Government Contracts for Small Businesses

Welcome to building better developers, the developer podcast, where we work on getting better step by step professionally and personally. Let's get started. Well, hello and welcome back. We are starting a new discussion, new interview. This time we're going to speak with Richard Howard. We're going to talk about something we actually have not talked about. I don't think at all in all of these years, and that is government contracts. How do you go out there and get them? There are stories about, particularly in the military industrial complex kind of thing of people going in and having these multimillion, multibillion dollar contracts. And while you may not be building, I don't know, weapons or big fighter planes or ships, battleships or cruisers or carriers or something like that, there are things that you can do for the government, big and small. It could be as simple as, I don't know, being a hot dog vendor, but having a government contract as we're going to learn. So let's dive into this conversation. I think it's going to be a new area and maybe it'll be something that will get the wheels churning a little bit in your own head and say, hey, maybe that's an area I need to explore. We have never really spent time talking about government contracting, about actually working with, and particularly we're going to talk about today is U.S. government. But just in general, we've always been more private businesses, public businesses, things of that nature. So this could be a little bit different. But we're speaking with Rick Howard and he does this. He is a Department of Defense contract. We'll say Maven. You can. Well, I don't want to oversell it. I don't want to, you know, like promise too much from this guru that we've talked to at the top of the mountain. But he may be able to convince you of that. And if nothing else, I think we're going to have a great conversation talking about what we can do and where you can actually leverage that and not have to be IBM or, you know, somebody like that, that's some huge organization that there are actually opportunities, even if you're a small company. So I want to welcome you on, Rick. And if you want to give us a little bit about your background and what you do. No, thanks, Rob. And yeah, just that was a very kind introduction. I don't know that anybody actually knows everything about government contracting. And there's there's a lot to it. But, you know, I'd be happy to give a quick intro. You know, I spent 20 years in the Air Force as an officer. And although half that time was flying the first half of that, the second half of my career was in acquisitions. And that's the profession of putting companies on contract for the government, both large and small. So my job was taking federal funding, federal requirements and turning that into a contract or the company that could produce the results that we needed. And then I went on to start my own consulting business, seeing the very deep need for small business contracts. You know, the we can talk about the funding and everything there, but it was difficult. It was something that I saw as a difficulty for small businesses approaching the government and trying to win contracts because it is a little bit different than selling commercially. So, yeah, I've been doing that for the past couple of years. So I own D.O.D. Contract dot com and Richard C. Howard and Associates. And we help small businesses sell to the government, small, medium sized companies. We also have a podcast called D.O.D. Contract Academy. You can look up. And so, yeah, that's what I've been doing. That's that's that's the nuts and bolts of it. Let's start with we'll start with the last one first, where we get into the the weeds a little bit more. So what do you cover in the D.O.D. Contract Academy? What is sort of your is it interviews? What's your sort of the typical kind of type of content on that podcast? Yeah, good question. So, you know, when I first started it a couple of years ago, so if you listen to the early episodes, it's really me just, you know, talking through the procedures and the strategies that, you know, I've used and have seen successful use, but it evolved into bringing my clients on that have been successful and interviewing small business owners in a lot of different sectors. You know, and I think maybe some of your listeners will be surprised to find out that almost any area that a small business owner could be involved with, the U.S. government's probably making purchases there. And in some cases, it's really significant. So, yeah, we cover people in everything from, you know, construction to cyber security to accounting and things of that nature. So and that's really fun. It's probably the most enjoyable part of the podcast for me is talking to those subject matter experts, as well as people either that are in or have worked in government positions that were decision makers or subject matter experts in some part of the process. So, yeah, we cover a lot. It's really it's really interesting. And I think a lot of especially small businesses get some ideas about how they could maybe increase or introduce a new line of revenue to their business. And that's always everybody looks for that, I think. So what what would be maybe a couple of examples of where companies have have gotten a contract or two and then maybe turn it into a steady revenue stream or something along those lines? Yeah, so there's there's lots of examples there. I would say, you know, first, what's I'll separate. I'm not even going to talk about things like weapons and ammunition and airplanes and stuff like that, the things that we know that the government buys. But let's take an accounting, an accountant that starts an accounting firm so that that person, that firm, they may be a woman owned small business that