The Federal Circle, we work with government contractors. Most are mid-market companies with annual revenues of less than fifty million dollars annually. There are patterns of perspective which we regularly find when we initially engage with clients. Here is one of the most common:

Focus on the technology: Many companies with very good technologies have difficulty in getting traction with federal clients. In fact, the best technology almost never wins out when it comes to government contracts. That may sound strange until you drill down into the process and begin to come to terms with the other factors which are involved.

The People Judgment: Many technologists are anti-humanist to the core. They would rather spend their time at a computer or with others who would rather spend their time at a computer. In some extreme cases, I have watched CEOs openly denigrated their potential clients – sometimes to their face – contending that they just dont get it or that they are operating in the stone age. That leads the decision makers to a judgment on the company. A good rule is that people do business with people they know, like and trust. Knocking one leg off that three-legged stool is not a good way to advance your chances of getting the business. If you are failing the people judgment, there is little chance that you will win the business.

Their Associates: Many companies do a very poor job of seeing the process through the eyes of the decision maker on the other side of the table. One mistake is to assume that our technology and team will win the day. It is important to remember that the person who will give or deny you the business is in the role of a risk taker and that taking bad risks will be bad for their career. Most decision makers are conservative and rely on people outside of the management team that they know and trust for references. In my book, Amazing Pace: Turbo-Charged Business Development, I describe how an Advisory Board made up of very senior and well connected people can significantly increase the chances of winning larger chunks of business. The core message of the book is that gate-keepers will often respond more positively to the people who advocate for your company than the management team itself.

Following Protocol: A good many companies fail at federal business development because they do not take the time and make the effort to understand the rules. Federal decision makers operate within a highly ritualized and regimented environment. Laws and regulations have been put in place in an attempt to assure that the process is fair. These rules have a major impact on what a federal employee can and cannot do. They also tend to dictate the pace and structure of discussions and decisions. One of the major side benefits of the Advisory Boards that I describe in my book is that teams, that may not have a lot of experience in such an environment, can be mentored by members of the Board. Avoiding mistakes can substantially increase the chances of winning the business.

Branding: Federal contracting is a very small community and decision makers regularly share information about companies that approach them. Many CEOs miss the fact that every action, contact and communication with one of these professionals directly impacts the brand of their company. Further, it is very likely that the experience – particularly if it is negative – will be widely shared. Negatives are not limited to mistakes or holes in presentations. A company that advances an antiquated value proposition will be branded as out of touch and unaware. One that is not completely aware of the competing value propositions will fare just as badly. Much like venture capitalists, these people have seen almost every variation. One fault is particularly insulting to decision makers – a sense of entitlement or manifest destiny. Telling a contacting officer that you intend to change the world as we know it will lead that officer to conclude that you know nothing of the world you want to change and are most likely to end up on the scrap heap.

The Federal Circle was founded to help middle market government contractors up their game. We have built a diverse team of very senior professionals who are still actively working in the federal space. We act as a guide and mentor for companies serious about taking things to the next level. In that role, we get to watch a lot of companies fail or fail to meet the new challenges advanced by our clients.

Dr. Earl R. Smith II

All government contractors are required to follow the Federal Acquisition Regulations (FAR) and when applicable, the Cost Accounting Standards (CAS). To comply with the regulations regarding proper financial management, government contractors must often satisfy the Defense Contract Audit Agency (DCAA), which is responsible for performing all audits for the DoD, and for providing accounting and financial advisory services to DoD components responsible for procurement and contract administration. DCAA also … Read More »]]> Keeping up with the financial responsibilities when running any business is tough, but when doing business with the government, a company has many other required accounting procedures they must follow.

All government contractors are required to follow the Federal Acquisition Regulations (FAR) and when applicable, the Cost Accounting Standards (CAS). To comply with the regulations regarding proper financial management, government contractors must often satisfy the Defense Contract Audit Agency (DCAA), which is responsible for performing all audits for the DoD, and for providing accounting and financial advisory services to DoD components responsible for procurement and contract administration. DCAA also provides contract audit services for many other government agencies as well. A small number of other Federal agencies do have their own contract audit capabilities.

