The State of Small Business Contracting
There has been a lot of rhetoric in the press lately regarding the state of small business contracting in the Federal Government contracting space. According to the White House, “It is essential that we provide our Nation’s small businesses with maximum practicable opportunity to participate in Federal Government contracting.” As part of this effort the SBA is going to hold 200 outreach events in the next 90 days:
http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_release_09-58.pdf
I’ll need to dust off my good suit since I’m going to be busy attending all of these events! Well actually, I doubt I’ll spend much time doing that. Why? Because as the recent article in Washington Technology points out, I’ve never seen anyone walk out of an outreach event with anything more than a business card. I think this article by Matthew Weigelt makes a number of good points:
http://washingtontechnology.com/Articles/2009/08/31/Small-Biz-Trends.aspx
Some of these points are excellent – network, find mentor companies, develop your value proposition, register in required databases, such as CCR. With a limited amount of resources, small businesses need to focus their business development efforts. The Washington Post carried a related story on how small businesses are disappointed with the Federal Governments efforts in this area:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/06/AR2009040604049.html?hpid%3Dtopnews&sub=AR
This is a variant of a theme I’ve always heard in this industry – “the Government doesn’t do enough for small businesses, fails to meet goals, etc.”. Having worked for, and with, small government contractors, I can empathize with their frustrations. Companies like Altron can’t afford to pay $25,000 or $50,000 in business development costs – we simply don’t have the resources. Large businesses become frustrated as well – often they view their small business subcontracting plans as just another compliance “tax” so they can continue to work with the Government.
How about a new approach?
My old boss used to say – “everybody pays attention to their own rice bowl”. His point – most people make decisions based on their own personal economic situation. How about a recent example from our friends on Capitol Hill? The Government wants people to drive more fuel efficient cars – energy independence, less green house gases – all admirable goals. They’ve been arguing with the auto manufacturers for years about mileage (CAFÉ) standards. This hasn’t really changed anything. Now they introduce the cash for clunkers program - if you trade in your gas guzzler we’ll give you a $4500 credit – this is so popular, the program quickly runs out of money. What’s my point? People (and companies) act in their own self interest.
Currently the Government sets small business goals for themselves and for their large contractors. They have a hard time meeting them and so do their large vendors. My experience over a decade at a large company – never saw a contract terminated, fined or an option not renewed because the company didn’t meet it’s small business goals. Many large companies do a great job with their small business partners, some don’t, but in the final analysis there really hasn’t been a penalty or reward either way.
I suggest the Government take their “cash for clunkers” approach to their contractor community. What about paying a 1 or 2% fee premium to large firms for exceeding SBA goals on their contracts? I think our large publicly traded contractors would jump at the chance to increase their margins. You would quickly have an aggressive small business program at most of the large business contractors!
Maybe then the SBA could cut back on their 200 outreach events.
Tuesday, September 8, 2009
Tuesday, April 7, 2009
How about the new DOD budget?
Secretary of Defense Robert M. Gates just laid out his proposed 2010 budget yesterday. Based on the synopsis in The Washington Post and The Wall Street Journal, I’m not too surprised. It’s a pretty brave step and takes on several cold-war era platforms. If you’re building planes, helicopters or ships it’s going to be a tough period for the next few years. I do agree with many of the “experts” here in town that with all the job losses in the economy this year – don’t take any bets – this budget may look a lot different when congress gets done with it!
One of the key parts of his proposed budget is a substantial increase in the government acquisition workforce. Over 50% of this recommended hiring over the next five years will be focused in this area. The Washington Post had a front page article on this today:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/06/AR2009040604049.html?hpid%3Dtopnews&sub=AR
If you are a service provider, what do you take away from all this?
The Government is making acquisition support an inherent Government function. For most service providers this is a positive development. I always prefer dealing with a sharp, knowledgeable professional – even if they don’t agree with me – than dealing with someone lacking the needed training or skills. My last DOD opportunity - announced in December, with nine amendments was subsequently cancelled so the Government could ultimately re-issue it. This kind of stopping and starting costs small businesses like Altron money – limited resources we could deploy on other opportunities. I’m looking forward to the Government’s investment in this area!
According to the headline in The Washington Post – “Contracting Boom Could Fizzle Out” – you might think the future for our industry is grim. I’ll have to politely disagree. If you’re a small business focused solely on providing procurement expertise – well – it’s time to re-think your strategic plan. Larger, well diversified service providers are going to continue to thrive and find opportunities in this market. Those companies that help the Government leverage technology, provide process improvement and enable Uncle Sam to do more for less are going to continue to thrive!
