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FIVE WAYS to Get Your First Federal Contract Success Strategies for Small Businesses BY RICHARD J. HERNANDEZ November 10 2016 THIS ARTICLE DISCUSSES FIVE STRATEGIES FOR SMALL BUSINESSES TO BE SUCCESSFUL IN THE FEDERAL CONTRACTING MARKET BASED ON THE EXPE- RIENCES OF THE AUTHOR, A FORMER US AIR FORCE CONTRACTING OFFICER (PCO), CERTIFIED PROFESSIONAL CONTRACTING MANAGER (CPCM), WITH 32 YEARS OF FEDERAL AND CORPORATE PURCHASING EXPERIENCE. The Federal government is the largest single buyer in the United States. Each year it spends more than $500 billion dollars on goods and services. The Federal Acquisition Regulation (FAR) provides Contracting Officers with the policies and procedures for purchasing. The Federal fiscal year starts October 1 and ends on September 30 of the following year. There are many advantages of being a Federal supplier which include timely payments, long-term contracts, protection against recessions in the commercial market, high-profile clients, ability to take advantage of mentor-protégé programs, and nationwide contract opportunities. The main disadvantage for small businesses is trying to understand the Federal procurement process. As a practical matter, it can take 18 to 24 months for a small business to get its first contract with the Federal government. However, the reward for the wait can be worthwhile with a large dollar value and long-term contract. To be successful, Federal marketing requires focus, patience and knowledge of the FAR. SUCCESS STRATEGY 1 - BRANDING / DIFFERENTIATION. Contracting Officers are subject to a barrage of potential suppliers essentially all offering the same services. Not having a brand can leave your firm being considered a commodity that gets lost in the crowd. The most successful suppliers have developed a niche market focus and strong branding strategies. The niche strategy works well in the Federal market since it is easy to get overwhelmed in the vast number of contracts and competitors. The niche strategy fits the mental model of Agencies and large business prime contractors who generally consider small businesses to be niche players or “boutiques”. SUCCESS STRATEGY 2 – NICHE STRATEGY. Market niche and branding strategies are created. The author recommends the book “Differentiate or Die” by Jack Trout as a mustread for small businesses to help improve their branding skills. The importance of an effective combination of niche marketing and branding cannot be understated. Advantages include the following: 1) makes it easier to get non-competitive 8(a) set-aside contracts, 2) reduces marketing / sales time; 3) encourages repeat business (loyalty); 4) generates referrals, 5) lowers marketing expenses, and 6) lets you charge higher prices. The author recommends NOT using the following types of branding statements: We are a one-stop shop. We are a full-service contractor. We are a general contractor. We provide a turn-key solution. We can get you anybody you need. SUCCESS STRATEGY 3 – PROSPECT LIST. There are four ways to find Federal contracts. First, go to the Federal Business Opportunity online bid board known as www.FBO. gov to find current bid opportunities, usually due within the next 30 days. Second, is to use the Federal Procurement Data System to research (past) awarded contracts. Third, is to use advanced data mining software to find expiring (future) contracts in your commodity (NAICS) codes. Fourth, is to obtain agency forecasts of upcoming (future) contracts. Successful small businesses prospecting strategies tend to target 2 or 3 Federal agencies to focus their marketing efforts. From there they develop a “Prospect List” of expiring contracts (to be renewed) or new contracts. Having a specific list of contracts usually helps you connect with a Contracting Officer and get on their bid list. General presentations tend to get the “We’ll keep you in our supplier database and will call you if we need you”. Small businesses can use a variety of tools to develop a prospect list, which include: www. FBO.gov. www.FPDS.gov, Agency Procurement Forecasts, Bid Match from Procurement Technical Assistance Centers (PTACs), Agency Strategic Plans, Newspaper / Trade Articles, Set-Aside Alert newsletter, and www.EzGov- Opps.com. Another excellent way to build a network in the Federal market is to ask for referrals and to participate in trade / professional organizations, e.g., the National Contract Management Association. SUCCESS STRATEGY 4 – UNDERSTANDING THE FEDERAL ACQUISITION REGULATION. The FAR provides policies and procedures for all Federal Contracting Officers. The FAR is available on the Internet at no cost. The FAR is approximately 2,000 pages. The key parts of the FAR small businesses need to know are: Part 14 – Sealed Bidding Part 15 – Contracting by Negotiation Part 19 – Small Business Programs Part 36 – Construction Contracting Part 37 – Service Contracting The author recommends taking classes on the FAR and/or using a consultant to help you. SUCCESS STRATEGY 5 – PARTNERING. There are many excellent reasons to work with partners when bidding on Federal contracts. Reasons for partnering include: 1) Federal Strategic Sourcing Initiative (FSSI). Contracts are becoming more complex; 2) Contract Bundling. Requirements being combined; 3) Capacity. Ability to meet all contract requirements; 4) Past Performance. Ability to use partner past performance; 5) Risk Share risk of contract performance; and 5) Cost. Share bid & proposal and contract costs. SUMMARY. Federal contracting is not a game for amateurs. However, the rewards can be significant for small businesses who are patient, focused, and understand the FAR rules. This is why it is important for small businesses to use the above five success strategies. To contact the author: Call 312-404-2224 or email rhernandez@e-mbe.net if you have any questions about this article. ©2016 Richard J. Hernandez 18 | Building Entrepreneur
