Lessons From the Contracting Wars


Faye Coleman is in the enviable position of telling the government what to do. As founder of Bethesda, Md.-based Westover Consultants, she helps a range of agencies design outreach programs or create online tracking tools. On Monday, I wrote about how some small businesses are yelling at the top of their lungs but have yet to get noticed by the government. For six years, federal agencies have failed to meet a goal to dole out 23 percent of their contracting budgets to small companies, costing small businesses $4.5 billion last year alone, according to testimony this week at a House Small Business Committee hearing. But after decades of working with the government, Coleman's consulting firm is one business that has learned how to get its voice heard within the marble walls.

Coleman got her first taste of government work while managing federal contracts for private training companies. She quickly learned that "when dealing with taxpayer dollars, there is a whole other layer of scrutiny and oversight." It meant that the companies she worked for had to cross all their "t's" before even thinking about applying for a contract. Even with that experience, when she went into business for herself in 1984, she found out that she "didn't know everything" about unlocking the Fort Knox of government dollars.

Coleman started out by meeting with agency officials she worked with in her previous jobs. She says that while they liked her pitch, many were reluctant to hire her because they wouldn't get credit for working with a minority-owned business. Coleman hadn't sought to be certified under the Small Business Administration's 8(a) program for disadvantaged businesses. "In those days, in early '80s, the program did not have a good reputation, and I didn't want to be associated with something viewed as less than completely competent," says Coleman, who qualified as a female African-American entrepreneur. She also admits that a certain amount of pride kept her from filling out the paperwork: "I felt that I wanted to stand on my two feet."

After getting shut out of contract after contract, Coleman eventually caved and applied. The program threw open the doors for Westover, allowing the company to bid successfully on contracts. But the certification also had drawbacks. After winning a few large contracts, Westover immediately shot through the 8(a) ceiling on the sales of businesses that can participate. That meant she had to split revenues with smaller firms in order to keep winning contracts. "We became victims of our own success," she says.

That didn't last long. When her nine-year eligibility under 8(a) lapsed, she started getting repeat business from agencies she had worked with before, no longer needing the certification. Not having to split sales with smaller firms, her revenues exploded, and she pushed beyond the small-business category. Now, about 70 to 75 percent of Westover's sales (which totaled $16.2 million in 2006, the company says) come from federal and local contracts, and the firm works with about 25 different government agencies. Clients include the Air Force and the Department of Health and Human Services. Coleman's company had a contract to assist with Gulf Coast relief work just 2 1/2 weeks after Hurricane Katrina hit land. Westover had about a week to help send out teams of volunteer mental health workers to take care of survivors stranded in temporary shelters across the region.

Her opinion of the 8(a) program has also improved. Coleman says that higher-caliber businesses have bettered the program's reputation. She thinks it is a good way for small companies to get access to funds and services to build up their internal operations. But the better reputation also means that these days competition among 8(a) businesses is fierce, making it that much harder for a woman, minority-owned, or other disadvantaged business to stand out among the crowd. In addition, the SBA's budget has been slashed under the Bush administration, making resources even more scarce. "I look at the 8(a) program as one of many potential tools in the toolbox," says Coleman. "That program should not be relied on as the primary avenue" to winning contracts.

With the high caliber and number of 8(a) businesses, yelling through the wall isn't enough anymore, says Coleman. Instead, she advises companies to look inward before starting the process. "Companies looking to get in really have to do their homework," she says. They need to research requirements and figure out what sets them apart from their competition. They also need to look hard at their infrastructure, making sure that they have things as basic as government-approved accounting services and detailed company literature with references ready before making pitches.

Once small companies have their housekeeping taken care of, they should learn the ropes by working with larger companies with a history of winning contracts, says Coleman. Today, things are even harder for small companies because the federal government issues much larger, wide-ranging contracts for an array of services over time. "Small businesses can't meet those requirements," says Gwen Martin of the Center for Women's Business Research, adding that federal regulations frequently aren't enforced.

But because rules often mandate that companies receiving contracts work with disadvantaged subcontractors, large contractors have a big incentive to partner up with smaller players. And since the fallout over small businesses not winning contracts in Afghanistan, Iraq, and New Orleans, the federal government has been making efforts to unbundle contracts so that they are accessible to small companies. For now, whether pitching the government or one of its partners, Coleman says, it's not hopeless for small companies: "There are opportunities out there."

government contracts

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