You don’t always have to beat your competitors to win in government contracting. You can join them, too.
Everybody is always looking for an edge when developing their government contracting business. Logic would lead you to believe that you always need to beat your competitors and win as many contracts as possible in order to grow your business.
But there may be other paths to growth, and a minor shift in your thinking could have a major impact on your win potential. One of these ways is “co-opetition” – cooperating with your competition and joining them in pursuing bids.
Teaming with your competition may be an effective method of growing your company and increasing your share of the market. In this article, we’ll go over the types of teaming, the benefits that this strategy may bring, and some of the things you should do to ensure successful partnerships.
Types of Teaming
Teaming comes in as many shapes and varieties. In order to assemble a competitive and sensible team, you will need to focus on your personal preferences, professional network, and the bid itself. At the end of the day, you can choose from any or a combination of the types of teams below, depending on your situation.
If you’re a larger company, you may be the lead contractor who hires one or more subcontractors for a project. This might be the most beneficial method of teaming if you want to maintain control of a project or if the bulk of the project falls within your area of expertise, but you need a few smaller contractors with unique skills to complete the project.
Government contracting giant Boeing often subcontracts specialty services. In a contract awarded in 2017 by the US Air Force, Boeing will use subcontractors to outfit the future Air Force One planes with state-of-the-art protective measures and an advanced communications system. You should never consider yourself too large or a project too small to at least consider teaming as an option.
Conversely, if you’re a small- or medium-sized contractor, you may decide to subcontract your specialty services to a larger contractor. This is a common method that small companies use to get a piece of the larger government contracts for which they are undersized.
Sometimes, large contractors are even required to seek smaller subcontractors for their government projects. Contract requirements may specify that a certain percentage of the project dollars must be awarded to minority-owned businesses, small business entities, woman-owned small businesses, and other set-asides.
This could be a great opportunity for your small business if it qualifies. For example, your minority-owned electrical company may be the perfect teaming option for the large general contractor who is bidding on a government construction project.
Another very simple form of teaming would be to strategically hire temporary employees specifically for one or more contracts. You may use this method if you think your business has almost everything you need to submit a successful bid except for one small piece, but you don’t feel like formally partnering with another company.
These temporary employees can be freelancers, specialists, well-networked individuals or even recently retired government employees with special insight to the project needs. However, you must be sure to confirm that your temporary employees do not have non-compete clauses, government restrictions, or any other legal matters which may become an obstacle in procuring a new contract.
Companies who poach active government employees or hire recently retired government employees will do so in a quick, unadvertised, and proactive measure. Perhaps your engineering firm will hire the life-long city engineer who recently retired and has droves of institutional knowledge which will give your company an advantage in the next engineering solicitation. This mutually beneficial relationship allows the retiree to ease into a life of retirement while your company gains a new business relationship and equally important historic knowledge.
Another common method of teaming is the joint venture, which is usually limited to big projects that require large teams with a broad range of specialty services. A JV with other contractors may be the best way to land a piece of extremely large contracts which require competitive and complete teams to build a winning bid.
A joint venture with one or a few other contractors may be your best method if you are unable to carry the burden of being the primary contractor or if you and other team members all want to maintain some level of control during the project.
There have been a series of joint venture partnerships in the rebuilding of the World Trade Center in New York City since the 9/11 terrorist attacks. One such joint venture was formed for a $3B contract for the new WTC transportation hub and was led by Parsons, DMJM + Harris and STV Group, Inc. There may not have been a single contractor large enough to handle this type of government contract, and being a part of the right joint venture could land you a piece of a similarly-sized contract.
Benefits of Teaming
The first and most obvious benefit of teaming is the increased size of your team and its professional network. The larger team size instantly supplements the list of your past performance and references, which are key review factors for most if not all non-LPTA government contracts.
The increase also allows you to cast a wider net with any business relationships gained from that partnership. Teams should be strategically assembled to supplement your existing business relationships in a manner that can be mutually beneficial to all participants of the team. Different team members can headline different bids based on the strength of their business relationship with the hiring entity, ultimately improving name recognition for all members involved.
