The largest contracts — worth more than $550 million total — went to 21 companies to develop “big bet” technologies. Those companies are Aerial Applications, Analytical Space, Anduril Industries, Applied Minds, Elroy Air, Enview, Edgybees, Essentium, Falkonry, ICON Technology, Orbital Insight, Orbital Sidekick, Pison, Privoro, Shift.org, Swarm Technologies, Tectus Corp., Virtualitics, Wickr, Wafer and one company that the Air Force has not disclosed.
“For all these awardees, you’re on a four-year, fixed-price contract that we believe, if successful, will disrupt part of our mission in a way that will give a huge advantage for our future airmen,” said Will Roper, the Air Force’s acquisition executive.
The value of the contracts awarded by AFWERX may seem small compared to the multibillion awards for major defense programs. However, these awards go a long way in helping technology firms overcome the “valley of death” between technology development and production, when a lot of companies are vulnerable to failure, said Chris Brose, head of strategy for Anduril Industries, which specializes in developing artificial intelligence technologies.
“For a company like ours or companies of that size, It’s quite significant. It allows us to really kind of do more of the good work that we’re doing, to scale and grow and work with new partners, and it makes a huge difference,” Brose said.
Brose declined to detail the precise nature of Anduril’s contract with the Air Force, but said that the general objective is to prove that an unmanned aerial system can deliver a mass of swarming drones capable of performing complex missions. While a human would still be “in the loop” overseeing the network, certain tasks — such as steering the drones, moving their sensors and processing gathered data — would be automated.”
The service has been experimenting with ‘pitch days’ across the country over the last year, such as the Space Pitch Days held in San Francisco in November when the service handed out $22.5 million to 30 companies over two days.
“PENTAGON: The Air Force will roll out the final stage in its commercial startup investment strategy during the March 13-20 South By Southwest music festival, granting one or more contracts worth at least $10 million to startups with game-changing technologies, service acquisition chief Will Roper says.
So, if the Air Force investment fund, called Air Force Ventures, puts in $20 million, the private capital match would be $40 million.
AFWERX, the Air Force’s innovation unit, has one of its hubs in Austin.
“This has been a year in the making now, trying to make our investment arm, the Air Force Ventures, act like an investor, even if it’s a government entity,” Roper explained. “We don’t invest like a private investor — we don’t own equity — we’re just putting companies on contract. But for early stage companies, that contract acts a lot like an investor.”
The goal is to help steer private resources toward new technologies that will benefit both US consumers and national security to stay ahead of China’s rapid tech growth, Roper told reporters here Friday.
The Air Force wants to “catalyze the commercial market by bringing our military market to bear,” he said. “We’re going to be part of the global tech ecosystem.”
Figuring out how to harness the commercial marketplace is critical, Roper explained, because DoD dollars make up a dwindling percentage of the capital investment in US research and development. This is despite DoD’s 2021 budget request for research, development, test and evaluation (RDT&E) of $106.6 billion being “the largest in its history,” according to Pentagon budget rollout materials. The Air Force’s share is set at $37.3 billion, $10.3 billion of which is slated for Space Force programs.
“We are 20 percent of the R&D is this country — that’s where the military is today,” Roper said. “So if we don’t start thinking of ourselves as part of a global ecosystem, looking to influence trends, investing in technologies that could be dual-use — well, 20 percent is not going to compete with China long-term, with a nationalized industrial base that can pick national winners.”
The process for interested startups to compete for funds has three steps, Roper explained, beginning with the Air Force “placing a thousand, $50K bets per year that are open.” That is, any company can put forward its ideas to the service in general instead of there being a certain program office in mind. “We’ll get you in the door,” Roper said, “we’ll provide the accelerator functions that connect you with a customer.
“Pitch days” are the second step, he said. Companies chosen to be groomed in the first round make a rapid-fire sales pitch to potential Air Force entities — such as Space and Missile Systems Center and Air Force Research Laboratory — that can provide funding, as well as to venture capitalists partnering with the Air Force.
As Breaking D broke in October, part of the new acquisition strategy is luring in private capital firms and individual investors to match Air Force funding in commercial startups as a way to to bridge the ‘valley of death’ and rapidly scale up capability.
Roper said he intends to make “maybe 300 of those awards per year,” with the research contracts ranging from $1 million to $3 million a piece and “where program dollars get matched by our investment dollars.”
The final piece of the strategy, Roper explained, is picking out the start-ups that can successfully field game-changing technologies.
“The thing that we’re working on now is the big bets, the 30 to 40 big ideas, disruptive ideas that can change our mission and hopefully change the world,” Roper said. “We’re looking for those types of companies.”
If the strategy is successful, Roper said, the chosen firms will thrive and become profitable dual-use firms focused primarily on the commercial market.
“The, we’re starting to build a different kind of industry base,” Roper enthused. “So, we’ve gotta get the big bets right. Then most importantly, if you succeed in one of the big bets, then we need to put you on contract on the other side, or else the whole thing is bunk.”
“Each SBIR Road Tour stop, hosted by a local organization, will provide attendees with an opportunity to hear directly from the participating federal agency program managers that administer over 5,500 new awards annually and to meet one-on-one with program decision makers.”
“Armed with new contracting authorities and a mandate to help the U.S. military stay head of peer competitors, the Pentagon’s Defense Innovation Unit is bringing new commercial partners into the fold and expanding its technological focus.“
“DIU was launched in 2015 by then-Secretary of Defense Ash Carter to bridge the gap between the military and the nation’s tech hubs. It is headquartered in Mountain View, California, in Silicon Valley, with additional outposts in Austin, Texas, Boston and the Pentagon.
