Not Small Anymore—Beyond the 8(a) and Small Business Size Standards

On December 19, 2013, I gave a presentation with my wife Louisa L. Jaffe, TAPE CEO and President, for the NCMA Small Business Virtual Conference. It was a topic close to our hearts, since we ourselves have experienced the reality of growing beyond the shelter of small business set asides, and being forced to compete with very large companies in our industry.

Here are the key points we shared in our presentation:

What it was like

In the past, when small businesses graduated, they often received five-year contracts that extended beyond their eligibility, often called “graduation gifts.” This is no longer the case – today’s small business environment has been affected by changes which impact that process:

• The rules on “novation” (technical term for when a new company takes over a contract) affect the small business contract size standard
• Recertification rules (due to these, assets are worth less and the larger business becomes less interested because they may not be able to win task orders and/or the work is now less valuable)

What gives small businesses the edge

• It’s about your local relationships
• Your advantage is your history and relationship with your customer – he/she knows you!
• You know your customer’s hot buttons
• You have a one-on-one relationship
• You are familiar with your customer’s budget, pricing, and strategy
• You may be able to shape and grow your Statement of Work (SOW)
• The big companies have no advantage over you in terms of one-on-one relationships, except that they can talk to 10,000 people at the same time

The requirements and expectations of a small business

• The small business advocates are required to be 1102s (contract people)
• It is to your advantage to develop relationships with small business advocates
  • Local/potential small business persons
  • This community influences the small business size standard
• Contracting Officer’s Representative (COR)
  • This community sets requirements for the work
  • They can answer your questions
• Prepare your company
  • Adapt to the way IDIQs are structured
    • You need to be prepared to be a good sub as a now large business
    • As a graduated or mid-tier business, your place at the table is that of a sub. The reality is that you simply aren’t big enough to win the task orders which are typically reserved for big jobs
    • This is the small business edge that continues after you graduate
• The last few contracts you won over the past few years give you momentum to carry you forward into the full/open world
• When you become a bigger small business, smaller businesses are your friends – cultivate these relationships
• Little businesses should also become friends with other small businesses

Keeping customers in the LPTA world

• As we discussed earlier on this blog, you can help encourage customers to develop appropriate, technically acceptable criteria to ensure that they get what they want and what they are looking for
• Ensure those standards are reviewed and discussed between all stakeholders
• Speak up about LPTA, when appropriate

Sub vs. prime – Help make everyone a success!

As a sub, the relationships you have to build are with potential primes and government agency customers. There is a lot you can do to be a good sub.

When you’re the prime, identify subs as stakeholders, and be sure to remember that small businesses are your friends.

Mid-tier advocacy

There are advocacy organizations that exist which recognize advanced small businesses and the growing gap of those who have graduated, but are not yet big businesses, to address issues such as:

• There is no glide path after graduation (the government will not help)
• The whole world of IDIQs exists because task orders take 20% of time of regular competition
• The way multiple MA-IDIQs are currently structured, mid-tier businesses lose out to big businesses on the IDIQs

Louisa and I thoroughly enjoyed presenting this material at the NCMA conference (if you missed it, you can purchase a downloadable recording of the entire event). Stay tuned for news of other upcoming presentations about small business issues in the federal contracting world.