Saturday, November 26, 2016

Small Business Teaming: 3 Tips For Forming Productive Partnerships
Although the small business market is currently difficult, there are opportunities for small businesses in the federal market. This is particularly true in the professional services sector, where large businesses are seeing their contracts being recompeted as socioeconomic set-asides.

As a result, teaming relationships for small businesses are of particular interest, and can provide an excellent opportunity for new business either as a prime or subcontractor, with new partners and relationships. However, teaming does come with issues that are of particular concern as well, such as running afoul of small business size status, eligibility, affiliation, and being taken advantage of by firms needing to “rent” a designated socioeconomic designation.

Here are three issues to consider when teaming for small businesses: 

1. Details. Worrying about details later is a recipe for disaster. The teaming agreement should detail how the parties will structure the team, and the work that each party will be performing through a clear statement of work. Further, the teaming agreement should have very specific terms that demonstrate the party’s intent to be bound in the structure of the relationship (e.g. the proposed prime contractor “SHALL”), and their performance in connection with the contract, such as those that meet limitations on subcontract provisions. You should also have a copy of the subcontract you plan on entering into, should the proposed prime be awarded the contract.

The last thing on Earth you want is to have an unenforceable agreement that is not definitive enough to qualify as enforceable. Do not leave details vague, and do not leave issues subject to too many conditions.

2. Communication. Small businesses must ensure that when executing the contract, there are no negative impacts on their small business size or status. Make sure that any issues such ownership, control, and affiliation are dealt with, and that all requirements for small business regulations and governance are met. This is especially true for firms that are certified in the Small Business Administration’s 8(a) program, and for veteran owned business certifications by the Department of Veteran’s Affairs.

3. Exclusivity. The purpose of the relationship is to create a winning team that complements each other, and having each party add capability that wins the contract and differentiates the team from the competition. Exclusivity provisions are especially necessary for small businesses as primes, because it prevents the larger businesses sub from “shopping around”, and teaming with others businesses to win no matter what. Not having exclusivity provisions defeats the purpose of teaming. Make sure that your proposed teaming partner is teaming with you, and you alone, such that you are the only offeror benefitting from what the teaming partner brings to the table.

Understand that your short-term gain could have devastating impacts long-term. Small businesses too often sacrifice these concepts, and that is a mistake. A small business should understand that they need to be prepared to walk away from the teaming agreement, if it is in your firm’s long-term interest.  

Always consult a legal professional, and ensure your teaming agreements are clear, concrete, and will help shape the successful teaming partnership to the benefit of both parties.

Friday, October 21, 2016

Are you a small business with a federal government contract? Not for long…
There is no question that the current environment in the federal market for small businesses is challenging, to say the least. However, the environment for small business may soon need to be declared a full on disaster zone.

Two recent developments are moving forward to continue making being a prime contractor and a small business more difficult, if not impossible.

First is the recent decision by a federal judge to rule against the small business community. One of the leading voices fighting for small business federal government contractors is Lloyd Chapman, President of the American Small Business League (ASBL). Mr. Chapman had hoped to bring to light the state of the small business federal government contracting market, and the way that small businesses get cheated out of billions of dollars in potential contracts.

In the wake of the decision, Mr. Chapman stated:

"This case would uncover billions in fraud in federal small business contracting programs. If the Federal courts cannot stop fraud in federal small contracting, where do you go?"

According to a Government Accountability Office report, the Small Business Administration had included billions of dollars in federal small business contracts to over 5,300 Fortune 500 firms and other large businesses. Therefore, the government's compliance with the goal of awarding 23% of government contracts to small business continues to be in question.

Even government contract experts agree that the small business community is seeing a large share of lost contracting opportunities:

Professor Charles Tiefer, one of the nation's leading experts in federal contracting law and former Commissioner of Wartime Contracting in Iraq and Afghanistan, submitted a declaration in support of the ASBL case. "If the lawsuit had been allowed to get its rightful day in court on the merits, the lawsuit would have required the SBA to give all small businesses -- and doubly so for minority, women-owned, and disabled veteran businesses -- a larger and proper share of federal procurement."