“More and more of what the department needs going into the future is dual-use technology, which means it’s equally or more important in the commercial space as it is for the military. So we’ve got to leverage what’s going on with the tremendous innovation hubs that we have around the country and make sure those companies … are thinking about the Department of Defense,” DIU Director Michael Brown said during a panel at the Reagan National Defense Forum in Simi Valley, California.
The organization has three core mission sets: accelerate commercial technology to the warfighter; boost the military’s capability and capacity by taking on transformative projects that can be scaled across platforms and across the services; and grow the national security innovation base.
Its offices in Austin, Boston and Silicon Valley are focused primarily on commercial outreach, while the one in Washington, D.C., engages with military partners such as service acquisition executives.
“We start with the DoD customer with a DoD problem,” Mike Madsen, DIU’s director of strategic engagement, explained in an interview. “Then we put that out to the tech sector and get the imaginative minds in the tech sector to help solve our problems.”
Over the past year or so, DIU’s hand has been strengthened by a number of initiatives, he noted.
A crucial one was Undersecretary of Defense for Acquisition and Sustainment Ellen Lord’s decision to give the organization new contracting authorities, including the ability to directly enter into other transaction authority agreements that are intended to cut through bureaucratic red tape associated with the Pentagon’s traditional acquisition procedures.
“She delegated that authority so that we could award our own OTA contracts, which is a pretty big deal to continue moving fast,” Madsen said.
OTA mechanisms favor nontraditional suppliers, he noted, “whether it’s a couple of folks in a garage in Minnesota or whether it’s a Fortune 100 company in Silicon Valley that just have never done business before with the department.”
The Defense Innovation Unit has awarded about 150 contracts to 122 nontraditional vendors. Of those, 66 are first-time suppliers to the military, Madsen said.
In the past, high-tech companies in the commercial sector “evaluated the $740 billion defense market and said, ‘No thanks. I don’t want a slice of that. … It’s too complex, it’s too hard,’” he said. “What we’ve represented is a lowering of those barriers to entry, making it easier for those leading-edge technology companies to get their technology to the men and women in uniform.”
Madsen said DIU understands the commercial sector’s faster business cycles.
“We want to move at commercial speeds … and look like a commercial entity to those tech companies” that are wary of doing business with government agencies, he noted.
With other transaction authority agreements, DIU can transition from a prototype contract right into a production contract as long as the prototype contract was awarded under competitive circumstances.
The organization has stood up a defense engagement team and a commercial engagement team. The defense engagement team reaches out to the services, combatant commands and other agencies to learn about their needs.
“Then we put that problem [statement] out to the commercial sector and work with them for proposals and look to award a prototype contract as quickly as we can,” Madsen said. The goal is to award a contract within 60 to 90 days, and then move through the prototyping phase and field new capabilities within 24 months.
Once a successful prototype is developed, DIU’s defense engagement team looks for ways to scale it across the department. An example is a recent effort to use artificial intelligence for predictive maintenance.
An AI prototype developed by a company called C3.ai is capable of reducing unscheduled maintenance for the Air Force by about 30 percent, “which is pretty significant for our mission-capable rates for aircraft,” Madsen said.
“We took that successful prototype to the Army and said, ‘Hey, this works on aircraft, what do you think about trying to prototype on wheeled vehicles?’” Madsen explained.
“We worked a prototype for the Bradley fighting vehicle. Now we’re engaged with the Navy to apply the same concept to not only the aircraft in the Navy, but also shipbuilding.”
The commercial engagement team’s charter, meanwhile, is to pave the way for high-tech firms to enter the defense ecosystem and transition their products into a program of record.
It also reaches out to venture capitalists to gain greater visibility into the marketplace.
“They’re effectively the gateway to hundreds, if not thousands, of companies,” Tom Foldesi, DIU’s director of commercial engagement, told National Defense. “For any particular solicitation when we’re looking for specific technologies, they are … able to point us in the right direction.
“The VCs are always a really valuable source because oftentimes they have line of sight to companies that we might not even know about. They might be in stealth mode, they might not have announced their [funding] rounds. So we can gain a lot of insight into what might be going on in the market that might not be public.”
Being co-located in the tech hubs offers advantages. DIU also has its eye on other tech centers such as Seattle and Pittsburgh, Foldesi noted. The organization has received proposals from companies based in 44 states.
“We cast a very wide net across the country,” he said.
DIU is uniquely capable of reaching out to the commercial sector and venture capitalists on short notice, putting firms on contract and helping to scale solutions across the Defense Department, officials say.
“This is very important because most of the companies are [otherwise] pulled into a labyrinthine system within the Pentagon, and it’s really demotivating,” Foldesi said.
The often-cumbersome nature of the traditional defense acquisition system is one of the reasons why a lot of companies have opted not to do business with the U.S. military. But
DIU posts it solicitations directly on its website, with the aim of moving fast on all of its projects.
“There’s money on the table,” Foldesi said. “Someone will be awarded a contract within a few short weeks or months. And then there’s the opportunity to transition that prototype contract to a program of record.”
Over the past year, DIU has improved its decision-making process for taking on new projects, Madsen noted.
“We’ve really focused on building out that concept of transition much earlier in the process so we know what that transition from prototype to production to fielding that technology to the men and women in uniform really looks like before we’re even down the prototyping path,” he said.
The Defense Innovation Unit also helps companies navigate security and compliance issues.
“Part of the benefit of working with DIU is you have a trusted advisor and partner being able to help you manage through those … potential challenges, which can be quite significant for a company that isn’t used to doing business with the DoD,” Foldesi said.
Meanwhile, the U.S. military is trying to stay ahead of advanced adversaries such as China and Russia.
“In this great era of great competition, we think the tech race is the most important one,” Madsen said.
DIU’s top five technology focus areas are artificial intelligence/machine learning, autonomy, human systems, space and cybersecurity.
