CXO

Getting a piece of Uncle Sam's IT dollars

Landing a federal IT contract can mean a steady revenue stream for your company, but you have to jump through many hoops. Find out what you need to know to do business with the government.


Mention government, and you think bureaucracy. That means weighty procedures and tedious, eye-crossing paperwork. Accomplishing anything amounts to suffering an endless process weighted down in rules and indecipherable regulations. But, despite the bad reputation, landing a government contract can mean a steady revenue stream for your company. Before you start firing off RFPs, here’s what you have to know to do business with the Feds.

The starting point
The bad news is government bureaucracy isn’t going away. But, the good news is, technology has made government more efficient. Even better, Uncle Sam outsources billions of dollars in contracts to U.S. companies. Every year, government purchases of goods and services from private contractors amount to almost $1 trillion.

So how do IT company software developers get a piece of the action? It isn’t easy. But it’s worth the effort when you consider that giant companies such as Boeing Company, Lockheed Martin Aeronautics Company, and McDonnell-Douglas snare billions of dollars a year in contract money from Uncle Sam. It takes a few years before you’re given the green light, but the payoff is a contract that can account for a significant share of a company’s revenues, setting the stage for more big-dollar contracts in the future. An average midsize or large company can secure million-dollar contracts if it has the right credentials, is aggressive, and happens to be in the right place at the right time.

Start by checking out opportunities on FedBizOpps.gov (FBO), a Web site that is the government point of entry for federal government procurement opportunities of more than $25,000. This is where government buyers publicize their business opportunities by posting information directly to FBO. Through the FBO portal, commercial vendors seeking federal markets for their products and services can search, monitor, and retrieve federal contracting opportunities.

Before you begin the lengthy contract application process, never forget you’re dealing with government bureaucracy, warns Gary Dunbar, president of Gary Dunbar, Inc., a Boston consulting firm specializing in helping businesses secure government contracts and grants in Boston. “Do what you’re told, follow instructions, and don’t attempt to be creative and improvise. It’s a very structured and predictable process, making originality a waste of time. Worse yet, it costs you points.”

Know what to expect from Uncle Sam
When you sell products or services to the government, there is plenty of work and you’re paid within 30 days. That’s a far cry from the private sector, which often makes you wait up to 90 days, according to Dunbar. The downside is that profit margins from government contracts are much lower than the private sector, typically 5 to 8 percent compared to commercial profit margins that range between 10 and 20 percent. But it can be a stable revenue source that companies can depend upon.

To get your foot in the door, you must be prepared to complete a lengthy proposal process. Dunbar usually works on contracts ranging between $2.7 million to $3 million, and his average contract proposal is about 100 pages. Billion-dollar-plus contract proposals can run as many as 3,000 pages!

The proposal preparation process begins with the Request For Proposal (RFP), in which the government agency outlines the specifications and requirements of a project. Before you ponder the RFP, remember that the government contract business is fiercely competitive, requiring infinite care in meeting all its specifications, adds Deborah Kluge, an expert on government contracts in Columbia, MD. “Invest time and learn everything you can about the contract and the agency offering it,” she advises. There are contract trends based upon the importance of the work. The defense department, for example, is spending billions on homeland security, building software systems that prevent terrorist attacks.

The RFP
Kluge offers some advice about the grant securing process, starting with the RFP. Learn what the lettered sections of an RFP are (Section B refers to your pricing, Section C is the scope-of-work, Section K contains Representations and Certifications, Section L provides instructions to the bidders, Section M specifies the bid evaluation criteria, and so on). The titles of the lettered sections are generally the same in every RFP. Also keep the following in mind:
  • The information critical to your bid may be scattered among many different sections of an RFP.
  • If you don't understand parts of the RFP, submit written questions.
  • Some RFPs specify a date by which questions are due. Make sure you send in your questions before the due date or they may not be considered.

Proposal schedule
Kluge offers more advice, with the following thoughts about proposal scheduling:
  • Make a schedule and stick to it.
  • Work backward from the proposal due date.
  • Make a separate schedule for preparation of the cost/business proposal.
  • Make sure you leave plenty of time for copying, binding, and delivering the proposal. Distribute the schedule to all members of your proposal team.

Proposal preparation
Next, you must prepare the proposal itself. Kluge recommends doing the following:
  • Study the proposal evaluation criteria and the points allocated to each section. Doing so will tell you what to emphasize.
  • Your technical approach and strategy should provide answers to the following questions: who, what, when, where, how, and why?
  • Your management section should contain a discussion on how you will manage the project and your staff.
  • Your personnel section should include information about the experience and skills of the staff members you are proposing for the project and their resumes.
  • Demonstrate that you have performed similar or related work for this or other clients.
  • Don't assume the government knows your organization's capabilities or the projects it has carried out. The government only evaluates the specific information in your proposal.

Costing strategy
Next, Kluge has this advice as you formulate your numbers:
  • Don't wait until the last minute to begin gathering cost information needed to prepare your budget.
  • Understand the type of contract you are bidding: fixed-fee, cost-plus, cost-reimbursement, time and materials, and so forth.
  • Prepare a spreadsheet template or checklist of items to include in your budget.
  • Check and re-check your numbers and formulas. Review the hard copy of your budget to see if everything is correct.

Watch your step
Finally, once you’ve followed all the rules, watch out for these danger signs that could knock you out of the contract race:
  • Failure to follow the RFP instructions regarding organization of the proposal; inclusion of required information, page limits, volumes, and so on. You must understand the problem (the reason the agency is issuing the RFP), meet the proposal deadline, and tailor your response to the specific RFP.
  • Costs/budgets are unreasonable (too high or too low) or incomplete.
  • Proposal is unprofessionally prepared (typos, blank pages, unnumbered pages, or sloppy-looking) or poorly written (information is poorly organized; poor grammar). In short, you’re in trouble if you don’t dot every “i” and cross every “t.”

If at first you don’t succeed…
After following RFP guidelines, there are no guarantees you’ll win the contract. “If rejected, call the contracting officer to arrange an in-person or telephone debriefing to find out the reasons for rejection,” advises Kluge. “Don’t get discouraged. Instead, learn from the experience and apply it to your next bid.”

Editor's Picks

Free Newsletters, In your Inbox