Small federal contractors feeling the pinch of reduced government spending

Bill Stuby, president of the Association for Procurement Technical Assistance Centers, said another problem is that many subcontractors work on highway projects, but the six-year highway reauthorization bill is still stuck in Congress.

“Because of that, they can’t do any planning on highway construction with primes,” he said. “Even if they know there will be opportunities in the future.”

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Experienced firms are far more likely to be successful in securing contracts. Companies with 10 or more years under their belts get about half of the contracts they bid on, but those with three or fewer years get about one-fifth, the study notes.

That’s partly because the government uses what’s called “best value contracting,” meaning it considers the past experience of each company when deciding on a winner for a bid. Small business contractors said it took them an average of 4.4 attempts before they won their first contracts.

“The new contractors don’t have any experience, so they don’t add any value to that evaluation process,” Stuby said. “It’s more and more difficult in this tough time for new people to land their first contract.”

Storey now runs a site that assists small firms in navigating the contracting world, and she said it helps for small companies to have previous exposure to the quirks of government work. The alphabet soup of government acronyms can be particularly hard to master. (The agency that aims to help small contractors — the Office of Small and Disadvantaged Business Utilization — goes by the tongue-twisting “OSDBU,” for example.)

“There’s a new culture, a new environment and of course, new acronyms,” she said. “But if you learn the process, there are a lot of opportunities out there.”

The federal government has a goal to devote 23 percent of contracting dollars to small businesses, but it has fallen short of this number each year since 2006. Last year’s Small Business Act specifically aims to reduce “bait and switch” tactics among prime contractors who don’t follow through on plans to subcontract work to smaller firms.

How to increase your chances at contract success

The federal contracting scene may get even tougher next year as contract spending is likely to decline by between one and five percent, according to the market research group FedSources.

To increase odds of success, Storey recommends that companies register with the Central Contractor Registration, the government’s contractor database, and to get on a U.S. General Services Administration schedule — the “Sears catalog” for government purchasing.

She said a small contractor should network with agencies and prime contractors, attend all industry trade shows and build a stellar Web site that showcases examples of past work.

Storey’s rule of thumb is that a contractor should “say ‘no’ more than they say ‘yes’ to decisions to bid” so as to ensure that they’re not wasting resources on contracts they likely won’t get. The AmEx survey found there are diminishing returns for those taking a scatter-shot approach: Bidding on more than six contracts in a three-year period actually caused a business’s “batting average” to decrease, suggesting companies are better off trying for just two or three contracts each year.

“More successful contractors focused on just a few opportunities, and the relationships you build with agency people let you know what’s coming down the pike,” Weeks said. “If you’re not winning, don’t just keep bidding.”

And if you’re not winning? “Ask for a briefing,” Weeks suggested. “If you don’t get a contract, maybe your pricing was wacky, or maybe there was a technical thing that you didn’t know about. You learn as you go.”

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