[drewpc]

Startups can and do get government contracts, but the government isn't going to come court you. You (the startup) have to figure it out yourself.

Selling to the government is very similar to selling to any other industry/company: you (the seller or maker) have to understand the customer's acquisition process. The big difference is that the federal government is the largest customer--millions of people and trillions of dollars. Therefore, they have a lot of rules and they all attempt to ensure "fairness" when the government tries to acquire something.

How do you do begin to understand that behemoth? Here are some tips:

-You invest some (a lot) of time understanding the Federal Acquisition Regulations (FAR) https://www.acquisition.gov. There are training classes available online and in person.

-Speak with acquisition specialists or contracting officers to understand the regulations specific to your product/industry.

-Learn about the specific rules/advantages that may apply to your company. There are many many preferences for small business, veteran-owned companies, disabled-owned companies, women-owned companies, etc.

-Understand what "fair" means to the federal government in the context of acquisition. It doesn't mean "the best solution". It doesn't always mean "the cheapest solution".

-Learn how to navigate the government's Request for Proposal (RFP) and Request for Information (RFI) processes so that you can be a part of delivering answers/solutions to the problems that the government has determined they have. The big government contractors have this stuff figured out. They know how to read an RFP and respond, even if they don't have the solution themselves.

-Understand the concept of "prime contractor" and "sub contractors". Prime contractors often win large government contracts but decide to/have to "sub" some of the work out. There are often regulations on how and what types of companies they must sub work out to. For example, AT&T may win a large networking contract but sub the work out to 10-15 other smaller companies to execute.

[JPKab]

" The federal government's Small Business Administration (SBA) attempts to help companies with fewer than 1,500 employees win government contracts. The SBA's goal was to award 23 percent of all federal prime contracts, and 38 percent of all federal subcontracts, to these kinds of businesses. But Holman says they have "failed miserably in getting anywhere near that goal.""

As a former employee of an SBA favored, minority woman owned business, let me make something very clear: The entire SBA small business process is itself gamed and owned by former employees (and their still employed buddies) of the big government contractors.

Case in point: My particular "start-up" was "owned" by my COO's wife. She was CEO in name only, but had 51% ownership because she was of Fillipino descent, and therefore qualified as a minority-woman. My COO was a white male who was truly the CEO. His wife was a stay-at-home mom, but on the company's pay roll. Since the other SBA stipulation was that there was a maximum profit limit for the company, the COO and his other buddy both had their wives listed as employees to pay them each the maximium allowed salary of $300,000 a year.

Think that was ugly? Then there was the other peace:

My company would bid on contracts, and when we won them, would simply sub out large portions of the work to the same giant defense contractors. This is not the exception, but the norm.

It is a rigged system with numerous bureaucratic rules which are exploited by the people who know the rules best. Whether or not your company actually knows how to do work is separate from the true qualifier for winning work, which is knowing the system and gaming it.

Fuck all of that. I'm so happy to be in the private sector now.

[rebootthesystem]

The phrase "fills me with the urge to defecate" come to mind.

[mynameismonkey]

We run a data/dev shop inside a non-profit 400 person company that is mostly gov contracting. _We_ will come courting. Most of our contracts require us to satisfy some percentage from five to 20% small business/woman/minority-owned. This could be services, consulting, pencils, you name it.

We. Cannot. Find. You.

The small businesses we know and love are not suitably registered with the fed/state certifications. We routinely have to document what we did to try and find adequate set asides. We'd love to be doing more business with small businesses, but yes, the paperwork is a hassle. But if you sub contract, you can negate 90% of the problem, let the prime contractor deal with it.

[Quequau]

I have a good friend who has run his own 2-5 person shop for years and lately he says that they're often excluded by decree because the contracts stipulate some sort of minimum size of business that is acceptable.

Do you have any suggestions I might pass on?

[mynameismonkey]

Follow the RFPs he would like to work on, see who wins them, call them, pitch product/service. Bring along certification of small business and make the small business vehicle the pitch, not the product/service.

Let's say I need data analysis. Thousands of companies can service this need. Very few have the specific certification for the fed agency/state/municipal requirements du jour. I have no solid way of searching all holders of all these certifications by service line.

So, I search online, I call peers, I dredge for vendors. Vendors who approach me and can quickly communicate their contract value with small business/minority-owned/women-owned whatever, and can demonstrate their knowledge of the particular market the RFP is for means they know and are ready to be added to a larger RFP and can document their claims.

For me, this saves me time and money, and brings value.

