For many small businesses that are interested in federal contracting, the challenges to entering the market can seem daunting. With tightening budgets, increased competition and the large number of laws and regulations to follow, the barriers to entry can be high. Nonetheless, government contracting can be very lucrative and may help provide much needed cash-flow stability for firms looking to diversify their customer base and market segments.
So how does one get started in federal contracting? New entrants to the market sometimes believe they can simply go the government's online marketplace, Federal Business Opportunities, bid on projects that match their capability or socioeconomic designation and win business. This is often not the case, since the lack of past performance or upfront capture activities can make this a losing strategy for long-term success.
Further, some firms enter the market by first getting a socioeconomic designation by the Small Business Administration, such as the 8(a) program, or a contract vehicle such as a General Services Administration Schedule.
Although these tools can create competitive advantages, firms that use them may lack a clear strategy for doing so.
One method that can be very successful for entrants into this arena—or for those firms wanting to expand their federal business footprint—is to serve as a subcontractor to another business that has the prime contract with the federal government.
Prime contractors, especially large ones, generally need subcontractors, since small subcontractors help expand their technical offerings, capabilities and differentiators for new business. Further, and perhaps most importantly, these small-business subcontractors also help larger firms take advantage of the institutional customer knowledge they may possess.
Another thing to keep in mind—subcontracting plans and goals are mandatory for contract values that exceed $700,000 ($1.5 million for construction). For these contracts, the prime contractor must establish a plan for how subcontractors will help perform the work, and what percent and dollar value of the contract will be subcontracted.
Therefore, subcontracting can provide various paths for small businesses. Here are some tips to help find these opportunities—and how best to leverage your firm to help increase your chances of being selected as a subcontractor.
Where can you find subcontracting opportunities? The SUB-Net database, managed by the SBA, is a listing of subcontracting solicitations and opportunities posted by large prime contractors and other non-federal agencies.
However, extensive research is always an important option. You will need to target the major prime contractors working with those agencies that would be a logical fit for the products and services you provide. Searching USASpending.gov and the GSA Subcontracting Directory for Small Businesses are good options, along with contacting your local Procurement Technical Assistance Center office.
Contacting the small business liaison officer for the firm you are targeting is also recommended, in addition to the small-business subcontracting plan administrator within the company. This representative performs similar functions to small-business specialists at federal agencies.
2. Demonstrate the role your company can play.
As previously mentioned, having the 8(a) or GSA Schedule does not automatically mean that your phone will ring. In fact, some businesses will not even talk to you unless you have something to offer. To be most successful, small businesses need to bring extensive customer-domain knowledge to be considered as a viable teaming partner. Institutional knowledge of the customer, its needs and how a teaming arrangement between your firm and the proposed prime can ensure success are some of the best ways to create a strategic partnership with a large business to leverage the opportunity.
3. Build past performance.
Once you are on the team, you should be very proactive, which means supporting the proposal process by timely submitting data-call requests such as technical information and pricing. The proposal process is normally complex, with multiple data calls, so make sure you allocate the resources to the effort. Remember, if you do not take care of the customer—who, at this stage, is the prime and the team—someone else will.
4. Add value to the team.
But ultimately, the goal is to solve customer problems and create important past performance profiles for future proposal efforts by your firm. By being a great subcontractor, you give your firm the opportunities to showcase your capabilities—and expand and grow your business.
Approach these subcontracting opportunities with carefully prepared intelligence and value statements and you can be in a position for teaming partners to come to you. Beyond that, subcontracting should come with an exit strategy for your firm to eventually become a prime contractor—and establishing your footprint in the federal market for a successful future.