“Those are the areas that we see undergoing the greatest rate of change in the commercial sector. We think they also best represent the defense mission set,” Madsen said. “But we’re not just sitting back static on those.”
DIU is now broadening its aperture and eyeing other capabilities.
Foldesi and his team are talking to venture capitalists to get a better sense of the business sectors with emerging technology that might be of interest to the military.
“We’re looking at things like power and energy right now,” including lighter and longer-lasting batteries with faster recharge, Madsen said. Advanced materials, additive manufacturing, communications technology such as 5G, and virtual reality and augmented reality capabilities are other areas of interest.
Another new initiative being pursued by DIU is known as National Security Innovation Capital, or NSIC.
About 92 percent of U.S. venture capital funding currently goes toward software, resulting in an underinvestment in dual-use hardware. As a result, early-stage hardware development companies are in such need of capital that they might turn to foreign investors that will exert influence over their intellectual property, Madsen warned.
“The concern … from our perspective is once that happens, now that technology is probably unavailable to the department,” he said.
A key objective of NSIC is to pump money into critical hardware ventures so that they don’t have to look overseas for funding and endanger the supply chain.
DIU is also overseeing the National Security Innovation Network, or NSIN, which includes universities that aid the Defense Department. The network is growing and developing relationships with nontraditional partners in academia that are not typically involved in generating technology for the military, Madsen noted.
Pentagon efforts to engage with the commercial tech sector have not always gone smoothly. For example, in 2018 Google pulled out of Project Maven — an Air Force machine learning initiative focused on sifting through drone imagery — after employees protested the company’s involvement in aiding warfighting.
However, that case is not representative of the commercial tech sector writ large, DIU officials say.
“In fact, we see the opposite,” Foldesi said.
Madsen noted that a recent solicitation for AI technology generated responses from 50 companies. “To me, that indicates that folks definitely want to work with us.”
Foldesi said overcoming wariness of the Pentagon procurement process is the greater challenge.
“This is why our mission is so critical,” he said. “If we’re successfully able to demystify and de-risk doing business with the Pentagon, people will have perceived us having opened up arguably the single biggest [potential] customer” for some of these new technologies.
As DIU reduces some of the barriers to entry into the defense market, venture capitalists are taking notice, he said.
“You’re seeing a lot more of the top VC firms in the world start to put a little bit more money into defense[-related] startups,” he said. “This is just the start of a trend that we expect to accelerate as it becomes smoother and easier to field your technology within the Pentagon.”
The Defense Innovation Unit’s resources are growing. Its budget increased by about 60 percent between fiscal years 2019 and 2020, Madsen noted. Brown said the organization has started 60 projects and completed 30, delivering about a dozen new capabilities to the military using cutting edge commercial technology. Total contract values exceed $500 million so far.
Companies doing business through DIU have, in turn, been able to raise more venture capital, he noted.
“For every dollar we provide in a prototype contract, on average, $10 of equity capital is raised,” he said. “We just need more volume in this to get the flywheel effect going.”
“This discussion addresses meeting the unique aspects of federal government contracting, yielding a successful plan and more importantly a successful execution of that plan in the federal contracting venue.
When visiting the SBA website on business planning, there are major topics in the business planning process which, when addressed in a plan, will insure the success of an enterprise and assist in determining and supporting the amount of funding needed. SBA Write a Business Plan“
“Marketing, advertising, competitor analysis and financing must be addressed. Free articles on strategic planning and developing a marketing plan are at the “References” Box Net Cube at the top right margin of this site: https://www.smalltofeds.com They address evolving an operations vision for an enterprise showing its potential to present to a banker or to an investor.
It may assist in visualizing business growth to look at an example of how someone else addressed a given topic.
Product entrepreneurs all face the same challenges. Those who succeed recognize they need to visualize themselves in the product development business, structuring an enterprise, generating a business plan, protecting intellectual property and then seeking industry partners and investors to bring the product to market.
In the process, copyrights, patents and royalty issues may come into play and development and distribution agreements are formed. Pricing is finalized based on cost and expense projections and competitive factors unique to the company as negotiation results are achieved with industry teaming partners, developers, manufacturers and distributors.
Service contracting to the federal government is a natural venue for small business. It does not require a product with a niche market or capital intensive manufacturing facilities. Service contracting does require skilled management and labor resources capable of performing a scope of work for which the government has identified a need and for which outsourcing to an industry contractor has been selected as the means to fulfill that need. The venue demands strong human resources management, industry teaming and an enhanced business system to price, account and bill on a job cost basis under government service contracts.
Utilize the below link to register your company. It provides excellent guidance and background, as well as access to the PDF file on NAICS Codes which are critical for you to choose before you begin the registration process. Give these some careful thought when selecting them. If there is a chance your firm may wish to be involved in a field, put the code in your registration. No one will question your qualifications at this point. That comes later during proposals.
When you have completed your registration at the link below you will received a Government CAGE Code, uniquely identifying your firm and its location as a government contractor.
As a small business becomes known in the federal government contracting community, successful marketing of sole source or group-designated business becomes easier, but it is always a challenge due to the need for taking early action in windows of opportunity.
Find those windows and communicate capabilities to the decision makers and industry team members who can help you.
If you are eligible for set aside designations make small business set asides or sole source procurements key elements in your marketing plan.
Waiting for a contract award to achieve a government contracting business process is not advisable. A win may not happen at all without addressing the structure and process requirements in your proposal to convince the customer his business environment is understood.
If one is not prepared in advance and one is fortunate enough to win, then in a very short time frame one will have to evolve a business system to perform on the contract and submit a billing
This article will discuss a framework for a small enterprise to develop a business system in service contracting, which is the most frequent venue utilized to enter the government market.
Government contract proposal preparation is time consuming and can be costly. Meeting the agency Request for Proposal (RFP) requirements with a responsive proposal can be well worth the effort if a winning strategy can be formulated. When considering submitting a proposal to a given government solicitation, conduct a bid/no bid exercise.