[drewpc]

The concept of "fairness" that I talked about in my previous post applies here. If two companies submit proposals in response to an RFP seeking to acquire 1,000 Widgets and Company A responds with a price of $10,000 while Company B responds with a price of $20,000, the government is required to chose Company A because they are cheaper. However, if Company B is a small business/minority-owned business/service-disabled-veteran-owned-business/etc, the contracting officer can choose Company B because it fulfills other requirements to support those types of businesses.

I could see some small cases where the government would restrict the size of the company responding to an RFP, but there are also ways around that. The small business can contact the contracting office and protest saying they were unfairly considered for that acquisition and usually will win.

The key to the Federal Acquisition Regulations (FAR) is that they try in earnest to support and encourage fairness when awarding contracts. Furthermore, the government goes out of its way to give the "underdog" a better-than-equal chance at winning the contract.

As another poster said, the small business can't lose out on other reasons (i.e. certifications, financials, etc). It could be that they're losing contracts for very different reasons.

Here are some links for reference:

SBA size standards: https://www.sba.gov/content/small-business-size-standards

GSA Small businesses: http://www.gsa.gov/portal/content/202261

Small business set asides: https://www.acquisition.gov/?q=browse/far/19/5&searchTerms=s...

Protests: https://www.acquisition.gov/sites/default/files/current/far/...

[vonmoltke]

> If two companies submit proposals in response to an RFP seeking to acquire 1,000 Widgets and Company A responds with a price of $10,000 while Company B responds with a price of $20,000, the government is required to chose Company A because they are cheaper.

They aren't required, but not doing so will necessitate a good justification. The Small Disadvantaged Business (SDB) designation is basically an automatic justification, but not the only one. Contractor past performance, the reasonableness of the bid, and other considerations can drive the government to actually choose a higher bidder. It also matters whether Widget is off-the-shelf or bespoke; the contracting officer tends to get more discretion in the latter case.

[drewpc]

This is a good point on a number of fronts. A key take away with this is that startups need to understand how to properly register their businesses to get maximum traction. SEO isn't everything. Things like Dunn & Bradstreet are often requirements to prove legitimacy, but overlooked simply because founders don't know what they don't know.

[redfalcon6]

Very interesting. I'm going to be in "next gig mode" next year and am a Vet. Was thinking about what kind of company to start. Would you be available for a short chat? My email in my profile.

[isthmus_]

There's also the fact that your business needs to be built to handle long term contemplative projects. Stereotypical Silicon Valley startups are built for fast, reckless growth which cannot and will not happen with a government contract.

[mindcrime]

Stereotypical Silicon Valley startups are built for fast, reckless growth which cannot and will not happen with a government contract.

FWIW, there are plenty of us here who aren't in Silicon Valley and who aren't interested in building a "stereotypical silicon valley startup that is built for fast, reckless growth".

I don't disagree with your point, just wanted to point out that the audience here is broader than just SV people.

[AndrewKemendo]

What you describe takes CONSIDERABLE time and money on the front end that start-ups don't have. Ok, but lets assume they do and they land a contract.

The FAR isn't just some document that you read and understand - there is an entire additional process for diligence and documentation that goes along with it.

Now you need 60 days of deliverables until you get paid from the government.

CACI and the rest of the major Prime contractors have hundreds of contract officers that work and maintain these contracts - often outnumbering the actual developers of whatever the products are.

What needs to change is the FAR and the budgeting process. Until then we will continue to ignore the government.

[ethbro]

I think another key point is that often the government tags a much higher cost on "risk of failure" when evaluating proposals.

Startups are fast, but they aren't always reliable. At least for values of reliable that == being able to throw money at {Large_Technology_Contractor} to have them parachute in an additional team of engineers to solve unexpected problem X. Or being around 10 years from now for support.

But agreed, there are all levels of involvement. Consider the prime contractor's cut off the top the price of getting bid into the game and contact with the right people, then do your best to work your way up!

[ArkyBeagle]

My understanding is that it's entirely possibly for just the contract pursuit process to overrun a project before one jot of work is expended on actual fulfillment.

That's less likely than in transactions with private companies - although for IT projects...

[mynameismonkey]

I once had a 60 day contract take a year and a half to get signed after I won it. We had to be ready each and every day of that year and a half to start the work...

[ArkyBeagle]

Some friends of mine will probably never actually execute on a contract that's been in the works since 2009. It's not a trifling system, either. And it's done. All that's left is the deployment and whatever paperwork needs to be done after.

one of the guys just soldiered on because he wanted to understand the technology.A few dozen weeks, but still.

They got paid what they could show in time and materials, but that's not the full award.