wins, starts winning government contracts to provide bookkeeping services or tax preparation services. They might be providing employees to the governments. They might be providing staffing services, maybe 10 to 20 people year over year. And that's going to generate you might have a three to five year contract with the government that pays you as the accounting firm owner to provide support that's trained and can meet the government need. Another another example could be cybersecurity is a big one. So I work with a lot of people in IT and whatnot. But you may provide the same thing. You may be providing individuals that are providing cybersecurity services to the government or you may be working on projects, you may be bidding on projects like penetration testing. The government, even they buy food and they buy office supplies. So there are certainly the commodities that you could sell to the government as well. But that actually lead that was you opened up with something that is. I think most people, they think about a government contractor, they think weapons and military and things like that. What are what are maybe some of the other than that, which you've already discussed is that there are, you know, there are some there are services and products they buy that are not blowing things up and killing people. What are maybe some other big misconceptions people may have, particularly if there's somebody that would it's like, I'm sort of hesitant dealing with government contracts. What are maybe some other misconceptions that a small business owner might have about them? Yeah, that's a good point. Why don't we start with the big picture, right? And the big picture and often, you know, whether it's clients or people that haven't thought about this or surprised to hear this, the U.S. government is a single biggest purchaser of goods and services in the world. And they are required, they're required to buy from small businesses and a lot of people don't realize this. So the Small Business Association, the SBA sets the percentage of contracts depending on the agency. And it varies. But for instance, in the Department of Defense, which is typically the single is the biggest agency that's purchasing small businesses, small business goods and services rather. Usually it's 23 percent. So 23 percent of what the DOD is buying has got to be from small businesses. And over the past 10 years, we're seeing fewer and fewer small businesses selling to the government, yet the government's mandated to buy from them and are in I should say the government spending year over year is increasing. So essentially what we're getting is fewer and fewer businesses kind of reaping the rewards of what the government spend is. Now, less than half of one percent of U.S. small businesses are selling to the government, just to give you an idea of how few are actually involved in the process. And to answer, I guess, the first part of your question, which is, you know, we do, we think about weapons, we think about airplanes and tanks and stuff like that with government spending, because that's what we hear about on the news. But what I think a lot of business owners miss, especially if they've never been in the military or they maybe never worked for the government, is that every military base and keep in mind, we have bases worldwide, not just in the United States. Every military base is in some cases a small city, you know, in a small town. But the infrastructure needs of those bases are very similar to cities and towns. So they need a fire department. A lot of them have hospitals. Some of them have airfields, they have movie theaters, they have schools that kids go to, they have golf courses and they have office buildings and they have housing for families. So all of these things, they have restaurants and supermarkets. So all of these things need to be supported in there. The way they're supported is through government contracting. So we have the government spending literally billions of dollars a year on landscaping, for instance, for these bases. So if you're on a landscaping company, you might look at what landscaping contracts are available, because again, those can be pretty lucrative and they typically are also long term. So you might win a one to three year contract to take care of the grounds on a base. So that's just to give you an example and start thinking about some of those things. Notice that on the contracts themselves, do they tend to be more project based or they tend to be more time frame based or does it again, is it sort of like anywhere else? It varies by product and service. Yeah, it did there. It totally varies by industry. So the government has to buy things in a specific way. They can't just buy things the way you or I do. But you'll see that very dramatically, depending on whether the government is buying something like food or office supplies or if they're, you know, they're not going to buy things that are not going to be affordable, you know, like they're going to invest in small businesses that are developing innovative technological solutions. That's something I was highly involved in. So it's kind of a passion area of mine. But so a lot of our clients, for instance, use this government R&D money instead of venture capital because you retain your IP and you're developing something that's intentionally dual use, meaning you can use it for the government and for the commercial sector. Now, one of the things that I think, I don't know if it's a misconception or not, it's an interesting thing as part of the contracts and the revenue stream as a small business. You're not in a situation where you can go in and even if it's a huge contract, you can't just go, you know, go work for a year and then come back and get paid some big chunk of money or something like that. And I think some people are really, really