By going through that process a company begins formulating your win strategy or it will discover that it should not bid this job for lack of such a strategy. The elements of the process are discussed below in the form of questions to ask against topics for key consideration
This article offers guidance as a template to apply marketing operations for accommodating federal government contract proposal preparation. Proposals are special, sometimes exhausting projects, but a necessary part of doing business with government agencies. Like many other aspects of business, the more proposals that are prepared, the more that is learned and the more one can borrow from past practice for the next one.
Strategic thinking must be applied to structuring a government service contract project management capability in your company. It must involve long term planning and designing a business system as well as establishing rates and factors to bid new work and control it while interfacing with the customer.
When one plans in detail to define the product or the service one reduces performance risk.
The project management challenge is not to launch significant and costly resources before the specification for the product is sufficiently defined, obviating the need for costly revisions or abandonment, yet knowing when the product definition and plan are suitable for release.
Consider the advice herein when developing and maintaining your business plan. Overlay approaches unique to the company against the guidance offered and place it in the standard format for business planning. It will yield a road map for success and can be further evolved for growth.
For additional details on these topics and other important information in developing and executing a government contacting plan, download the free books and supplements available in PDF format at the “Box” in the top right margin of the below site.”
“Now is the time to think through your marketing strategy and the various venues for contracting with the federal government. This article will discuss these venues and the opportunities they offer your small business.“
You are embarking on the utilization of SAM Contract Opportunities, the gateway for federal government agencies advertising prospective contracts on the Web.
II. WHAT TYPE OF SMALL BUSINESS ARE YOU?
A. Commercial Contracting Under FAR Part 12
Are you planning to market an existing commercial product which has been on the market, such as software, hardware, a commodity, a report, a conference, a survey or a study, sell it to meet a government specification or statement of work and bill for the end product when delivered?
If the answer to this question is “Yes”, you may be able to do business under Federal Acquisition Regulation (FAR) Part 12, “Commercial Contracting”, which is a simplified and fast form of selling to the federal government.
The vast majority of purchases by the federal government in this category are Firm Fixed Price (FFP) with a product warranty of some type. You may be able to sell under FAR Part 12 if your product meets the definition of commercial items specified by the government.
B. Non-Commercial Contracting
Are you planning to market your services at an hourly rate, sell them by labor categories with professional job descriptions to perform the government statement of work and bill by the hour for labor and at cost for material and travel?
Or is your product or service a development effort or not readily available to customers in the commercial marketplace. If you fall into this category for either reason it is unlikely you will be contracting under FAR Part 12 and you will be pursuing long term government contracts.
If the above apply, much of the remainder of the Federal Acquisition Regulation (FAR) will apply to you, together with the various contract types other than FFP which are used for efforts where the contractor and the government may share the business risk in development, implementation or production of a new product, system or service.
C. Commercial and Non-Commercial Contracting
You may decide to market under both (A) and (B) above. Some small businesses sell their product commercially, but contract for product implementation and support on a service contract basis.
If you are selling under (A) and (B) or just (B) above you should examine this web site further to obtain sufficient detail to develop your business system in estimating, proposing, accounting and billing the government for contracts not qualifying under FAR Part 12.
III. YOUR CUSTOMER
Although all requirements in the federal government market emanate from the US Agencies there are several ways for meeting these requirements with a business arrangement that suits your small business.
A. U.S. Government Agency As a Customer
There are over many agencies or “Departments” in the Federal Government. Each of these agencies has a statutory obligation to contract from small business for 23% of everything it buys. Contracting officers must file reports annually demonstrating they have fulfilled this requirement. Not fulfilling the requirement can put the agency annual funding in jeopardy. You have a motivated customer in federal government contracting officers and buyers.
As a prime contractor to one of these agencies your small business proposes, negotiates and contracts directly with a federal government contracting officer. You may or may not have subcontractors or suppliers.
A subcontractor is a teaming partner who agrees to accept a portion of the effort under your prime contract and abide by the prime contract terms and conditions flowed down to him from you. On competitive procurements the business arrangement is usually mutually exclusive on the part of the subcontractor and your company.
A supplier is a purchased finished vendor or off the shelf retailer who sells you items or components necessary to produce your product but does not accept the flow-down provisions of your prime contract other than the most general terms and conditions such as US Public Law , EEO, Tax Provisions, Warranty and the like. Supplier relationships are not usually mutually exclusive arrangements.
You may be able to fulfill the entire prime contract scope of work or meet the product specification from within your company. However, major government procurements are increasingly geared to teaming arrangements involving a prime and several subcontractors. As the prime on such a procurement you normally have the lead share of the work scope, you have a product critical to the program, you know the customer the best or a combination of these factors. Your subcontractor team members are usually not your direct competitors but are involved in lines of work that complement your business and enable the team to fulfill a scope that is larger than any single member could undertake alone Your direct competition is most likely forming similar teaming arrangements in an attempt to win the larger jobs which can span a number of years in duration and mean good, solid cash flow for all participants.
A General Services Administration (GSA) Schedule is a pre-qualifying way to obtain business directly from all federal government agencies. The GSA performs the service of negotiating with you for multi-year pricing of labor, products and equipment, together with pre-established terms and conditions. Your schedule and terms are posted to the GSA Web Site and all federal agency buyers can expeditiously buy from your schedule. A GSA Schedule is normally set up for 5 years. Achieving and Utilizing a GSA Schedule
The GSA also sponsors and manages major Indefinate Delivery/Indefinate Quantity (IDIQ) procurements such as “Alliant” and “Alliant Small Business” for Information Technology. These contract vehicles pre-position large and small contractors and teams of contractors to accept competitive delivery orders under established terms and conditions and standardized solution s for technological areas in high demand across the federal government. An IDIQ procurement can span a period as long as 10 years.
