When it comes to government contracting, you want to be on top of your game, and that means having a killer capture plan and putting in place advanced strategies that are rarely used. In this article, we’re going to walk you through the steps for developing a short-term contracting acquisition plan, expanding your business with some hidden methodologies, and then implementing a long-term plan with advanced techniques. 

Short-Term Contracting Strategies:

Before we dive into short-term strategies, let’s discuss the different marketplaces. There is the B2C or Business to Consumers. This is not what we’re going to cover. Next, the B2B or Business to Business marketplace. Again, this is not our topic today. The market that we’re exploring is what’s called the B2G, or Business to Government marketplace. Each of these niche markets requires different strategies. We’re going to move deeper into the B2G industry and explore key business models for your consideration.

Market Places:

1. B2C
2. B2B
3. B2G

B2G BUSINESS MODELS:

Here are three strategies you want to understand about the B2G market.

1. B2G: Business to Government as the PRIME ContractorIn this approach, you sell your product/services as a prime contractor directly to government agencies. You may have vendors/suppliers or subcontractors to help you fulfill on the awards.

2. B2B2G: Business to Business to Government as a Tier 1 Subcontractor

With this strategy you are a subcontractor working with a prime contractor. The prime is an experienced teaming partner who knows how to foster relationships, write proposals and execute contracts. You become part of their team to help support the statement of work as required by the agency. In this, you are a Tier 1 sub to Prime who is direct to the government. 

The prime may have multiple subcontractors and you may be one of them. You can also have your own subcontractors or vendors to help you fulfill your portion of the contract. These vendors are considered Tier 2 subcontractors to the prime.

3. B2B2B2G: Business to Business to Business to Government with you as a Tier 2 sub to a Tier 1 sub to the Prime to a Government agency.

Okay, trying to not make this confusing, but with this approach, your business is a Tier 2 subcontractor. For some companies, this is the best strategy to utilize as your entry into the government marketplace.

The above three considerations lead us right into our top key short-term strategies that every business must consider. 

Key Short Term Strategies:

1. Start by being Subcontractor to prime contractors
2. Start with micro-purchases (<$10K) and credit card purchase orders (<$25K)
3. Start with Simplified acquisition procedures (SAP) (RFQ/PO <$250K)
4. Build your Capture Team: proposal writer, capture manager, HR, CPA, Legal, teaming partners, board of advisors, etc.
5. Build your Past Performance:
   • Start with low dollar value contracts (micro/SAP),
   • Use teaming partners’ past performance,
   • Do more commercial projects to build PP,
   • Become a Tier 1 or Tier 2 sub to build PP
6. Choose low profit margin vs high profit margin to get your foot in the door
   • Fed vs SLED: 80% Fed focus / 20% SLED focus approach
   • Best Value vs LPTA
   • Federal: 60% Best Value vs 40% LPTA
   • SLED: 20% Best Value vs 80% LPTA
7. Consider obtaining small business certifications or team with a biz with certifications
8. Pursue set-aside and sole source contracts with small business certifications
9. Build business infrastructure (for new startups)
10. Create a brand that attracts government buyers. Get government contracting ready so you can become a prime contractor (website, marketing collateral, capability statement, capability video, capability brief, etc.)
11. Start as a specialist and define a niche market as your starting point (focus on one key product/service)
12. Choose one focus area as a starting point: (federal, state, local, commercial) (over 85K agencies
13. Get your finances in place: set up lines of credit, raise funding (mobilization capital, expansion into gov’t market, add new offerings, etc.). You will generally need 20% of the contract award value to start your projects until you invoice and receive payments from the government.
14. Develop your pricing strategies (labor rates, wrap rates, price markups, fringe rates, benefits, vacation time, blended rates, etc.
15. Learn to write proposals or outsource a proposal team: www.govassociation.org/proposal
16. Build proposal library/templates/FOIA requests
17. Pursue key relationships (refer to Relationship Triangle)
18. Create your Dream 100: https://youtu.be/sQe9qWBvW94?si=fy2CWBo7fShekEmb
19. Pursue SBIR/STTR grants: www.sbir.gov
20. Go after Challenge competitions: www.challenge.gov
21. Coopetition: Cooperate with your Competitors (form Teaming Relationships)

Advanced Contracting Acquisition Strategies

Before we get into some long-term strategies, let’s dig deeper into some advanced acquisition strategies. Here are some of my top advanced techniques for your consideration.