interested in that. And I think that's a really good point. Chunk of money or something like that. And I think some people are there's that that worry that, you know, the government moves slow and, yeah, you may make some money out of it, but it's going to take forever to get through it. Is that something that you see, particularly from small businesses, I would think that that would that would be a challenge. Is that something they run into or is it one of those misconceptions that, you know, the government does pay their bills on on time? Yes, I would say that that part of that is right on the money, actually, and part of it is a misconception. So the part that's right is selling to the government is the long game. So this is not a it's not a get rich quick. It's not, you know, you're not going to get on the phone with someone that can actually buy what you sell on the government side and craft a deal in a week and make it go through that. That's not going to happen. However, it can be a extremely lucrative process with not necessarily a huge amount of effort. So it's all about being consistent over time. And so there are very specific ways each company, each industry is going to approach, especially for a small business, can approach the government. And the way that we handle it with maybe a small business that has a small team is we're very focused in what we recommend is you start with one agency that buys what you sell because we can see what the government spends. And that's another big advantage to sell to the government. So you do have long timelines, but we're also not guessing. So we don't have to guess who's buying what you sell in the government. Most people in the government can't buy what you sell, but, you know, your listeners can go to websites like usaspending.gov, for instance, and get a really good idea very specifically what offices, what agencies in the government buy what they sell and what offices. So consistently working towards the goal of selling to them over time, even in a, even in a very focused manner, you know, where you might just be doing, you know, a few action items every week can get you there, but it is the long game. It's something you really need to plan at hitting for a year or two. To start seeing some really good results. So what is, let's say that, you know, we've got people now in the audience that are like, Hey, this sounds like maybe this is something worth, you know, taking a stab at it. Where do you be, where would somebody even begin to, you know, figure out where, where, where, where do they start? If they say, Hey, I'd like to look into this and see where maybe I can find a fit for myself. Yeah. I know that that's a good question. So what I tell people is first of all, if you're a small business and you're working at only selling to the government, I usually try to vector people away from that, you know, get, get your business going, make sure you have an income that's coming in before you start this. Because again, it does, it can take some time, but the first question you want to ask is does the government even buy what I sell? Right. So, you know, depending on what, you know, industry you're in, you know, we can go to, and again, you can go to usaspending.gov. It's a good free website where that discloses what the government spends and all of the regulation that controls this and makes government contracting a little bit different also, you know, provides you a, a platform you can go to, to see exactly who's doing the spending. And I think there's over 300 criteria that are published for every contract that the government awards. So, and that's not all that information that isn't necessarily necessarily in usaspending.gov, but you can go there. So I can go there really quickly and say, all right, if I'm a company that provides information technology services and I'm a small business, I can go in there and see exactly how much the government spends each year in total. I could see how much they spend on small businesses. And I can also get a good sense of what the small businesses that look like mine are making. And that's going to give you a good idea of what you can make year over year. If you're successful at this and that, if you keep at it and that's, that's very important, you know, there are also, there are, you know, one of my clients was a documentary filmmaker. And so he wanted to know how much the government, because this is where we walked him through it. How much is the government spending on your type of services each year? You know, what we found is it's going to be a lot less, right? It's not they're not spending billions of year, billions a year, at least at the time we did the project on, you know, documentary film companies, but they were spending millions, low, low millions. And when we kind of crafted his plan, we saw, you know, you could probably expect to make to win a couple hundred grand a year and a variety of efforts and maybe a little bit more than that once you get good at it, but you got to make a decision based on that. Is it worth pursuing knowing that there's going to be a limit on what you can sell? But I will tell you that in most areas, the answer is going to be yes, the government does buy what you sell. And then, of course, the logical next step is how much of it do they buy and how do they buy? And that's that's what can help craft your plan. But then how do you take that next? So let's say that you pick it and you pick an apartment or maybe you start with your search and you see here's a bunch of different apartments that spend on, you know, spend money on my product or my service. How do you what is your what's your next step? How do you when you say, hey, the Department of Defense spends a billion dollars on hamburgers and I make hamburgers. How does somebody go from there to say, OK, how do I get