The ASBL plans to appeal the ruling to the 9th Circuit Court of Appeals.
Second, and more pernicious, is the unthinkable actions by Congress, who are supposed to be fixing this problem.

With no surprises behind the impetus, Section 838 of the 2017 National Defense Authorization ActCounting of major defense acquisition program subcontracts toward small business goals, is nothing short of a small business killer.
The impact would be catastrophic on the small business community, since the Pentagon spends the most. This provision allows the Department of Defense to count first tier and second tier subcontract dollars towards the current goal established for competitive and noncompetitive set-aside awards to small business. Subcontract dollars would therefore replace dollars being awarded to small contractors today.

To see the potential impact, and the potential disaster awaiting small businesses, Guy Timberlake, the Chief Visionary Officer of the American Small Business Coalition, has an excellent analysis on the situation.

In three separate events in Washington D.C. this week where this issue was mentioned, all three representatives of the small business office for agencies at the individual events were excited at the prospect. They falsely believe this will help meet their numbers, but correctly believe this will be much less work for them. It was clear where the priorities are for these, and other, small business offices across federal government.
All small businesses should be up in arms over these developments, as the powers that be are aligned to punch down and cheat small businesses out of billions of dollars in federal contracts. Small businesses need to be aware of what is happening, and contact their members of Congress.

If this gets adopted across the federal government, small business government contracting can be a thing of the past. 

Tuesday, September 27, 2016

Improving Transparency in Federal Government May Improve Innovation

A while back, Nick Wakeman, of Washington Technology, went on a self-described “rant” about the lack of transparency in awarding task orders on certain contract vehicles. 

Allow me to continue the rant.

One only needs to do a cursory review of the Interagency Contract Directory ( to see the enormous amount of contract vehicles across government. By applying a layer of data analysis on top of it, a frustrating pattern emerges at the lack of information available on awards off of these vehicles, or information on the vehicles to begin with.

According to the website:

…The main purpose of ICD is to help agencies take advantage of interagency contracts by supporting market research and the identification of suitable contracts that can facilitate the efficient and effective placement of orders, including with small and disadvantaged businesses. The new ICD will strengthen both of these goals by making the tool more intuitive and easier to use… 

As Nick mentioned is his blog:

…This task order is worth $224.4 million. That’s nearly a quarter of a billion dollars. This is a big deal. Why keep it hidden?...

Why indeed. 

I agree wholeheartedly with Nick that transparency into larger awards should be mandatory, as there simply is too much secrecy with the amount of money flowing through all the contract vehicles across government. Perhaps the $10 million threshold Nick mentions might be a good start. I know many small businesses spend countless hours trying to find out information about these activities, with little success unless you have some insider knowledge. 

As Nick mentions, disclosure would not only bring more transparency to the process, but valuable data can be another component to offer small businesses an important pathway to opportunities which are currently closed. 

However, I also want to take transparency a step further in the pre-solicitation phase, by finally allowing some transparency to shine on responses to sources sought notices across government. 

One of the main issues here is that procurement personnel often complain about the poor responses, or lack of responses, by small businesses. Granted there is very little review of why this might be occurring, but perhaps another data point on might be something to explore.

Currently, firms can list themselves as an “interested party”, and appear under the tab labeled Interested Vendors List. What if we took this a step further, eliminated the Interested Vendors List, and actually created a way to show firms that have actually responded, and create a tab with this data called “Respondents”?

This would eliminate many of the firms that are simply fishing or unqualified, unscrupulous legal firms who are “experts in protests” advertising on these notices, scammers and spammers, and provide real data on who is responding and their capabilities. 

I know I always wonder: 

  • Whatever happened to my response?
  • Was it received?
  • Is there any opportunity for follow up?
  • Who I might team with?
  • What were the results?

Perhaps with this data, small businesses can find more opportunities to find teaming partners, and for firms to find complementary solutions to improve service delivery and performance. 

Of course this would all need to be automated, as the last thing we want, or need to do, is put further burdens on the acquisition workforce. 

Transparency is always a good thing to improve competition, opportunities for small businesses, and procurement outcomes. Let’s open the curtains and see what is possible.