NEWS > Do you really want a slice of the $700 billion Dept of Defense budget?

Do you really want a slice of the $700 billion Dept of Defense budget?

02.February.2022

3 min read

With annual expenditure in the hundreds of billions of dollars, obtaining even a small slice of the Department of Defense’s (DoD) pie can appear extremely appealing. Each year thousands of opportunities arise both nationwide and overseas in support of DoD’s operations, and government contracts can certainly provide a significant revenue stream with timely payments. However, as with any business dealings, it’s vital you go in with a clear strategy of how to access the opportunities, and your eyes wide open to the realities and obligations of doing work with the government. Each situation will naturally be different, driven by the product or service you offer, government strategy, what the government is looking for, and many other factors, but certain fundamentals need to be in place and considered in all instances.

The basics

Before you’re even able to bid on government contracts you need to be registered in the System for Award Management (SAM) database and have your NAICS and DUNS codes. Without these administrative pieces of the puzzle in place, you’ll go nowhere. Once these pieces are in place you can start to review opportunities and assess your readiness to bid for the work. Can you demonstrate ‘past performance’, that is, a strong history of delivering the relevant goods or services? Is your business prepared for strict regulations and oversight that come with any government contract? This is taxpayer money after all. With annual contract expenditure in the hundreds of millions of dollars, you will not be alone in bidding for contracts, and you will undoubtedly face very stiff competition. How unique and differentiated is your offering? Does your business have the ability to decipher a government request for information (RFI) or request for proposal (RFP), and then put together a compelling proposal clearly articulating and demonstrating your ability to meet the government’s needs? Your capability to deliver against all these areas will dramatically impact your chances of success.

Navigating the process.

With the basics taken care of, the next job is to figure out the procurement process and how to navigate it. Planning, Programming, Budgeting, and Execution (PPBE) is the annual DoD process for allocating resources. It serves as the framework for DoD leaders to decide which programs and force structure requirements to fund based on strategic objectives. PPBE is a calendar-driven process that, for any fiscal year cycle, typically begins more than two years before the expected year of budget execution. The process itself can be complex and daunting, with federal regulations governing the process, type of contract, and who can legally bind the government. To best position your business for success, you’ll need a clear strategy, based on an in-depth understanding of the process, the purchasing agency’s mission, buying cycles, key contacts, their responsibilities, and regulations that govern the procurement process.

To partner or not to partner?

The Federal government works with many large organizations to complete their contracts and they are often required to provide subcontracting opportunities to small and medium-sized enterprises. Partnering with these ‘Primes’ can open up opportunities and bring additional benefits, including the avoidance of significant administrative overhead costs often required by the government to manage their large contracts. Primes can also provide you with the opportunity to get your foot in the door for any future contracts, and the right partner can also help by allowing you to use their past performance if they have a good track record. On the flip side, you need to recognize that the prime may have priorities and goals that don’t align completely with yours, and that brings some inherent risk into the partnership that needs to be managed. Choosing the right partner can make a real difference in creating a springboard for your future growth.

There’s no doubt that government contracts can be very rewarding, but the process can also be confusing, complicated, and time-consuming. Having a skilled and trusted advisor with the right network can be invaluable in navigating the world of government contracting; ensuring that you manage risk, and proceed very intentionally with full knowledge of what is required of you and your business.