Government contractors have found there’s no ‘silver bullet’ solution certified to guarantee compliance with DCAA’s regulatory audits.

Instead, contractors must invest in the proper processes and reporting tools to help them achieve and maintain compliance with DCAA’s various financial audits. When it comes to compliance, DCAA auditors most want to see a ‘traceability of documentation.

Government Contractor customers continuously search for fully FAR, CAS and DCAA compliant systems. Unfortunately, there is no such system. Most accounting systems can become compliant with the proper implementation, and certainly some lend themselves to any easier process.

How to Get Government Contracts – Business

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Government contracts are not as unattainable as the paperwork makes them seem. Once you learn the system, they can be an excellent source of revenue for your business – even when the economy takes a dip and business is harder to come by.

Federal, state, and municipal agencies routinely contract for outside support. They have to; the requirements for all … Read More »]]> Article by Michael Riley

How to Get Government Contracts – Business

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Government contracts are not as unattainable as the paperwork makes them seem. Once you learn the system, they can be an excellent source of revenue for your business – even when the economy takes a dip and business is harder to come by.

Federal, state, and municipal agencies routinely contract for outside support. They have to; the requirements for all of the services they provide far exceed the internal structure of most government agencies.

The key to winning a government contract at any level is knowing the system – the specific system that an agency requires you to follow. Don’t let the red tape intimidate you. Once you clear the initial hurdles, the rewards can far outweigh the challenges.

Government contracts vs. private contracting

Projects for the government are covered by strict statutes and regulations to protect the public and reassure taxpayers that their money is being spent properly.

Government contracts are different from private contracting in several ways. To begin with, most public works jobs require that you pay the prevailing wage rate. Public works as opposed to private work is very highly competitive. For example, contractors are on a much bigger margin than public works, while public works typically involves a greater volume. So markup is less. But you’re working with a higher price in labor.

You also have more outside agency inspection, which is often extremely critical. And it’s much more paperwork-intensive: tech submittals, payroll, and legal (lien) documentation, just to name a few areas.

Since the government typically requires more paperwork, many businesses never enter the market. So what’s in it for those who do? Is it worth it?

Good opportunity for stable businesses

Doing business with the government won’t make you instantly wealthy. But it can certainly work to your financial advantage. For one thing, it can help you to level out the economic peaks and valleys during the business year. If you can apply the profits from government revenue to paying for your business overhead, you can be more selective with other contracts that involve a higher margin.

One of the good things about contracting with the government is that when the economy is tough, Congress pours dollars into public agencies to help jumpstart the economy. When the work is properly done, you know you’ll get paid.

Is Your Business Ready For Government Contracts?

To succeed with government contracts, first make sure that your business is solid enough to complete the job term. If your business is in financial trouble, a government contract isn’t going to save you.

In fact, if you can’t fulfill its requirements (which include sustaining your business throughout the contract term), it could put you out of business. Be sure that you have enough capital and the right people and resources to do the job before committing to it.

Also, the government does not typically finance contracts before the work is performed. You may be able to receive incremental payments if the contract’s value and duration are substantial enough. But there must be a good reason, not just the fact that you need money to stay in business.

Since public projects involve paying the current prevailing wage, labor costs are considerably higher than the industry average. The norm is usually based on the highest union pay scales. A business bidding a public works job has to be able to carry those costs for several weeks prior to receiving payment from the government.

The importance of proper capitalization and paperwork filing can’t be stressed enough. You have to consider your payment schedule: the labor dollars you’ll have to front during the project and your materials cost. To get paid, you’ll have to make sure that you’ve correctly filled out all of the paperwork, submitted it on time, and gone through proper channels.

Make sure that you get all of the information in advance so that you won’t be caught flat-footed after starting the job. Make sure to read all of it thoroughly, and then read it again.

Once you’re armed with that, and are sure that your business is strong enough to sustain itself through the initial phases of government contract work, get ready to enjoy some great profits and business relationships with government agencies who will seek out your services for years to come.

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