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Small Federal Contractors: Relationships, risk and the federal opportunities in your backyard.

Sunday, October 21, 2012   (0 Comments)
Posted by: Guy Timberlake (
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One of the chief complaints I hear from small businesses pursuing work in the federal sector is the lag time between opportunity identification and when (and if) the actual purchase transpires. For small business owners, unless you are independently wealthy or heir to the Gates' fortune, the cost of waiting for business can do serious damage to the retirement portfolio, kids college fund, etc.

On the other hand, one of the primary gripes from government is the perceived risk associated with engaging small businesses on projects of substance and criticality. While the current political climate (and the current Administration) have added to the increased visibility of the issues associated with being a small federal contractor, there is still quite a bit of work to be done.

What if, for the purposes of these two points, there were a way to help both sides achieve a win? A way to create more frequent opportunities for small business concerns with a lower inherent risk for both Government and Industry?

I know, I know, folks from both sides will say there is not a chance something like this could happen. To effect change of this nature would require an act of Congress and well, we know the likelihood of something like that happening given the current, past and probable future state of Capitol Hill.

Alas! Would you believe there is no action required from the actors of little to no action and that an opportunity does exist? Thanks in part to current OFPP administrator Joe Jordan, it has been receiving more visibility as of late. In fact, a major defense buying command was recently quoted as saying they are aiming to award 90 percent of these purchases to small businesses.

Since I think that is a big deal, here's the skinny.

On the surface this acquisition method seems insignificant, and for this reason is dismissed as not a good use of time or money by many in Industry. The one's that know about it anyway. I've been facilitating recurring market intelligence articles, seminars, webinars, workshops on the subject for years and am amazed by how it is not at all on the radar for so many from Government and Industry. This method, which employs streamlined processes to provide relief from the normal administrative burdens associated with agency procurements, was created for that reason and also to increase opportunities for small and small disadvantaged business concerns. It's pretty much written that way in the FAR.

Now, there are some limitations regarding these purchases. One relates to how big the purchases can be, but that is a major factor in the less risky aspect of these buys. Another limitation is related to the acquisition pecking order. For the most part, this method pulls up the rear behind purchases from 'Required Sources' such as the GSA Schedule.

By now, you're asking yourself how significant can this acquisition method be?

How does $15.5 billion dollars grab you? That's how much agencies spent during FY2011 via 771,000 contract actions conducted under the Simplified Acquisition Procedures. This was a $4Bincrease from the previous fiscal year (FY10), which itself experienced a $7B increase from the previous fiscal year (FY09).

For a perspective of spending via this method, the following graph shows totals since FY07:

This depiction is based on information reported by federal agencies to the Federal Procurement Data System (FPDS-NG).

This is important since the rules associated with these purchases essentially state that agencies are to set-aside these purchases if, by applying the "rule of two" they can identify small business concerns to fulfill the requirement. Don't believe me? Just check the FAR or better yet, check out the joint memo to federal agencies issued by Mr. Jordan of OFPP and Ms. Mills of SBA in June of this year.

Here are the specific benefits and opportunities for small federal contractors:

  • First, understand how these purchases work based on the agencies and types of opportunities of interest.

Most agencies and there activities around the Nation leverage this method and over one thousand NAICS codes were used to spend $15 billion dollars in FY11.

  • Second, especially if you are not based in the National Capital Region, look over the fence in your backyard for business instead of falling into the trap of establishing a presence in DC just because a consultant told you it was necessary.

Of the top five states (by Award Recipient) since FY08, California, Idaho and Florida account for $9 billion in spending.

  • Third, as a small federal contractor, if you have faced push-back while trying to be considered for multi-million dollar or larger opportunities, it is likely due to lack of someone that matters having knowledge and/or trust of you and your organization, and this is a relationship business.

Go after these smaller (lower risk) opportunities to build relationships and trust to get to the next level. It's what helped me win my first million dollar award from the Navy under the F/A-18 Electronic Classroom program years ago.

Finding the information about who spends how much and on what is not that hard. The effort you commit to this can pay dividends and help keep the lights on while waiting for the 'big ones" to come in.

Oh, and don't be worried that FY12 is only showing $12 billion in spending. Final results for DoD won't be known until the end of the calendar year due to the ninety day OPSEC rule applied to their transactions. If DoD spends anything close to what was spent in FY11, the gap that exists will be narrowed quite a bit, if not completely.

One last thing.

In FY11, only about half of the total awards actually went to small business concerns which means in FY11, there was at least $8 billion that could have been awarded to small businesses. If this had happened, would there still have been discussion about agencies not achieving their small business goals?


The Chief Visionary


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