1. Pursue Unsolicited Proposals: This technique is found in FAR 15.6 and allows you to win Sole Source contracts. It’s rarely used by contractors, mainly because most business owners just don’t know about this approach.
2. Utilize OTAs: Other Transaction Agreements are super powerful. OTA’s do not fall under the FAR and are treated as commercial purchases. You can win a sole source contract up to $500 million without any repercussion of protest.
3. Respond to BAA: Broad Agency Announcements is a scenario when an agency knows they have a problem and a need, but they don’t know exactly what the solutions might be. The agency will put out a BAA and ask for potential bidders to respond with a “white paper” or a proposal with their unique solutions. They may choose one company’s solutions or multiple companies’ solutions to see which is the most ideal to solve their problems.
4. Join an Accelerator: Agencies are partnering with private sector leaders and forming a variety of accelerators. https://www.civstart.org/accelerator / https://www.afwerx.af.mil/ 

Long-Term Contracting Strategies

Every business needs some long-term strategies. These are considerations for you to explore for your long-term growth plans.

1. Set up Joint Venture (JV) and/or Mentor Protégé relationships.
2. Open a new office in a key government market (DMV, NCR, Huntsville, Space Coast, military base, etc)
3. Be a Generalist: Expand into other niche markets/industries based upon your teaming partners’ capabilities and the capabilities you can build internally.
4. Choose an EXIT strategy that’s right for you: (different end goals)
   • Build a Legacy Corporation:
     • Build your company to leave to your family
     • Passive income
     • Cashflow
     • ROI/Profit
   • Build and Sell your Business:
     • Build your company to sell later
     • Contracts/Past Performance
     • IP/Assets
     • People/Staff
     • Brand/Reputation
     • Relationships
     • Systems/Operational support/Infrastructure/Processes
     • Profit (ROI)/Financials
5. Create a passive revenue stream:
   • You need to build a passive revenue steam for your business
   • Government contracts go from project to project. Even though you may be on a multi-year contract for 5 years, it will eventually end.
   • You need to develop a recurring and/or passive revenue model for long term sustainability.
   • Understand the 3 types of revenue model
     • 3 L’s: L+L+L=L
       • Linear+Leverage+Longevity=Legacy Company
     • Linear Revenue
       • Quick revenue, can happen very fast
       • Transactional
       • Exchange of value (product for money, services for money)
       • Time for money
     • Leverage Revenue
       • OPM (money)
       • OPT (time)
       • OPS (services/products)
       • Other People’s money, time, services
     • Longevity Revenue
       • Passive (money while you sleep)
       • Recurring
       • Do it once and money keeps coming (with minor upkeep/updates)
       • Informational products / software
       • Building a brand/systems/name sells itself
     • Create your own product
       • Develop a software solution
       • Develop a widget
       • White-label (private-label) some else’s product
6. Have a Small Business Program. What happens when you become a large company?
   • Buy another small business (40% of another 8a if you’re an 8a graduate or 10%)
   • Be a mentor to a small business (Mentor Protégé Program)
   • Set up a small business program (Supplier Diversity Program) to help you win more contracts
   • Growth through acquisitions of other businesses
7. Government Contracting is about one word:
   • Key word: CONTROL
   • Control what?…. control CONTRACTS. 
   • Learn to control contracts. When you win the contracts, there are plenty of other companies that can help perform the work.

We’ve covered some important strategies for you to consider as you expand your business into the government market. Let me know which strategies you are considering. As you implement some of these techniques, let me know which ones produced the best results for your business.

ABOUT THE AUTHOR: Abraham Xiong, CCM™

Abraham Xiong is a small business advocate, social entrepreneur, executive trainer, technology enthusiast, business coach, and community leader. He is the Founder of www.GovAssociation.org and www.GovGenie.com, which are organizations assisting small businesses to access more contract opportunities in the B2G marketplace. He can be reached at: info@govcontractors.org