B. A Government Prime Contractor As A Customer
Government Prime contractors who are large businesses (roughly defined by the SBA and the banking community as having over 500 employees and annual sales in excess of $20M) and who hold federal government contracts have the same requirement as government agencies to buy at least 23% of the supplies and services in support of those contracts from small business.
Large business, under federal procurement law, must prepare and submit annual “Small Business Contracting Plans” for approval by the local Defense Contract Management Area Office (DCMAO) nearest their headquarters. These plans must include auditable statistics regarding the previous 12 month period in terms of contracting to small businesses and the goals forecast for the next year. The federal government can legally terminate a contract in a large business for not meeting small business contracting goals. Approved small business plans must accompany large business contract proposals submitted to federal government agencies. You have a motivated customer in large business subcontract managers, administrators and buyers. A small business who becomes a prime contractor does not have to meet the annual small business contracting plan requirement until it becomes a large business.
In selling to a prime contractor you propose, negotiate and subcontract with a company who holds a contract with a US government agency and in turn flows down its provisions to you. Or you sell under purchase orders on a commercial basis (FAR Part 12) to another company who holds a federal government contract.
C. Selling Via a Joint Venture
There are occasions when two companies wish to combine their respective products or resources and form a separate entity to undertake a contract, usually a prime contract with the federal government. The marketing considerations for such a venture involve impressing the client with the resources being dedicated to the program or addressing government concerns about broadening the technology and assuring redundant capability in the industrial community. A joint venture consists of human and other resources from the participating companies. However, it stands alone as a legal entity. Joint venture agreements are difficult to craft. Protecting proprietary information, together with intellectual property is especially demanding. Dividing the contractual effort and ultimately integrating it into a final product or service is also a challenge. Complicating the scenario is the fact that the US Government reserves the right to approve joint venture agreements before a contract can be issued to the entity. One company usually assumes the lead role in the joint venture. Some joint ventures hire a joint venture administrator who is the only legal entity authorized to sign a binding document on behalf of the two companies once it has been approved by each firm through a joint venture board, with equal representation by both organizations. Administration, accounting and billing at the joint venture level is a third tier of administrative cost which must be born by both companies.
Your customer in the federal market is either the government itself or a prime contractor. You will sell as a prime contractor, as a commercial supplier or as a subcontractor and on occasion you may have the need to establish a joint venture with another firm.
IV. MARKETING AVENUES
A. Small Business Certifications
Your small business designation at your SAM registration places you in the small business set-aside market for 23% of the total goods and services the federal government buys. Within small business, there are additional self-certifications and SBA certifications to which you can apply if you qualify.small business designations
Self-certification occurs when you respond to government requests for proposals, cite you registration number and state in your proposal certifications and representations that you are a Small Business and whether or not you have set-aside designations.
Procurement contracting officers and prime contractors are responsible for verifying self-certifications. Owners claiming designations must have a major equity share in the business and must be involved in running the business operations.
The SBA certifies Small, Disadvantaged Businesses under their “8(a) Program”. The application for this certification is available at the SBA Web Site for businesses who qualify by virtue of minority ownership and minority involvement in running the business operations. The SBA reviews, approves and grants 8(a) Certifications to small minority-owned businesses. Please see the following link:
Federal agencies and prime contractors are required to set goals and contract to achieve annual objectives for each of the above certifications within the overall 23% small business contracting mandate required by statute. Procurements are regularly “set-aside” for these designations to achieve government and prime contractor annual objectives. Procurements are also set-aside for small business in general, which includes companies who may not qualify for the additional small business certifications discussed above.
B. Capability Statement
With your small business SAM registration and additional certifications, you are ready to develop your capability statement. This document will be a promotional brochure which on paper and through the electronic media advertises who you are, what your do and why the government or prime contractors should buy from you. Major elements of your capability statement in addition to your small business designation and certifications are as follows:
(1) Company overview
(2) Supplies and services description couched utilizing your marketing ideas and strategy.
(3) Past performance of your enterprise or your personal background and qualifications (experience, education, etc.)
(4) Facilities or capabilities overview (How you perform your service couched in a manner that will appeal to your target market)
(5) Explanation of the positive results the client should expect.
(6) Points of contact and ways to contact you for meetings, placing an order and contracting your services.
Your capability statement can be distributed on paper to your target market as a brochure, emailed as an attachment and linked into related industry web sites or partner web sites to get the word out about your product or service. The capability statement targets contracting officers and prime contractor buyers who are seeking to fulfill their small business buying goals. It is a way to get you in the door and speak to or correspond with the management and technical personnel who are the decision makers in sourcing small business buys.
C. Self-Marketing for SBA 8(a) Small Disadvantaged Business (SDB)’s and Historically Under-Utilized Business (HUB) Zone Contractors
If you qualify for a SDB Certification or can attest that you are located in a HUB Zone, these items can be valuable marketing tools. Presenting your capability statement to a prospective federal customer and meeting the management, technical and procurement decision makers puts you in a position to self market projects. All federal agencies and large business contracting to the federal government have to meet SDB and HUB Zone annual buying objectives. They have processes for competitive procurements. The processes are generally lengthy to comply with regulations governing solicitation on the open market, request for proposals, source selection, negotiation and award.