From the government agency perspective, hiring a large team with a broad range of services will reduce any risk associated with the perceived ability of a smaller contractor. Sometimes government buyers view smaller contractors as having a limited amount of resources, which they feel may lead to potential cost overruns and longer timelines. Thus, you would be wise to highlight in your bid the fact that your perfectly assembled team has allowed you to reduce the timeline and cost associated with the project, if possible.
Additionally, teaming can help distribute the risk of any contract across all members of the team if assembled accordingly. Instead of shouldering the risk for an entire project, you would only be responsible for your agreed-upon portion of the contract. That means you are limiting your bonding and insurance exposures associated with the contract.
In addition, the smaller focus of your assigned task allows you to limit the resources (personnel, equipment, distribution capabilities, and others) assigned to a single project. This keeps your business model more balanced and less reliant on a single contract.
Similarly, teaming allows you to focus on showcasing your strengths while other vendors cover up your weaknesses. It is important to make sure you find other team members who can supplement your abilities rather than those who create redundancies. By carefully selecting team members who create a unified and complete team, it will also be seen by the hiring government agency as reduced risk on their part. They will be able to hire more confidently without the risk of a contractual nightmare with an incomplete or incompetent team.
One more benefit of teaming is the flexibility that it brings in creating specific teams for different contracts. Since each government agency is unique, you will find that each government bid and the associated needs for each contract can vary greatly. To maximize your chances of winning these contracts, it is a good practice to customize a new team for each bid based on the project needs or client preferences. The flexibility and ability to customize each team will allow you to submit bids on projects which you may have previously precluded yourself.
How to Ensure Successful Teaming
Just jumping into a team doesn’t automatically ensure a winning proposal or a successful project. Even if you are teaming with another contractor, you will still need to do your homework on your client and strategically assemble a team to improve your probability of winning a bid. Your business development team should strategically develop relationships with potential clients or you should identify team members who can provide such relationships.
For instance, your homework may reveal that your client prefers to hire teams with specific specialties on-staff rather than subcontracted. This is a sign that your company may need to hire temporary employees or enter a joint venture rather than the prime contractor-subcontractor type of relationship. Each bid will be unique and your business development team should identify the key relationships needed to increase your win probability.
Although you will not want to team with members who are redundant with your own services, make sure you have redundant skills in your teaming network. For instance, a lead design firm that you work well with may not be available for your next project, so you’ll need to have a backup design firm who can help. Having a few redundancies in your teaming network allows for flexibility and its associated benefits discussed earlier.
The fluidity and impermanence of teaming is something to remember as your business grows. Remember to assemble teams specific to each bid or contract and dissolve the team at the completion of the project. Some partnerships will work better than others and teaming allows you to recycle successful teams in new contracts while shedding unsustainable partnerships.
Further, you need to clearly define your roles in each team you assemble. It is easy to define roles when you are the lead contractor hiring subcontractors or temporary employees. But if you are a subcontractor, your role in a partnership is largely defined by the lead agent. Joint ventures may take a little more time in defining boundaries and roles due to the more complex nature of an equal partnership and the typically larger projects.
It is also important to very clearly define pay schedules and responsibilities with your team. Subcontractors may need to be informed that invoices will be paid within 60 or even 90 days of completed work in order to allow time for the hiring agency to review, process and release payment to the lead contractor.
Payment details for joint ventures should also be clearly defined in an agreement between all team members for everybody’s protection. Ideally, each team will dissolve at the successful completion of each project. However, be sure to protect yourself by having an exit strategy and exit clauses in each team contract so you are not held responsible for another contractor’s shortcomings or financial obligations.
If your strategy of going into bids alone is not working as well as you planned, teaming might be a good option to grow your company.
Sometimes strategically assembling teams and winning smaller pieces of many bids may be better than hammering away at dozens of bids with the hope of winning 100% of each one. This strategy can boost your bottom dollar while mutually reducing the risks associated to your business, your team members, and the hiring government agency.
The flexibility and short-term nature of teaming makes it the perfect wrinkle to throw into your proposal to give you a competitive advantage in your next bid. The old adage goes: “If you can’t beat them, join them”. However, a more accurate representation for government contracting businesses might be “Don’t try to beat them, team with them.”
We hope this post was helpful! If so, it’d be awesome if you shared it with the buttons to the left. Then follow us on Twitter @winoptix and sign up for our email list below. You won’t regret it! 🙂