The Department of Homeland Security has $40 billion to spend. Here’s how to get a piece of it.
The Department of Homeland Security is a tempting if intimidating target for entrepreneurs looking to drum up new business. The department has a reputation as a tough nut to crack, and no wonder -- comprising 22 disparate agencies, from the Coast Guard to the Secret Service, it has suffered from growing pains. Still, nearly 30% of DHS contracts went to small firms in 2004, and that trend is expected to continue as the department spends a $40.2 billion budget this year.
As is the case with most government agencies, doing business with the DHS is neither easy nor expeditious. Sigarms, an Exeter, N.H., gun manufacturer with 150 employees and $60 million in sales, first took aim at the department in February 2004. It took a full seven months before it was selected as one of two companies awarded a five-year, $23.7 million contract to supply Immigration and Customs Enforcement (ICE) with up to 65,000 handguns. "There were 74 pages of specifications with 50 characteristics, and that was before the pistols were even tested for reliability and durability," says Peter Kujawski, Sigarms vice president of military and government sales. "It was a long, arduous process."
And then came the testing. Each bidder sent a 10-member shooting team to a federal facility in Pennsylvania to fire its pistols up to 20,000 times a day in 250-round cycles -- a task as tough on the shooter as it is on the gun. "After one cycle, you feel the pain in your forearms and fingers," says Kujawski, who shot with the team. "Imagine doing 1,500 to 1,700 rounds a day." To ensure its shooters were up to the task, Sigarms tapped George Harris, a master sergeant in the U.S. Army Reserve and coach of its marksmanship team. Harris saw to it that Sigarms team members began behaving like a military unit, dressing alike and eating and traveling together. Going that extra mile -- plus meeting all the agency's unusually detailed and rigorous specifications -- helped Sigarms land what turned out to be the largest nonmilitary firearms contract in history.
For PEC Solutions, the key to success has been developing a deep understanding of what the DHS actually needs. In 2003, the Fairfax, Va., company won a five-year, $60 million contract to supervise the US-VISIT program -- the department's effort to collect and manage biometric and other data on people entering the United States. The US-VISIT request for proposal didn't specify technologies, but asked prospective contractors to come up with a way of "validating that the person who leaves 30 days after visiting Disney World is the same person who came in," says Tony Urreta, who manages PEC's homeland security solutions department. It was up to the bidders to figure out how to pull that off. PEC had previously worked with the Immigration and Naturalization Service and the Transportation Security Administration and was familiar with airport flight patterns. The company built on that knowledge by studying vehicle and foot traffic at border crossings, as well as new technologies such as retinal scans. The lesson, Urreta says, is that you have to be flexible to deal with the DHS. The technology you know may not be what's necessary for meeting security challenges.
If you see opportunities for your company at the DHS, begin by monitoring two websites, hsarpabaa.com and hsarpasbir.com, that list requests for proposals, contract awards, deadlines, and contact information. You may also want to subscribe to an Internet service like Input (input.com), which keeps clients abreast of developments inside the federal government; subscriptions cost between $500 and $25,000, depending on company revenue.
Kevin Boshears, head of the DHS Office of Small and Disadvantaged Business Utilization, likes to send small companies to the General Services Administration Schedules Program (gsa.gov). Through this program, small and midsize businesses can apply to join a pool of companies that are preapproved for contracts from all federal agencies, with a cap of about $1 million. "It's a nontrivial event to go through the process," says Ari Vidali, CEO of Envisage, a provider of database technology based in Bloomington, Ind. "But if you do, it becomes very easy for a federal agency to purchase your goods and services." For Vidali, the application process took nine months. Since being accepted, Envisage has won contracts from the DHS to help local, state, and federal law enforcement agencies manage training.
The DHS also provides networking opportunities at monthly conferences around the country. (Search "Vendor Outreach Sessions" at dhs.gov.) Christine Podracky, CEO of Total Systems Technologies in Fairfax, Va., has used such sessions to connect with prime contractors and officials at DHS agencies. As a result of such contacts, she says, her company is on the verge of signing its second DHS deal, with the TSA.
Doing business with the DHS or any other government agency requires you to be in it for the long run. Government wheels turn slowly, and anyone who's looking for a quick score will be sorely disappointed. Winning a big contract -- and then satisfying its terms -- can mean major investments in infrastructure. In the last 18 months, Sigarms has spent more than $3 million on equipment, expanded its manufacturing facility to more than 100,000 square feet, and increased capacity by 25%, all in anticipation of future government contracts. That faith was well founded. In February, the company announced its fourth new federal government contract in six months, not from the DHS but from the U.S. Postal Inspection Service, for 3,600 Sig Sauer pistols.
A little help from a friend
To get your foot in the door at the DHS, consider the department's Mentor-Protege Program. It pairs large contractors with small companies to help the smaller outfits qualify for work from the DHS. When the relationship works, it's a win all the way around: Proteges get access, mentors get special credits, and the DHS gets an expanded pool of small companies to do business with. So far, 47 such partnerships have been approved.
Rather than playing matchmaker, the DHS relies on mentor firms to select their proteges -- so active networking and marketing are musts for would-be mentees. Mentor and protege companies then submit a joint proposal that spells out the developmental assistance and subcontracting work the mentee can expect to get over 36 months. For more info, go to dhs.gov/openforbusiness.