Under the 8(a) SDB Program and the HUB Zone Program if you can assist a federal agency or large business in identifying a product or service they need and that you are a qualified source to fill that need then the your customer can buy it directly from you and bypass the competitive process entirely. The key to achieving this type of targeted marketing is to contact and/or visit your customer regularly and get in front of the solicitation process. Once a project has gone to the “Sources Sought” or “Solicitation” stage you can still convince the customer to set it aside for 8(a) or HUB Zone firms, but you will be competing with other SDB’s or HUB Zone contractors in your NAIC’s Code for the business. The “Early Bird Gets the Worm”, adage is useful for SDB and HUB Zone organizations. Some buying agencies even permit an 8(a) SDB or HUB Zone Contractor to assist in writing the product or performance specification for a project to expedite the process. Federal agencies and large businesses are motivated to use the non-compete, set-aside features of the 8(a) SDB and HUB Zone Programs. Doing so permits them to meet their small business procurement goals and enables a swift buying action of a product or service for which they may have a critical need.
D. GSA Schedules and Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts
The General Services Administration (GSA) pre-qualifies contractors with a terms and conditions package and negotiated rates for products or services. Your GSA schedule is then posted to the web at:
This site is searchable by all government agencies who want to buy products and services. A GSA schedule allows you to offer a pre-existing contract vehicle with established pricing to any federal government agency or prime contractor. This shortens the procurement process considerably. In some procurements, a GSA Schedule is necessary to qualify for bidding certain jobs. You can read more about applying for a GSA Schedule by going to the General Services Administration Web Site at: GSA Web Site
Under Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts, terms and conditions and labor hour pricing are agreed upon in advance with an agency for a period of time (usually a multi-year arrangement). Many large government agencies contract utilizing IDIQ contract vehicles and often make multiple awards to several companies who then compete for work on a delivery order basis thereafter.
The GSA also manages large scale IDIQ procurements in high technology areas such as Information Technology (IT). Individual agencies then compete and procure IT products and services against the standard with established terms and conditions and known pricing. Once qualified, winning in this type of environment is simplified to submitting the best technical solution to a given delivery order with the lowest man-hours or product pricing. It is not uncommon for competitors to offer discounts during the competition.
Under both GSA Schedules and IDIQ Contracts individual delivery orders are negotiated separately regarding the labor hours, material and travel cost necessary to complete a discrete scope of work.
Because the federal government buys on such a large scale and in many acquisitions chooses to package related technologies or services, it is a necessary part of your marketing plan to consider teaming with other companies. As discussed in paragraphs II. and III., above, large businesses who are in the same line of work as you are have a requirement to subcontract to small businesses under federal government contracts. In addition, large and small companies who are in related or synergistic businesses to yours actively seek partners in the federal government market to permit access to larger packaged procurements.
Attend trade conferences, join trade organizations, get into technical blogs on the web. All large businesses contracting with the government have a small business liaison officer which you can locate at the company web site. Present your capability statement electronically or preferably in person to local large businesses engaged in federal government contracts who may need your services.
Many large businesses are willing to team as a subcontractor to a small business to get access to the small business set-aside market. A large business cannot receive an amount in excess of 50% of the dollar award of a small business set-aside, but many large businesses are willing to subcontract to multiple small businesses on federal government contracts to broaden their business base.
For SDB companies, the “Mentor – Protege’ Program is available. This is a federally sponsored program whereby a large business sponsors a smaller business through active teaming and mentoring. Your can learn more about this program at:
The best way to approach a large business or another synergistic small business is to have a program target as a discussion vehicle. If you find a project for which you need a partner or partners, carefully research the firms you are considering, check their D&B’s, see if they have entered their company in the “Interested Parties” frame of the solicitation at FEDBIZOPS.
When teaming with another company, most arrangements become mutually exclusive if you are subcontracting to one another and not just supplying off the shelf products. As the business relationship evolves and you begin sharing information a two way Non-Disclosure Agreement (NDA) is usually necessary to protect proprietary information.
As the business relationship matures and the parties agree to become exclusive, a teaming agreement is also necessary. At this point you have agreed upon who will be the eventual prime contractor and who will be the subcontractor. The areas regarding work share and proposal preparation are particularly critical in terms of thorough definition to avoid future misunderstandings among the parties. If and when the prime contract is awarded, the teaming agreement is replaced by a subcontract from the prime party to the subcontracting team member.
F. Small Business Innovative Research Program
Other federally sponsored programs are the Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) Programs for high technology small business. These are competitive programs awarding small business fundng in critical high technology areas. Your can learn more about the SBIR/STTR Programs by going to:
This article has offered a template of avenues for small business federal government contract marketing. You should apply the template to your business plan and explore which avenues suit your enterprise. The federal government contract customer is motivated to buy from you. Your marketing task is to target and find your customer considering the supplies and services you sell. The federal government offers competitive advantages to various types of small business, depending on ownership and size. Federal government contracts offer small purchases and long term contractual arrangements from firm fixed price purchases to cost type and time and material contracts. The opportunities are there for small business entrepreneurs’ to pursue.”
“A small business entering the field does not have a government contract past performance record to include in proposals to federal agencies. At the onset, the only qualifications that can be referenced are commercial successes and the individual expertise and qualifications of the owner (s), employees and management. Past Performance Challenge
Here are seven small business management techniques to assist in achieving that first government contract:
1. Contingent Hire Agreements — Recruit prospective employees and associates who have previously worked in businesses that have contracted with the government. Such individuals bring expertise and qualifications with them and lend credibility to your enterprise.
A contingent hire agreement is one way to approach an experienced employee with the prospect of joining your firm at a later time when the business base is there to permit professional advancement. Under such an agreement the prospective employee agrees to contribute time and effort on a proposal for a new contract and is assured on paper by your company of a position on the project when it is awarded to your firm.
Such arrangements are generally recognized by the government as a credible way for new or start-up businesses to grow and agencies will accept resumes of experienced professionals in proposals from small business contractors with signed contingent hire agreements even though the personnel may not yet be on the company payroll.
Prospective employees of this type are often available from the retired or downsized ranks of prime contractors. Be aware that government procurement integrity regulations apply. Individuals should not be considered who have a potential conflict of interest in the project you are bidding due to a former association with the buying agency in a source selection authority role as specified in FAR Section 3.104.
