Small Businesses Look To Partnerships For Federal Contracts

The U.S. Department of the Interior (DOI) Office of the Inspector General released a report July 1 indicating that several Fortune 500 businesses were the actual recipients of some $5.7 million in federal contracts designated for small businesses over the last two years. The report examined three-tenths of 1 percent of all contracts dated 2006 and 2007.

For advocacy groups like the American Small Business League (ASBL), which has alleged unfair treatment of small businesses from the federal government's Small Business Administration (SBA) for years, the report hardly scratches the surface.

"I wonder how many we would find if we looked at the other 99 percent. My guess is hundreds," said ASBL President Lloyd Chapman, a former solution provider.

The ASBL has conducted its own reviews of the DOI's top 100 recipients of federal small business contracts in 2006 and 2007, using data culled from Fedmine.us. Between the two years it identified 50 large firms, including businesses like ManTech SRS Technologies Inc., Newport Beach, Calif., and GTSI Corp., Chantilly, Va., the latter of which was recommended for debarment from future small business contracts by the SBA in 2006. (GTSI did not respond to repeated requests for comment.)

But it's part of a larger problem, Chapman emphasizedand#8212;one that the ASBL suggests the SBA has repeatedly failed to address.

"The SBA's excuse was miscoding, but miscoding would be an accidental data entry error, right?" Chapman said. "Is it possible that every day for seven years that contracts could be miscoded? Well, why then is a Fortune 500 company always miscoded as a small business, and not the opposite, if it's accidental? It's just not really believable, is it?"

The ASBL has long maintained Bush administration politics have much to do with a climate that allegedly favors large corporationsand#8212;the league has endorsed Sen. Barack Obama for presidentand#8212;and while solution providers interviewed for the article didn't always want to talk politics, many agreed that a small business designation is sometimes little more help than a blank sheet of paper.

Next: Restructure The Standards "It's an unfortunate thingand#8212;there's a competitive advantage and there's gamesmanship associated with it, sure," said Ray Bjorklund, senior vice president and chief knowledge officer of government market intelligence consultancy FedSources, McLean, Va. "The SBA is trying to restructure the standards, but it is a very touchy subject areaand#8212;both from administration politics but also the vested interest of many small businesses that might get forced into a different category."

Most observers see a mixed picture. The SBA is making a more concerted effort to make corrections and fix designations, Bjorklund said, and national media attention is helping to drive the investigation. But many solution providers don't seem convinced.

"A good friend of mine said, 'I'm going to write a book about the GSA, the state, the SBA, the committees and anyone else who talks about what they're doing to help small businesses or women-owned businesses or whatever," said Joanne Taylor, president and CEO of Provista Software International Inc., Fremont, Calif. "She said, 'I'm going to call my book 'Lip Service.' I thought that was great. I see no reason for optimism."

So what can a smaller shop do to get a win on the board? Many solution providers preach what the more pragmatic small-business proprietors out there already know as a key strategy for winning federal business: partnering.

"There are plenty of success stories, but I also think some small businesses that have a variety of certifications on their portfolio are leaning a little too hard on and#91;thoseand#93; certifications and not trying hard enough to get their foot in the door," Bjorklund suggested. "You have to get yourself noticed."

Many businesses aren't getting the most out of networking opportunities, solution providers agreed.

"We go to FOSE and things like the Air Force Information Technology conference, as well as other hosted events that have been great in terms of us getting to know people and letting people know who we are," said John Samborski, vice president of Arlington Heights, Ill.-based Ace Computers. "We're not there to just show ourselves for the airforce personnel, we're also there to show ourselves to other contractors."

It's all about visibility, Samborski said. Intense front-end networking efforts have led him to expect lots of phone calls from prospective partners whenever a good opportunity comes into viewand#8212;and he hasn't been disappointed.

"We're more of a hardware provider, so in that case you're the same as Dell, or an HP, or someone else who's very dominant. It's not easy," he explained. "You have to really demonstrate a very intimate relationship with a customerand#8212;and we're able to do that, but a lot of folks just don't know who we are. Therefore, by partnering with someone who already recognizes who you are and what your capabilities are, and#91;they'reand#93; happy to work with you and get you in front of companies."

"It's one of the most challenging things we go through," said Denise Arboleda, owner of New York-based Compulink Technologies Inc. "You need to be this or you need to be that. Every small business should look to partner with another small businessand#8212;one could be able to turn one part of a project around and another could, for example, have a quality understanding of an application. You can't do it by yourselfand#8212;you should look at who's who in the reseller channel and see who's out there that you could work with."

But doesn't partnering also mean a smaller takeaway?

"The tendency in any business is to say, 'I want it all,' " Taylor said. "But 10 percent of something is better than 100 percent of nothing. As small businesses, we need to get smarter. We need to apply pressure to our local politicians and quit dealing with agencies that have no skin in the game."

It was partnerships that led Taylor to some of Provista's biggest federal contract wins, including with the U.S. Navy and the Federal Aviation Administration.

"Together, we had all the right skill sets and we took away some of the fear," she explained. "You know, no one ever got fired for hiring Northrop Grumman, or IBM, or HP. But someone could get in deep trouble for hiring a small company like Provista if there wasn't some level of comfort. Well, a level of comfort is having more than one small business involved. Strength in numbers, and knowledge."

"When you're a small business, you don't know a lot of the loopholes," Arboleda added. "Some of that key information just isn't available to you if you're not savvy."

No matter what, solution providers urged, don't be intimidated.

"I believe that pitching federal is no different than pitching Fortune 500," Arboleda insisted. "They don't want to hear what you have to sell, they want to hear what you're going to do for them that's different than what they have already. You have to go in there and do your homework really well."

"There's a lot of myth about government and how difficult they are to work withand#8212;that they're not as efficient as the private sector," concurred Taylor, who's been working in the federal space for six years. "I find them to be as efficient and easy to work with, and I'm glad we got into this space. I do just wish they'd come up with a true classification for small businesses"and truly promote that."