I'm not a basketball fan, but I know what the stars of tonight's game will be saying tomorrow morning. "It was all about the team." "Everybody on the team hustled." "Teamwork made it happen." Team, team, team: It has become a victory stand cliche.
Well, it turns out that the hardest working word in sports does pretty well in the lucrative game of federal contracting, as well. Sub-contracting, or the related practice of "teaming," can be a highly efficient way to grab an outsized share of the cash that Uncle Sam doles out. About two in every three small businesses that join up on bids with other federal contractors—either as subcontractor or team partners—generate $1 million in revenue. (And 38% of those that "team" pull in more than $10 million.) Only 46% of federal contractors overall hit $1 million in revenues, according to Subcontracting and Teaming, a report by American Express OPEN. For reference, fewer than 5% of small businesses overall manage to crack that seven-figure revenue mark.
Here’s why subcontracting and teaming are so rewarding:
And then there’s the satisfaction. As Karen Barbour, president of The Barbour Group puts it,
“When you are a small business, you find yourself bidding on scrappy jobs, with no meat in them. You lose enthusiasm. You can’t put your brand on those types of jobs. With the federal government, you have real profit, nice jobs that, when they are done, you can say, ‘Wow! I did that!’ "
What's the difference between subcontracting and teaming? Denise Rodriguez-Lopez, American Express OPEN's advisor on teaming and CEO of the KMJ Company, explains that the two differ in both timing and in relationship. A prime contractor will bid on an opportunity but hire a sub for capabilities the prime doesn’t have. The subcontractor is part of the prime’s team but the prime is responsible to the client.
In teaming, two or more firms get together in advance to pool capabilities so they can bid on contracts none of them is qualified to do alone. The relationship is more equal, she says.
Helpful as these partnerships can be, you still need to exercise considerable due diligence. Rodriguez-Lopez offers some advice:
For a comprehensive list of questions to ask, check out Ralph L. Kissick’s write-up of key teaming issues.
And what can all that preparation get you? A chance to get new business, a bigger and better reputation, and a much bigger and better bottom line. That's worth it, isn't it?