The federal government talks a good game when it comes to making use of small businesses and, in fact, many agencies do an excellent job of using small firms. The rhetoric, however, doesn’t always match the reality. Additionally, large businesses may be left scratching their heads over decisions an agency made to set-aside a procurement that didn’t seem properly scoped for a true small business to handle. Here are some tips on how small and large firms can better navigate this important area of government acquisition.
Make Sure You’re Really Small: Many once-small firms can’t let go of their previous size status. It’s the protective blanket that allowed them to grow in the first place. Resist the urge, though, to improperly call your business small if it is not. Falsely certifying size status can get you, and your customer, in a lot of trouble. Your firm can be liable under the False Claims Act and your customer will get heat for not vetting your firm and now having to set aside procurement if it wants to meet its small business goal. No one wins. You’ve upset a customer and possibly have to give money back.
In a competitive market, your small competitors are more likely to turn you in if you try to pass as something you are not. Plus, contracting officers (CO’s) can ask you to certify your status at the time they cut a task order. Answer truthfully. You may be surprised to see how well your firm does on its own without any size designation.
Handle Joint Ventures Carefully: Many large and small businesses form joint ventures (JVs) to compete on contracts for which they could not otherwise participate in. Make sure you ask the contracting agency though, whether they will consider offers from JVs before you go through the time and expense of forming one. Some contracts allow for JVs, while others do not.
In addition, make sure that the government will accept your individual corporate experiences, and not just look at the new legal entity and decide that it has no experience. Ask questions. Also, remember that the government can take small business credit only for the work done by the small JV partner. Some companies decide just to let their small business partner take the lead on a contract, with the large business taking a minority stake.
Don’t Stand So Close to Me: Small businesses that work closely with large businesses need to keep many issues in mind. One is to not get too enmeshed in the workings of your larger partner. Do you share back office infrastructure with them? If the large business walked away, would your firm still be able to stand? Not only are these sounds business questions, they can also impact your firm’s ability to be called “small”.
Affiliate “too closely” with a large firm and you may find that the feds think you’re really part of the larger company and, therefore, not entitled to small business contracts. Even worse – if the feds decided you and your large business were “affiliated” on a completed piece of work, you can each be suspended or debarred.
Large Businesses Must Monitor Their Small Subs: If your firm is a large business that works with small business subcontractors, you must make sure you track your sub’s performance. Make sure that they’re providing qualified people with proper clearances. Products must be Buy American or Trade Agreements Act compliant, depending on the size and nature of the contract. Don’t hand off a piece of work to a subcontractor and never monitor them. As the prime, you are responsible for that company’s performance. The feds will come to you to seek redress for any problems. Pay attention.
These are just some of the guidelines small and large federal contractors need to follow when selling to the federal government. There are many others. Make sure you do your homework so that no matter what the size of your federal business, there will always be good business for your firm.