I. INTRODUCTION A property owner wants to develop a parcel of land. The homeowner’s dream is to upgrade their home by remodeling or replacing old bathrooms and kitchens. The owners conduct their due diligence and find contractors they can hire for their projects. What is the next step? How can the property owner and contractor outline the specifics of the work and what has been agreed to? The answer to these questions is that a written contract is mandatory. The goal of this article is to discuss contract fundamentals so that the parties to a construction project gain an understanding as to how to protect their interests. II. WHAT IS A CONTRACT In its simplest terms a contract is a promise. In the construction arena, typically involving a promise to perform a certain scope of work, for agreed upon compensation, with a definitive completion date. A well drafted contract will contain certain basic elements, which are necessary requirements to create an enforceable agreement. To ensure the contract will be enforceable, it should contain the following information: 1) Date of agreement 2) Identification of the parties with contact information 3) Description of the scope of work How the customer explained it How the proect was documentet CONTRACTS: THE BASICS BY ROBERT A. SHIPLEY How the project leader understood it What operatiors installed How the engineer designed it Haw the customer was billed 4) Responsibilities regarding scope of work 5) Dispute resolution procedures 6) Insurance clauses 7) Project cost (price) 8) Project completion date A Contract is protection so that all parties are provided with a clear picture of the work that each contractor will be required to perform. The well written contract provides a description of the rights and responsibilities of the parties, providing protection to all contracting parties. While the goal of any project is always a successful completion, disputes do occur, and the contract will provide your framework for the resolution of any dispute. The following provides a graphic depiction of what can occur when confusion rather than clarity reigns. III. CHECK LIST The experienced construction attorney will be familiar with the contractual requirements discussed in this article. However, and while not recommended, in the event a form contract document is used instead of one prepared by a qualified construction attorney, it is important to have a checklist to assist in making sure the contract you choose contains the necessary information to protect your interests. In addition to the basic information described in Section II, your contract checklist should also include verification as to the following: How the programmer wrote it Haw the helpdesk supported it How the sales executive described it What the customer really needed 1) Clear and precise description of the scope of work and the responsible party. 2) Indemnification Clause 3) Specific description of the contract documents, including the plans and specifications. 4) All exhibits, such as descriptions of insurance coverage, must be referenced in the contract and included as part of the contract documents. IV. HIGHLIGHT OF IMPORTANT CLAUSES The properly documented contract should contain the following clauses which are contained in most construction agreements: 1) The promise made by the contractor that they will perform their work in a good and workmanlike manner, as well as to return for a specified time period to repair or remediate defective work. Virtually all contracts will include these types of clauses. This type of clause should be included whether you are hired by the owner/ developer or as a sub-contractor by the general contractor. In all contractual, as well as business relationships, there is an expectation that you are competent and well qualified to perform the scope of work defined by the contract documents. 2) A warranty clause, which is essentially an affirmation as to your qualifications to perform the work, as well as that the work will be performed in a quality manner, consistent with industry customs, practices and applicable standards. Most often warranty periods are for one year from the date of completion. The typical warranty clause will include the following elements: i) the equipment and materials will be of good quality and new unless otherwise specified ii) the work will be free from defects and iii) the work will conform to the contract documents. A warranty serves as motivation to the contractor to make certain that the work is performed in a quality fashion, consistent with the requirements of the contract documents. It helps the contractor to self-police the work, because there is a desire not to be called back to repair or replace defective work. 3) Indemnity arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. The right to indemnity and the duty to indemnify ordinarily stem from a contractual agreement, which generally protects against liability, loss, or damage. Continued on page 21 Building Entrepreneur | 19
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