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  • Should NAICS Small Business Size Standards be increased?

    Posted on November 23rd, 2011 anna 1 comment

    I talk to a many small businesses who aspire to sell their services and products to federal agencies. And when I explain to them that a “small business” under their NAICS Code is any business that makes $25M a year or less, they say, “25 MILLION?!” and they deflate a little.
    How can a truly small business compete with a $25-Mil company? or even a $5-Mil company?

    Another day, another conversation – this time with a small government contractor who is afraid of hitting the small business set-aside threshold and having to compete “with the big guys” in Full-and-Open competitions without any preference. “Raise the size standards to $30 or $50M” they say.

    HOLD ON! I call shenanigans. If the purpose of set-asides is to allow truly small businesses to compete for work otherwise unattainable in a competitive environment, how high or how low does the SBA need to set the bar? Who are we trying to protect – the truly small businesses, or the growing enterprises that simply haven’t ballooned yet?

    The capitalist in me argues that if a business can’t compete on the merits, well maybe it shouldn’t compete altogether.  Of course, there’s always an element of social policy when the world’s biggest buyer happens to be your customer, and that customer can in fact mandate policy as it writes the check.  So who should the SBA protect?

    I say, the NAICS codes are INflated already.  Raising them even further denies the truly small, new vendors any chance of competing because you raise the set-aside playing field to allow more and more players with substantially greater resources, deeper pockets, years (decades) of experience claim the same benefits. What’s the point?  Once a business is making over $10M a year (and oftentimes, even before), they need to behave like a big business already, by:

    • creating an internal infrastructure of processes, practices, and lessons learned
    • maintaining an opportunities pipeline and establishing a list of ongoing / recurring work that will sustain the operation
    • hiring an executive team (internal or external) to manage all the aspects of running a busines
    • establishing costing / pricing / proposal development mechanisms
    • having a business development method in place, whether through dedicated sales, teaming, and/or buyer outreach

    What about the truly small businesses? I say we need to protect / give preference to the business that

    • is managed by the owner(s) with little defined structure
    • is still figuring out its strategies for marketing, customer retention, business development,
    • does not have internal processes on ‘autopilot’ through HR, recruiting, proposal centers
    • doesn’t have significant past performance that can “speak for itself”

    If the point of the program is to get new blood / new businesses / new ideas into the federal procurement process, then boosting the size standards to protect the entrenched players is doing everyone a disservice. At some point, everyone needs to sink or swim on his/her own merits.

  • There *IS* such a thing as a stupid question.

    Posted on June 24th, 2011 anna No comments

    Dear prospective government vendors:
    When in the presence of buyers, you should at a minimum know the “federal” structure of the U.S. federal, state, and local governments.  Especially in a seminar setting when you raise your hand and the whole class is listening.

    It’s ok not to know a procedure, or have a question about micro-purchase thresholds.  But do yourself a favor and learn the difference between federal and state governments, understand the differences between executive, legislative, and independent agencies.  You will spare yourself and the room the head-desk-hitting embarrassment of an inquiry such as “why don’t local governments just post their solicitations to FedBizOpps”?

    You have not only made a fool of yourself in front of the buyer, but also lost credibility with a roomful of people who may be potential partners, buyers, and resources.

    Or maybe it doesn’t bother others as much as it bothers me. Blame 6 years of law school and a modicum of respect for a federal system of government.

  • The In-Sourcing Pendulum is Swinging Back

    Posted on June 17th, 2011 anna No comments

    So the Obama administration came in, guns blazing, contractors = bad, in-sourcing is good.  And every contractor ran scared to hide under his/her desk, lest they be noticed and in-sourced.  And, in the early days of idealism and grand-standing, a real push for in-sourcing did cost jobs and contracts.

    However, the fears of in-sourcing becoming a trend seem to be largely unfounded, for a couple of reasons:

    1. Government is Slow. If you need a toilet fixed, you don’t open a plumbing manual or go out and interview plumbers for a permanent job.  When your toilet gets fixed, the plumber doesn’t hang out at your house waiting for it to break again.  He has other homes, other contracts — and isn’t on your payroll til he retires.  And — if you’re a government agency that needs a major improvement to your infrastructure, a new airplane or tank, the most efficient thing to do is hire someone who already has the skills and workforce who knows how to do it.  Then when the job is done, the contract is over.

    2. Government is More Expensive Than You Think. The in-sourcing flag-wavers were adamant that contract labor was expensive because the FAR requires contractors to disclose all their costs, including overhead, rent, benefits, etc.  When you compare that to a govvie’s salary, yep – that IS expensive.  What those advocates failed to count was the WHOLE COST of the “cheaper” government worker — including the square footage that her desk takes up (and the appropriate utility costs), the overhead for several layers of government managers, the health insurance and the retirement benefits that she would be collecting for years and years.  Since those costs were not directly borne by the contracting agency, but rather by the OPM, in-sourcing advocates turned a blind eye – even though ultimately the $ was coming out of the taxpayers’ pockets one way or another.  All costs considered, contractor personnel are often the less expensive option.

    3. Government Needs to do Government Work. Nowhere in the constitution does it say that  federal agencies need to have CMMI V compliant processes.  Nor should they need to.  Federal agencies should do the basics – protect the nation, print money, provide essential services — and where they need support in fulfilling those functions, they should hire experts that can help.  Inherently governmental functions, such as decision-making and money-obligating functions are the government’s purview.  But putting down fiber? Not so much.

    4. Government is Not Hiring. There’s a freeze in Washington.  And as long as we in a state of continuing resolution, the freeze will continue – which means no new jobs are available.  So what do you do when a problem arises and you don’t have the skills or resources to do it internally?  You capitulate / see reason and hire a contractor.

  • Set-aside is not a magic bullet.

    Posted on June 10th, 2011 anna No comments

    I’ve talked to a number of new government contractors who think that getting a status symbol will somehow make the phone ring off the hook, contracts will start dropping from the sky, and the likes of Lockheed Martin will be beating a path to their door.

    Well, hate to disappoint you — but adding an acronym to your business card will not stand in place of good old networking, relationship building, doing your homework to understand what the government is buying, and bolsting your expertise and credibility in your industry.

    What do preferred treatments and set-asides do for you?  They help open doors.  They help give you an edge.

    What don’t they do? replace expertise, experience, understanding of the customer needs.

    Yes, it’s true that federal agencies have to spend 23% of contracting dollars with small businesses.  It’s also true that some contracts can be set-aside to be bid within certain categories of small businesses (such as SDVOSB, HUBZone, 8(a)).  But it’s also true that there are hundreds, and in some industries, even thousands of businesses that have the requisite status.

    What separates those small business who win contracts from those who don’t?  Patience, understanding of needs, and a solid business case with proven results.