Building a government contracting business is exciting on many levels. You are able to utilize a variety of avenues, programs, certifications and vehicles to grow the business, and you’re able to support numerous critical missions, each essential to the needs of the nation. At the same time, your business is also facing an enormous range of competitors. More and more companies are entering the government solutions market, and especially the federal contracting marketplace, every day.
With the history of sequestration just a few years behind us, the threat of shutdowns continuing as Congress and the President play ongoing brinksmanship, and a federal government eager to cut costs and find efficiencies, today’s government contractors must find effective strategies to drive growth. Here are six steps worth considering as you seek to expand your small and emerging government contracting business:
Component #1: Plan, land and then expand.
This three-phase model is often referred to in the GovCon space as “strategic nibbling”, and it focuses on a highly targeted approach centered on building a stable, reliable and long-term business relationship with one or a few federal agencies or offices, and expanding from an initial beachhead into a larger relationship.
For example, if your firm wins a small project to staff a 3-5 person team providing human resources support within the National Institutes of Health (NIH), this model suggests that you set a team member to the task of getting to know other personnel, contracting officers and executive leaders within the NIH to explore opportunities for building on your internal reputation. The idea here is that one of the greatest psychological factors in how purchases are made ties back to the comfort and confidence the buyer has in the seller’s ability to deliver and understand the unique culture of the organization.
The upside to this model is that you build growth on the basis of existing relationships. The downside is that it can spread your business focus across a wide range of services — something that can be hard to manage and scale.
Component #2: Build on a core competency.
Whereas the ‘land and expand’ model focuses on building your business across a wide range of functional areas but within a limited group of existing agency relationships, the core competency model goes in the opposite direction. Land and expand suggests that being a known, trusted player at an existing client agency is more important than staying narrowly focused in terms of what you offer — and for many government contractors, that is likely to be true. If you are staffing in human resource generalists, it may not be that challenging to start staffing in contract support specialists as well.
On the other hand, if your business brings specific technical expertise or knowledge to the table, then it’s better to focus on a core competency model which establishes that yours is the ‘go-to’ firm for specific capabilities within a niche segment of the overall federal market. Here, your goal is not to burrow into just one or a few agencies, but rather to fulfill the same mission and capabilities across a wide range of agencies.
This may be more difficult at the outset, but the long-term benefit is that you not only build a wider reputation, but you also gain the economies of scale that come from having a team deployed across multiple contracts, all delivering the same core capabilities.
Component #3: Establish powerful teaming partnerships.
Another critical path to growing your small government contracting business is by positioning as a highly valued teaming partner to other firms. Teams are essential to meeting the complex requirements of sophisticated and demanding federal contracts, and by presenting yourself as an attractive subcontractor and potential teaming partner, you gain two advantages.
The first is an increased likelihood of success in winning challenging contracts, and the other is the experience and qualifications that come from working on a team. Keys to being a leading player when it comes to teaming including being able to consistently deliver the talent that you present in your proposals; having systems and processes in place that support project delivery success; and achieving accuracy and precision in the proposal development efforts with your teaming partners.
Component #4: Identify and pursue the right certifications and set-asides.
This is where some small government contractors start out, if they are able to qualify for one or more programs. Of course, all small businesses in the federal marketplace are eligible to compete for small business set-asides, but that’s just the beginning (and still finds you in the largest competitive pool). You can narrow down your competitive challenges and increase your exposure to sole source opportunities by pursuing additional certifications as they may be applicable to your business. These may include (but is not limited to):
- Small Disadvantaged Business (8a)
- Service-Disabled Veteran (SDVOSB)
- Women-Owned Small Business (WOSB)
- Alaska Native Corporation (ANC)
- HUB Zone
The first four are examples of certifications tied to the owner herself or himself. The fifth certification is different because it is tied to the company’s operating locations and the makeup of its workforce. This demonstrates that certifications can be based upon a myriad of factors, as determined by the economic development or empowerment objectives of Congress over time.
Just keep in mind that the greatest danger to building your business on certifications and set-asides is that, while it insulates you from the challenges of free and open competition, this is a temporary condition and many firms that graduate from set-aside programs struggle to survive in the larger marketplace. In addition, being certification-dependent can dramatically impact the value of your business for M&A or exit planning, since the applicable status of the owner(s) as constituents of the applicable set-aside eligible groups limits the firm’s transferability.
Component #5: Set yourself up for success on key schedules and vehicles.
The U.S. General Services Administration (GSA) gives companies the ability to register their products and services in specific categories and for purchases in certain budget ranges, through the federal GSA Schedule. Being admitted to the GSA Schedule gives you the ability to present approved product and service pricing to federal agency buyers, who can select your company knowing that you are already an approved supplier.
There are two challenges with the GSA Schedule. The first is that you have to agree to pricing that is the lowest you will offer in the marketplace, since the federal government is entitled to a guarantee that your price for federal customers is the best you can offer to anyone. And the second is that being on the scheduled is not the same as selling on the schedule. Put another way, you still need to market and sell to federal buyers.
Contract vehicles are another avenue for building your government contracting business. These include the GSA Schedule itself (technically, it is a contract vehicle) but also include things such as ID/IQ contracts and GWACs. An indefinite delivery/indefinite quantity (ID/IQ) contract vehicle is used by federal agencies for highly complex and sophisticated projects, and allows companies to win contract opportunities. A government-wide acquisition contract (GWAC) is generally managed by one federal agency but is then made available to others seeking similar solutions.
Component #6: Focus on precision capture planning for the future.
Finally, a well-oiled government contractor business development operation should have at its core a well-defined and highly precise capture planning process that looks carefully at all aspects of the contracting process and allows the business development team to carefully evaluate, rate, prioritize and score opportunities at each step. This ensures that the team is focused on researching ‘best-fit’ contracting opportunities and pursuing those that the company is most likely to win, as a result of clearly defined opportunity qualification criteria.
What all six of these growth components have in common is a unique and tailored focus on finding, pursuing and leveraging opportunities within the federal government contracting space in ways that are efficient and give structure and definition to your business development efforts. This will, in turn, position your small government contracting business to win and keep more business in the future. Take time to discuss these strategies with your team and begin building the future of your government contracting business today.