You can download a recommended draft shell for a contingent hire agreement from the right margin of this site at the BOX “References” cube or at the following link: Contingent Hire Agreement
2. Seek government solicitations for taking over incumbent work forces. In some cases the government designates base operations contracts, system support contracts and other service contracts at military installations or federal agency locations as small business set-asides. In certain of these contracts the services may have been performed until now by a large corporation which is no longer eligible to compete due to the small business designation of the current procurement. The employees of this large company become available for recruitment since they will lose their jobs at the location if they do not join the winning company. These individuals have built-in technical expertise on the project and government contracting backgrounds. Acquiring an Incumbent Work Force
3. Build government contract business system infrastructure such as estimating, pricing, proposal preparation, long-range planning and job cost accounting processes. These processes are particularly important if you do not qualify to sell under FAR Part 12, “Commercial Contracting” and you are in the services business. Having these key elements in place enables your company to bid large scale jobs consistently and to forecast, estimate and account for new government business. They also permit the company to pass site surveys and audits by DCAA and DCMAO in connection with proposals and contract awards. Having key infrastructure in place creates a favorable impression to prime contractors and other prospective teaming partners. Framework for Government Contract Business System
4. Team with large business contractors who have experience in the government contracting field. As part of such teaming arrangements they may be willing to trade-off their expertise and assistance for your particular technical skills and your small business participation as a subcontractor on new contracts. Remember large government contracting businesses are required to submit and perform to annual plans or buying from small business to the government. Failure to do so can jeopardize their current government contracts or place in danger the award of a project where a small business plan is required.
You have motivated large business prospective partners available to you in the government contracting community. Protect yourself with proprietary data agreements and insure that your company’s work scope for a given project is well defined in a thorough written teaming agreement. Large businesses will respect you for your professionalism when you demand a formal business approach. Teaming in Government Contracting
5. Submit and negotiate a General Services Administration (GSA) Schedule. Pre-establishing pricing and terms and conditions with the GSA lends credibility to your enterprise. Schedule periods can last from 5–10 years and simplify buying for your prospective government customers They can have confidence that the GSA has reviewed and determined that your rates are reasonable and they can be assured that the terms and conditions of your schedule have met the approval of the GSA. All they need to do is place a funded delivery order request for the supplies or services with the GSA against your schedule, negotiate the technical statement of work and delivery requirements with you and the deal is done. You can read more about pursing a GSA schedule at: Achieving a GSA Schedule
6. Pursue contracts which are set-aside for small business enterprises. If you are a woman-owned, minority-owned, veteran-owned or disabled veteran-owned business, seek government business solicitations which have been set aside with these designations. It is more likely that you will be competing against enterprises at that same developmental stage as your company by taking this approach.
If you are a small business with no other set-aside designations, seek teaming arrangements as a subcontractor with minority-owned, veteran-owned or women-owned businesses. 51% of a project (work scope, dollars and hours) must go to such designated businesses under such arrangements, but your part of the program is still significant and earns past performance credit. Your team members will not usually be your direct competitors but will be involved in lines of work that usually complement your business and enable the team to fulfill a scope that is larger than any single member could undertake alone. Teaming arrangements can result in winning larger jobs that can span a number of years in duration and mean good, solid cash flow for all participants.
7. Self-market to federal agencies with your capabilities statement and ideas for government programs. If you are a Minority-owned 8(a) or a Hub Zone-located small business, a government agency can sole source a procurement to you without competition under the Federal Acquisition Regulation (FAR). Even if you are not an 8(a) or Hub Zone firm, self-marketing has tremendous potential. There are over 50 federal government agencies with facilities, bases, locations and offices housing contracting officers and buyers all over the United States. Find the nearest locations to you via the agency search filters at FEDBIZOPPS and send them a capabilities statement with a request for a meeting with their small business liaison officer. Your Capability Statemenr
Federal agencies are required by statute to meet with you. Once you are there find out the names and contact information of their technical management authorities who define requirements for acquisitions. Determine what the agency needs through research with the technical decision makers and on the web. Most agencies forecast their long range plans at sites available to the public. Define a creative project in terms of meeting your client’s needs and offer it to the agency points of contact as a prospective set-aside contract.
If the agency posts your self-marketed project for competition, you will still be in the driver’s seat during the proposal stage, having developed the concept and positioned yourself well ahead of your prospective competitors in terms of a solution with your customer. You may well have convinced the agency to set the program aside for a small business category in which you qualify Small Business :Set-aside :Designations . That leg up cannot be achieved after a solicitation has been posted to :FEDBIZOPPS.
Entering government contracting as a small businesses is indeed a challenging time, but there are many opportunities awaiting you. Capitalize on those opportunities and win your first federal government contract.”
We tend to think of innovation as a formal and complicated process, but it doesn’t have to be. Innovation is just a fancy word for improvement and invention. When you come up with better packaging, find a supplier who will give you a better rate, or try out a new marketing idea, you are involved in innovation.
Build Innovation Into Your Business Routines
Set aside an hour each week to think and exercise your creativity.
Build innovation into your business planning by setting goals that focus on improving products and processes. For example, one of your business goals might be to find and try out a new way to communicate with your customers.
Create an innovation action plan to implement your innovation goals.
Actively Solicit Suggestions for Improvement of Your Small Business’s Processes and Products
Use both formal and informal methods to get customers to make suggestions for innovation, such as questionnaires, surveys, and casual one-on-one conversations.
Talk to your suppliers and see what suggestions for improvement they might have.
Involve Staff in the Innovation Process
Make problem-solving a part of every staff meeting. For each meeting, for instance, you might set a question for discussion on a specific product or process that asks, “How can we improve…?” Publicize the topic of discussion a week ahead of time so people have time to think about it.
