How Tech Companies Can Successfully Capture Federal Business

CRAIG HUNTER: Welcome to the second in our short series of podcasts where we explore technology companies doing work with the federal government.

In our last session, we spoke through some high-level reasons a technology company may want to engage and transact with the federal government, so be sure to check that out.

My name is Craig Hunter. I am an audit partner in our Government Contracting group here at Cherry Bekaert. With me today is Joe Salgado, General Manager of Capture at Red Team Consulting.

Together, we are going to dig a little deeper into the topic of capturing federal business. Welcome, Joe.

JOE SALGADO: Thanks for having me, Craig.

CRAIG HUNTER: Getting right to it, Joe, let’s say I am a technology company and I have products which may benefit the federal government. How do I educate myself on what they are looking for and where do I go to do that?

JOE SALGADO: There are a lot of different ways I recommend to new entries into the federal government contracting space.

One thing I tell them is to look at as many articles as they possibly can about the agencies they are interested in. There are many specific websites and journals geared toward the contracting community.

These publications feature articles about upcoming opportunities. Another resource is subscription-based services like GovWin and others that compete with them.

These services cull information from publicly available sites to find new opportunities. You can perform very targeted searches by agency or industry, though these involve an annual subscription.

Additionally, there are publicly available sites like SAM.gov, which has significant information from the actual agencies. You can find new opportunities there called RFPs, which stands for Requests for Proposals.

Anyone coming into the federal marketplace is going to encounter a lot of acronyms. I recommend reading as many of these RFPs as you can.

At Red Team Consulting, we are nerds for this. We like to read the RFPs and sometimes the protest documents issued by the Government Accountability Office (GAO).

When there are challenges to awards, those documents show how agencies look at different laws and how they interpret them. You can educate yourself with a lot of publicly available information.

Lastly, join as many organizations as you can if you are a business development professional. Organizations like AFCEA, ACT-IAC, and NCMA are excellent resources.

They host virtual and in-person events where you can interact with colleagues who are doing the same thing you are to find new information and opportunities.

CRAIG HUNTER: It looks like there is a tremendous amount of resources out there for individuals and companies.

To distill that down, if a technology company sees that the government would be interested in their product, what are the ways they can break into this market? It is often seen as having high barriers.

JOE SALGADO: There are many ways. For technology vendors, I segment them into two categories: services and products.

If you are entering the marketplace with a technology product, you can work through the General Services Administration, or GSA. You can create your own GSA Schedule for your products and sell directly to the federal government.

Many Original Equipment Manufacturers (OEMs) are not interested in that because of the legalities and complications that can arise with the commercial side of their business.

Instead, many OEMs work with government resellers to provide products to the federal government. There are a multitude of these resellers, ranging from small businesses to large firms that have been around for over 20 years.

They hold GSA Schedules as well as Indefinite Delivery, Indefinite Quantity (IDIQ) contracts specifically for providing technology to the federal government. Talking to these resellers is often the quickest way in.

For services, there are multiple ways as well. One is acting as a prime contractor, but the bar is higher because you need experience in the technology you are providing.

You will be in heavy competition with players that have done this many times before. We usually recommend that those entering the marketplace start as a subcontractor.

Being a subcontractor to a prime contractor might offer a better competitive advantage. Some opportunities are larger than what a new vendor can provide alone.

Being a subcontractor for a specific, carved-out piece of service is a better way to get experience with the federal government and your target agency. This builds your experience for bidding on future contracts.

CRAIG HUNTER: As you mentioned, some of these projects and awards are very large with multiple elements. Often, even the big contractors do not do it all themselves.

One of the challenges for technology companies is getting to know those big contractors and making their expertise known so they can be part of the overall solution. Do you have specific advice on working with primes?

JOE SALGADO: This comes back to working with industry organizations. Being part of these groups opens you up to networking at breakfast and lunch gatherings.

Even with the online gatherings over the last year and a half, people can interact. When we were in person, sitting at random tables allowed you to get to know people at every event.

You want to get to know potential primes. This includes large contractors like Northrop Grumman or Leidos, but there is also a lot of opportunity in the mid-tier business range.

Mid-tier companies, with annual receipts between $100 million and $300 million, have experience but often need subcontractors for the work they are doing.

CRAIG HUNTER: Another way we see companies coming together to bid on a contract is in the form of a joint venture.

A separate legal entity is created, and two parties bring their respective value to a single contract purpose. This is a way to really formalize that relationship.

JOE SALGADO: That is another tool in the toolshed for government contractors because there are specific advantages to being a joint venture.

In some cases, a joint venture is put together among small businesses to coalesce and go after a large opportunity. In other cases, the SBA has specific rules for Mentor-Protégé Joint Ventures, or MPJVs.

The MPJV is approved by the Small Business Administration. The mentor can be a large business, but the joint venture is still considered small while having the experience of both the mentor and the protégé.

That can be a "superpower" on some of these bids. It helps you get experience you might not be able to get as a subcontractor to a large business.

CRAIG HUNTER: You mentioned experience. Do companies have to have what they call "past performance" with the federal government in order to get new work?

JOE SALGADO: Part of every bid involves evaluation criteria. At Red Team, we specialize in going after RFPs, which is the typical way businesses compete for anything substantial over $500,000.

Part of the instructions on almost every bid is past performance. They want to know if you have done this before in comparison to the scope of work requested.

New entries often think they cannot bid because they haven't worked with the federal government. In most cases, commercial experience is accepted, though federal experience may be more highly evaluated.

If you are a prime contractor, you can also add a subcontractor that has that specific experience. You do not necessarily have to have federal experience to bid on a federal contract.

CRAIG HUNTER: Thank you, Joe. That takes us to the end of our time today. We have touched on a lot of terrific points. Is there a way people can follow up with you?

JOE SALGADO: I can be reached at my email address: joe.salgado@redteamconsulting.com.

CRAIG HUNTER: Thanks again for your time, Joe. For everyone else, thank you for listening. Up next in our series, we will discuss what you need to know now that you’ve won your first contract. Stay tuned.