Is it Possible to Grow a Federal Contracting Business in Tumultuous Times?

By Gloria Larkin

The federal government marketplace is facing a dramatic shift driven both by the maturity of the market and a new administration.

Most government contracting businesses are started by individuals with an area of expertise (engineering, IT services, construction, public relations, accounting etc.), or a passion (serve the warfighter, make the world a better place, inform the public, save the environment etc.). Armed with some validation that there is a market for these skills and knowledge, perhaps by working for another government contractor or as a government employee, they strike out to establish or grow their own businesses.

The effort to start or grow a government contracting business of any kind is overwhelming in a steady marketplace. Legal structure/filings, accounting compliance, capital funding, facilities and hiring staff are the just the beginning. When a firm tackles the business of federal contracting there are the additional steps of registrations and socio-economic set-aside status requires even more paperwork and time.

The critical next step is the hunt for actual solid business opportunities. Which agencies are buying what the business sells? Who are those agencies currently buying from? Through which contract vehicles? At what price? How does a business distinguish itself? How does one identify and reach decision makers? Businesses that have won at least one federal contract have successfully answered most of these questions and defied the odds. In most cases, it was the founders who blazed this trail and won the initial contracts – and then performed the work to fulfill those contracts.

But today even well-established government contractors are challenged by uncertain budgets, changing agency missions and fluid priorities.

This is the time in the lifecycle of a government contracting business when the owners must make a decision. How can the business grow beyond the individual contributions and reach of the founders? How does one adapt to this changing marketplace and win more contracts? The next usual step is to hire additional business development capacity and expertise.

The traditional approach has been to hire a seasoned federal business development professional, which is now fraught with risk and expense especially if that individual is expected to step into the shoes of one of the founders or key business line managers.

That manager or founder may struggle with defining business development expectations clearly, delegating authority or exhibiting the patience to allow sales and business development staff to learn, grow, develop relationships and produce results.

The federal procurement marketplace is also changing. According to Government Executive, 43% of federal contracting officers will retire between 2014 and 2018. With those retirements go long term relationships that have benefitted incumbent contractors. This is bad news for the incumbents but good news for other contractors.

The Office of Management and Budget also now requires more outreach by federal agencies to the vendor community prior to the issuance of solicitations. These outreach activities include industry days, small business conferences, sources sought notices and Request for Information. Federal procurement has become very event driven.

Relationships are still very important and they are formed by participating in the events sponsored by the agencies. They are throwing a party (figuratively speaking) and expect well-informed vendors to show up. And, the combination of rapidly growing retirements of government personnel and the recent hiring freeze enacted by the new administration severely limits opportunities for federal contractors to have one on one time with decision makers.

For those companies responding to these market changes and positioning to grow, smart government contractors are creating highly disciplined business development “engines” that leverage adaptive industry best practices and the knowledge and skills of the owners and subject matter experts. They then bring in additional outside resources to expand capacity.

This business development engine consists of a structured approach to gathering market intelligence on agencies, contract vehicles, opportunities and competition, executing action items related to the analysis of that data, following rules for determining whether to bid, choosing smartly when and how to team with others, and following a disciplined marketing outreach program.

If designed properly, this business development engine consists of a blend of technologies, processes and people with varying levels of business, marketing and analytical skills. This innovative structure has proven to produce incredible financial results – and is scalable and repeatable – freeing the owners or managers to take on more strategic initiatives.

Gone are the days of the lone business development professional circling the beltway, sitting in lobbies and depending upon their friends for referrals. This has been replaced by discipline, process and results.

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