Have a suggestion box.
Reward staff for suggestions that are followed through on.
Talk to staff impromptu. Get out of your office if you have one and make personal visits to chat about how things are going.
Provide creativity/innovation workshops for staff.
Invest in Innovation
Invest in technology that improves your business operations and make your company more competitive. Information and communications technology are particularly worthwhile.
Invest in machinery and equipment that will allow you to make productivity improvements.
Invest in developing new products and services.
Cultivate an Innovation Mindset
Continue to educate yourself about innovation by attending workshops, webinars, conferences, reading blogs and articles, etc.
Stay on top of developments, technological and otherwise, in your industry. If you’re not a member, join at least one professional or industry organization and participate in its meetings and events.
Investigate SR&ED Possibilities for Your Business
The Canadian government strongly supports SR&ED (Scientific Research and Experimental Development) and through the SR&ED tax credit program Canadian companies can get reimbursed for up to 41.5% of their expenses for qualifying projects. Ordinary small businesses can participate in this program, even sole proprietorships.
The Key to Innovation Success
It’s not enough to say that innovation is a priority; you have to actually work at it.
Jim Hogan, President, and co-founder of VMAC, which developed a rotary screw compressor technology that revolutionized the mobile compressor industry, puts it this way; “I’ve developed my own philosophy about innovation. It may sound corny, but you have to think you’re smart and try things. If you don’t, your competitors eventually will. The prize goes to the people with the guts to try” (The Innovation Challenge, Business Development Bank of Canada).”
“The Navy’s small business numbers are trending upward, and it wants to keep it that way to increase the number of new ideas coming into the service. To do that it’s shortening its small business innovative research process, and is attempting to get more of those technologies into production. “
“We’re really pushing hard on increasing the agility of our small business innovation research program (SBIR),” James Geurts, assistant Navy secretary for research, development and acquisition, told reporters Tuesday in National Harbor, Md. “We’ve reduced the requirement in terms of proposal length by 75% and we are looking at reducing the timeline to get to actual contract award by that amount.”
Geurts said to get those reductions the Navy looked at internal processes. The idea falls under the Navy’s broader NavalX initiative to make the acquisition process more agile.
“Many of our barriers are self-inflicted and culturally reinforced,” he said. “You’ve heard me talk about scraping the barnacles and really challenging ourselves to ensure any process time we have is adding value.”
The Navy’s work with SBIRs doesn’t stop at the initial contract though. SBIRs are grants for research and development, not for production, and the Navy wants results.
The service can award SBIRs, but they need a place to go to mature into an actual product sailors can use with an initial production contract. Geurts said the Navy is spending a lot of time identifying a need for a SBIR, and figuring out how to rapidly transfer a successful SBIR into a fielded program.
Obviously, not all SBIRs will make it big and some will die in the valley between research and development and actual production.
The Navy is thinking about what success means in terms of taking risk, while not wasting taxpayer funds on too many technologies that will never develop.
“Success to me looks like we are as efficient as we can be in generating ideas and evaluating ideas,” Geurts said. “It looks like getting our iteration speed up and our iteration costs down. I think we fail when we have cost imposing steps in the process that don’t add value.”
Geurts said it’s the Navy’s responsibility to sort out the parts of the process that protect the taxpayer and sailor and the parts that are duplicative and burdensome.
Geurts said failures in SBIR aren’t total failures, though.
“While the SBIR itself may or may not go forward, that doesn’t mean it didn’t add value,” he said. “It may have made a stink about a requirement in a different way. It may have challenged our way of thinking about an operational problem. SBIRs can be successful in a lot of ways, it can get a new startup familiar with how to work with the Defense Department.”
The Navy is trying to bring in more small business to shake up the status quo and bring in more ideas to the service. The Navy contends that in near-peer competition, the service will need novel technologies that give the United States the edge over China and Russia.
In 2019, the Navy beat its big goals for small business.
“Our small business rate was about 18.3% and that represents about $16 billion,” Geurts said. The Navy as a whole awarded $117 billion in contract obligations in 2019. “That’s above the goal. We had a goal of 14%. I think that’s important because we get some great innovation from our small business providers.”
“The service is looking for companies that can fill technology gaps by working alongside the Catalyst Space Accelerator program, which is a public-private partnership. KiMar Gartman, director of the accelerator, said the research lab is interested in systems such as space-based sensors that can discriminate between different objects.
This [the program] helps companies determine if their technologies would be able to meet the needs of potential customers, she noted. The program will culminate in a demonstration day for vendors to show their products to investors, such as the other military services.
“It just helps them to get an idea of whether or not their technology is relevant to the problem statement — those commercially and in the DoD,” she said. “We try to bring in the Army, the Navy [and] other Air Force units that would have interest in the technology.”
The goal is to have eight companies participate in the upcoming accelerator, which is scheduled for September, Gartman said. The next demonstration day is slated for November. The events are held in Colorado Springs, Colorado, which is “one of the hubs of space,” Gartman said.
“We’re able to bring in all of these potential customers from the [military] bases and … [other] entities that are located right in the Colorado Springs area,” she said.
Connections made through the program could potentially result in federal grants, contracts or other transaction authority agreements, she noted.
“These companies can start applying for those [small business innovation research grants] and there seems to be more interest because they’ve gone through an accelerator,” she said.
Past event topics have included positioning, navigation and timing, and resilient commercial space communication, she noted. For the upcoming accelerator, the program will exclude ground-based technologies.
“We figured if we included ground-based, we’re going to get a lot of the same companies that we had in the last two,” she said. “[We] felt it would just be too broad of a swipe.
They were wanting to narrow it down a little bit.”
Candidates for the program are recruited through sources such as social media, websites and conferences, she noted.”