It is full steam ahead in FY ’22 and we have been engaging in some very important topics to support growth for small businesses in the federal marketplace. As more and more companies look to participate, we are seeking to shed light on best practices for anticipated growth. Your performance rating is king in GovCon, so it is imperative that you seek opportunities congruent with your potential for success as a result.
While aiming high, and looking for the biggest opportunity may seem like the best plan, sometimes achieving small wins and accumulating many past performance engagements can build the solid foundation you need to move on to the higher award amounts.
So where do you turn for opportunity if you have less than 5 years in the industry and you’re looking to pad that backlog with positive past performance?
Micropurchases
According to our recent discussion with Directors of Small Business for 2 major Prime contractors, micropurchases are an excellent way to win work with government agencies without a ton of past performance experience, and capture opportunities for success with little to no competition.
As defined in the Federal Acquisition Regulation (FAR) 2.101, a Micro purchase is “an acquisition of supplies or services using simplified acquisition procedures,”. Essentially, each provides an aggregate of purchases so long as they do not exceed the threshold of $10,000. Each purchase, if deemed reasonably priced, does not necessitate competitive quoting, so they are not very difficult to earn. Companies with zero to very few awards are best served here by combining several Micropurchase wins to serve toward your valid past performance.
The most supportive factor to this work is that these purchases are primarily paid via the GSA SmartPay Purchase Card, which allows for direct and expedient payment rather than 30+day payment remittance typical in contract awards. This provides vital value for businesses who do not have access to working capital.
Joint Venture
As you establish your place in the industry, another great way to earn past performance experience is through Joint Venture agreements. These arrangements align a mentor business and with a protege that typically has 2-5 years experience, so that they can participate on a contract award together.
The benefit to the mentor company is that they can seek contracts allocated for small businesses if the protege qualifies as such individually. It also allows for the mentor business to seek small business set aside contracts, for example, like those designated for 8(a), HUBZone, service disabled veteran-owned, and woman-owned.
The benefit to the protege is that this allows them to capture opportunity by utilizing the collective past performance history of the protege and its mentor. This usually enables contract work with larger prime contractors or even prime status on the award. By utilizing the mentor’s greater past performance history and experience within the industry, the potential for higher award amount increases. Additionally, the mentor and protege work together to share the expense for the work, which allows more experience to be gained while not having to fit 100% of the bill on your own for the work.
Micropurchases and Joint Ventures allow small government contractors to gain access to contract awards that will not only establish a backlog for successful fulfillment of contract obligations but also allow you to build financial stability that will provide more access to working capital for your future bids.
The greater the contract award, the more it costs to participate by way of operating expenses for the business. So, if you are having difficulty qualifying for flexible and affordable working capital options, you may want to seek one or both of the above resources to build your financial base through positive past performance, which will provide your business more opportunity to access reasonable funding options for your future contract endeavors.