into that? How do I see what's out there? How do I see what what are the contracts and the projects that are our proposals that are out there? So you can actually look at the same website. You can look at a lot of those contracts. There's a limited amount of information there, but there's enough. And by the way, there's also research tools you can pay for that are going to be a little bit more intuitive. And of course, I use a lot of those when we're conducting our research. But what you would do and that's actually a good, you know, example of what we'd walk through. I would look at that and say, let's say the government does spend a billion dollars a year on hamburgers. Right. But I'm a small let's say I'm a small woman owned business. And I want to know, by the way, I'm a small woman owned business. Maybe I am the one that actually sells the raw hamburger patties. Right. Maybe that's that's the piece of it. So we can see a billion dollars a year goes to hamburger related purchases. But maybe half of that is actually cooking the burgers and serving it. So now we're down to half a billion. And as we start getting more refined, well, how about the actual product that you're selling? Maybe it is half a billion a year. Well, now we can look at, well, how much of that goes to large businesses, how much goes to small businesses? And then we see, OK, well, of that, maybe two hundred million dollars a year is spent on small business, small business hamburger purchases. Right. And but we can keep going from that now that now that we're down to that level, we can see, all right, well, now what does the agency make up? So it might be, well, let's say the Air Force is the top spender, but maybe the Department of Energy is the second purchaser for whatever reason of hamburgers. Obviously, we're just talking here, but, you know, we can start as you start refining it, you start getting a sense of which agencies actually buy what you sell and we can go again, we can say, all right, well, if the Air Force is the number one purchaser from small businesses, what about women on small businesses? And I'll explain where I'm going with this in a minute. And then maybe it actually becomes the army and it's some type of army acquisitions command. And we could start seeing the actual offices. We could see maybe it was Aberdeen, Peruvian grounds someplace else in the army that's buying hamburger meat. It's probably wouldn't be Aberdeen, Peruvian ground, but we can start seeing with very specific results who what offices are actually doing the purchases from a company that looks just like yours. And so that's where we're going with this and that's how we're going to get the actual target for who we're actually going to be selling in this case, the hamburgers to and who we might want to avoid. Right. So if we saw that, you know, the Navy tends to buy from large businesses in McDonald's or whatever. Well, that might not be who the small business owner wants to go after. So we can be pretty smart about how and who we're targeting. So as you're looking at those, you being whoever it is that's doing the research, as you're as you dig into that, then you can actually see where that that split is a little bit essentially, right, is that you can you can see that, oh, this is an organization, this is a department or an agency that is heavily doing that, you know, sort of making up that twenty three percent or whatever that number was of small businesses. So they are in this area heavily working with small businesses where maybe another one is like, no, we we only deal with the the big boys. Is that sort of how that? Yeah, we could see we can see trends. So that's one piece and something else we can see. And let's talk about just when I bring up woman owned small business, there are, you know, you register your business to sell to the government and you register your business and Sam dot gov. And the government has what we call set asides. So there are certain classes of businesses that the government. So I mentioned twenty three percent have to go to small businesses. Well, it's between three and five percent have to go to a woman owned small businesses. Another percentage has to go to eight day, which is typically a minority or disadvantaged business. And there's criteria for that. And you get a certification that gives you that essentially that set aside. Same thing with veteran owned service, service disabled veteran owned small business hub zone. So those are those are kind of the big four. And so there's between three and five percent of contracts have to go to each of those groups. So now I'll just say this because it's at top of mind. So there is actually legal language associated with the spending, which makes them look at service disabled veteran owned small businesses before other types of businesses. So if we were to look at the hamburger sales, right, the kind of that we're making up here, we're looking at the hamburger sales. We'd see that the VA probably made most of their hamburger sales from service disabled veteran owned small businesses. So in that case, that if you have a business with that type of certification, it makes a lot of sense to target the VA for the hamburger sales. That makes sense. So now how let's say you've taken these steps now and you've gone, you've you've found your department, you found your agency. You found, let's say, this couple of contracts or proposals that are out there. How do you go about figuring out how to actually do that? Is it just like any other proposal response process? Is there I'm assuming it's not because it's the government, but maybe I'm wrong there. And what's that? What's that sort of that process look like? That's a really good question, because it so that process is a lot different. And it also highlights probably the biggest mistake or one of the biggest mistakes