STRATEGY

What Your Country Can Do For You

You don't have to be as big as Halliburton to get a piece of the government-contracting action.
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Strategies

You might say Pam Braden is sitting pretty. In just six years, her IT logistics company, Gryphon Technologies, has grown to seven offices, 200 employees, and sales of $20 million, engineering weapons and telecommunication systems for the U.S. military. And that's not the only thing the Riverdale, Md., entrepreneur has to boast about. Her people worked on almost every Navy ship used in Operation Iraqi Freedom. "The ships were deployed for long periods of time, with no problems," she says. "They completed their missions. We're pretty proud of that."

Of course, Braden's foray into government work was somewhat lower profile: a $500,000 subcontracting job organizing the trademark office of aerospace giant Northrop Grumman. But she jumped at the chance. "If you want to be a large business, which I want to be," Braden says, "you need to network the big companies and the government itself."

With demand in the private sector stubbornly slow, it's hard not to look at the big-ticket contracts scooped up by outfits like Bechtel Group and Halliburton and wonder how to get a piece of the action yourself. In fact, the best -- and often only -- way to get your hands on Uncle Sam's cash is by starting out, like Braden, as a subcontractor.

That's because the big prime contracts increasingly go to the heavy hitters. Despite a congressional mandate that reserves 23% of contracts for small businesses, the reality is that they have a tougher and tougher time competing because of contract bundling and a notoriously arduous bidding process. "For new entries, subcontracting is a more direct route into the market," says Stan Soloway, president of the Professional Services Council, a government contracting group in Arlington, Va.

Federal law requires prime contractors to enlist subs on nearly all jobs valued at more than $500,000 -- a fact that more and more small companies have begun to recognize. In the weeks after Bechtel was awarded the first major contract for rebuilding Iraq, for example, the San Francisco conglomerate was inundated with thousands of subcontracting inquiries. Company officials estimate that more than half of the $680 million project will be subcontracted out. And the Iraq project, spokesman Jonathan Marshall is quick to point out, "is far, far from our largest job."

How to get in on the action? You could learn a thing or two from Bechtel board member and former secretary of state George P. Schultz, whose political connections are credited with helping Bechtel win the lucrative Iraq contract. But even at its less lofty levels, the world of government contracting is almost as small and insular as your local chamber of commerce. Invariably, the best deals go to those with the best connections.

Creating that network of contacts is no simple task. It takes superior networking skills and loads of patience. Braden, for example, built her Rolodex over the course of 14 years working at several engineering services firms that specialized in government work. But even with her contacts, it took her about a year of constant meetings and phone calls before she scored her first subcontracting gig with Northrop.

"The law requires prime contractors to enlist subcontractors on nearly all jobs of more than $500,000."

The job struck her as "low level." But Braden didn't hesitate, because she sensed it would lead to more. Indeed, following the Northrop project, her start-up went on to work with outfits like L-3 and Lockheed Martin. Now, Gryphon Technologies gets 75% of its revenue as a prime contractor, dealing directly with the Department of Defense -- giving Braden a reliable customer while the private sector remains in the doldrums. "Working solely in the public sector," she says, "was breaking my heart when all of those dot-coms were doing so well. But now I'm grateful."

Braden suggests that first-timers hire someone with government experience to jump-start a subcontracting venture. If that's not feasible, try and prove yourself first with private-sector contracts, then hound potential corporate partners about what you could do for them on a government job. "You can't just sit back and accept 'we'll call you," says Fred Berger, senior vice president of Business Plus, a Hampton, Va., administrative and tech support firm that specializes in military work. "You have to set up a personal relationship and keep pushing."

A good place to start forging those relationships is at the so-called "site visits" organized by government agencies when federal service contracts are designated. Such events are designed to give bidders an opportunity to tour facilities and better understand the job. Find projects related to your industry (listed at sites such as www.eps.gov) and crash the party.

Most major prime contractors also have advocacy offices to facilitate subcontracting relationships. Northrop Grumman, for example, holds quarterly fairs where potential subcontractors are invited to showcase their products and services. "You get to know them and what their capabilities are," says Jim Perriello, president of Government Solutions, a Northrop business unit. "And when a deal comes up, they'll be on your mind." Trade associations, such as the Professional Services Council and the Contract Services Association, also in Arlington, provide planning advice to members, and host conferences and social functions, where first contacts can be made.

In fact, says Braden, the social setting can be as fertile a ground for discussions as the boardroom. Gryphon buys tickets to pro sporting events and invites reps from potential partner companies. "I try to be natural and just have a good time, talk to these guys about what they're doing," she says. "It's just getting to know the people at a different level."

Last updated: Jul 1, 2003




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