One of the key parts of his proposed budget is a substantial increase in the government acquisition workforce. Over 50% of this recommended hiring over the next five years will be focused in this area. The Washington Post had a front page article on this today:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/06/AR2009040604049.html?hpid%3Dtopnews&sub=AR
If you are a service provider, what do you take away from all this?
The Government is making acquisition support an inherent Government function. For most service providers this is a positive development. I always prefer dealing with a sharp, knowledgeable professional – even if they don’t agree with me – than dealing with someone lacking the needed training or skills. My last DOD opportunity - announced in December, with nine amendments was subsequently cancelled so the Government could ultimately re-issue it. This kind of stopping and starting costs small businesses like Altron money – limited resources we could deploy on other opportunities. I’m looking forward to the Government’s investment in this area!
According to the headline in The Washington Post – “Contracting Boom Could Fizzle Out” – you might think the future for our industry is grim. I’ll have to politely disagree. If you’re a small business focused solely on providing procurement expertise – well – it’s time to re-think your strategic plan. Larger, well diversified service providers are going to continue to thrive and find opportunities in this market. Those companies that help the Government leverage technology, provide process improvement and enable Uncle Sam to do more for less are going to continue to thrive!
Tuesday, March 17, 2009
What a difference a few months makes!
It’s been just over five months since I posted my last blog. What’s different? A few things – a new year, a new President and lots of bad economic news (1.8 million job losses in the last three months, the Dow Jones Industrials down approximately 45% since the end of September, major bank rescues and the auto industry on life support and another “Ponzi” scheme scandal). We certainly live in interesting times.
What does all this mean for the Government contract industry? Lots. However, I think a little optimism is in order.
Government spending: The federal government is going to spend nearly $1.5 trillion dollars between TARP and the economic stimulus package just signed – $1,500,000,000,000 – that’s a lot of zeros. Certainly the largest chunk of this spending is not going to be contracted out. OK – how about 10%? That’s $150 billion dollars! A quick look at the stimulus package “American Recovery and Reinvestment Act of 2009” provides a short roadmap - $19B for Health Information Technology, $7B for environmental cleanup, $0.9B for Government Technology Improvements, etc. In order to deploy these funds quickly, the Congress and the Administration are going to need the support of the government contracting industry.
It will take time to deploy all those federals funds and the effect of that spending will not produce an immediate up-tick in the economy. Stan Soloway of the Professional Services Council (PSC) was recently quoted in the Washington Post about the effect on contacting:
(http://www.washingtonpost.com/wp-dyn/content/article/2009/02/24/AR2009022403504.html)
Stan’s comments are on point concerning the need for a robust government procurement workforce and how critical that is for both Government and Industry.
A cautionary note:
Government contracting and outsourcing has never been popular, but the economy is putting more political pressure on our market. Just last week President Obama ordered a review of contracting practices:
(http://www.washingtonpost.com/wp-dyn/content/article/2009/03/04/AR2009030401690.html?sub=AR)
Clearly the environment for contractors has shifted. You need to ensure all your internal controls are operating and continue to train and educate your staff on the regulatory environment.
Keeping forging ahead:
I’m very optimistic – once the wheels in the procurement process get turning, there is a bright future for this market.
What does all this mean for the Government contract industry? Lots. However, I think a little optimism is in order.
Government spending: The federal government is going to spend nearly $1.5 trillion dollars between TARP and the economic stimulus package just signed – $1,500,000,000,000 – that’s a lot of zeros. Certainly the largest chunk of this spending is not going to be contracted out. OK – how about 10%? That’s $150 billion dollars! A quick look at the stimulus package “American Recovery and Reinvestment Act of 2009” provides a short roadmap - $19B for Health Information Technology, $7B for environmental cleanup, $0.9B for Government Technology Improvements, etc. In order to deploy these funds quickly, the Congress and the Administration are going to need the support of the government contracting industry.
It will take time to deploy all those federals funds and the effect of that spending will not produce an immediate up-tick in the economy. Stan Soloway of the Professional Services Council (PSC) was recently quoted in the Washington Post about the effect on contacting:
(http://www.washingtonpost.com/wp-dyn/content/article/2009/02/24/AR2009022403504.html)
Stan’s comments are on point concerning the need for a robust government procurement workforce and how critical that is for both Government and Industry.
A cautionary note:
Government contracting and outsourcing has never been popular, but the economy is putting more political pressure on our market. Just last week President Obama ordered a review of contracting practices:
(http://www.washingtonpost.com/wp-dyn/content/article/2009/03/04/AR2009030401690.html?sub=AR)
Clearly the environment for contractors has shifted. You need to ensure all your internal controls are operating and continue to train and educate your staff on the regulatory environment.
Keeping forging ahead:
I’m very optimistic – once the wheels in the procurement process get turning, there is a bright future for this market.
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