companies make when they're trying to sell to the government. So a lot of companies that try to sell to the government quit because what they do first, they usually aren't doing the piece that we just talked about. They're usually not finding who they're targeting. They're usually just looking for requests for proposals, requests for quotes. So that's the process. So again, now that is a painstaking process and it's highly regulated. We can cover that in a minute. But if you're writing proposals, if you're at the first time you're engaging with the government is when you see an RFP or an RFQ, your odds of successfully winning that contract are very, very low. And what I mean by that is when the solicitation comes out in every industry is a way to get the money out of the government. And so that's the process. What I mean by that is when the solicitation comes out in every industry is a little bit different, but just as a general rule, when the solicitation comes out from the government, picture a pair of handcuffs on the program manager in the contracting officer's hands. They can't have conversations with the companies that are bidding on these contracts. If the companies have questions about what to put in the proposal, if they even receive an answer from the government, it's probably going to be in a public forum. So sam.gov is where a lot of this comes out. So you may see a notice on sam.gov associated with an RFP, and it might be a list of answers to questions that companies have been asking them. But that's really the best you're going to do. But before that solicitation comes out, that's something called the market research phase. So for all your listeners, if you want to be successfully engaged here, you need to live in that market research phase that's before the solicitation. And this is why it's so important to identify who your customer is. Because if I know my customer is the Air Force, for instance, let's say it's Lifecycle Management Center. I'm here at Boston. So maybe it's C3INN or another PEO that's at Hanscom Air Force Base. I know that I need to find opportunities before that solicitation comes out. So that's why it's really important to know who I'm targeting. And that might look like a sources sought. That might look like the government publishes acquisitions forecasts. You can also look at contracts that are going to expire six months, a year from now. So before the contract expires, or sorry, before the solicitation comes out, the government is now free to talk to these companies because this is the market research phase. This is when the government is going to figure out what is actually going to be in the solicitation. So the savvy companies, so the savvy hamburger company, for instance, they're going to know, okay, so I'll switch to the Air Force. The Air Force is buying hamburgers. I find a, I'm going to target a unit at Hanscom Air Force Base. I need to find out when they're going to be buying hamburgers next before the solicitation. And I find out maybe it's through one of those requests for information or sources sought. And, you know, and maybe I'm the program manager for the Air Force and I'm just trying to figure out what kind of hamburger do I want it to be grass fed? Do I want it to be X, Y, and Z? So I'm going to reach out to these companies or put a RFI out. So now that the savvy companies are going to not only respond to that, but they're also going to say, Hey, look, Air Force, not only can I provide the hamburgers that you want, but we provide grass fed hamburgers. And that's really, we can, you know, the nutritional value is way higher than if you just buy from a traditional hamburger dealer. And by the way, I'm a woman on small business, so you could set this aside for women on small business. And this is how we determine if we can set aside something for a small business or a one of the other more specific set of sides, because there has to be a couple of those businesses able to even respond. So this is where you can shape the solicitation, shape how the government's going to buy from you and put yourself in a much better place to win. Because now they know who you are. You've probably helped them write this solicitation because they are, they're taking those things. So that solicitation might come out now and say, you know, the Air Force wants to buy, you know, a million dollars in hamburgers. And this is set aside for women on small business that came from your response. And by the way, we also want to buy grass fed hamburgers. So now not only have you eliminated a ton of competition because you made this a set aside for your type of business, but you've eliminated competitors even within your set aside by getting the grass fed hamburgers put in there. Right. And that might not be something your competitors are offering. So just an example, a simple example of what you might be able to insert into that solicitation process. And we will pause there. Don't worry. We're coming back next episode. We're going to continue our discussion and we're going to talk a little more deeper in the areas of how do you really position yourself for these government contracts? There's a lot of things that he's sort of mentioned in this first episode, and we're going to dig a little deeper into those in the next episode, but we'll wrap it up here. Let you get back to your day, whether you're dealing with government contracts or just your normal run of the mill work. Hopefully it keeps you busy and go out there and have yourself a great day, a great week, and we will talk to you next time. Thank you for listening to building better developers, the developer podcast. You can subscribe on apple podcasts, stitcher, Amazon, anywhere that you can find podcasts. We are there. And remember just the little bit of effort every day ends up adding into great momentum and great success.