By Al Moore
All businesses, regardless of size, location, service, or competitive landscape, face one universal challenge: generating new sales opportunities. Strategies and tactics designed to build a sales pipeline go back to the Egyptians. It’s been called everything, judging by the chapter titles of “How-To” books on store shelves: “lead generation,” “demand creation,” “farming,” “hunting” versus “gathering,” “rainmaking,” “pursuit development,” even “bird dogging.”
Federal contractors and subcontractors are not immune from the need to identify viable business opportunities. Hampton Roads, as home for numerous DOD, NASA, and other government facilities, is a hotbed of federal procurement activity.
For the small business owner, the thought of making one’s way through the Federal contracting maze and successfully competing with some of the largest companies in the world can be daunting.
To provide some guidance on this challenge, we spoke with several leaders in the Federal contracting community.
One universal theme stands out: the importance of networking. As Gary Lisota, President and CEO of Valkyrie Enterprises commented, “Networking is the big thing. The size of your Rolodex is an important as anything.”
While commercial sales are known to be very relationship-dependent, sales to the federal government are not much different. The federal process is often more controlled, transparent, and subject to comment. However, Lisota stated, “It’s important to have a champion” inside the buying organization. “Those champions are built through strong relationships and a reputation as a high performance service provider.”
Gary Brandt, chairman of American Maritime Holdings, Inc., also discussed the importance of relationship-driven connections. AMH subsidiaries deal with three types of buyers: federal, commercial, and private owners. While private and commercial business does place a higher emphasis on personal relationships, the federal buyers also recognize the importance of a strong, trusting relationship.
“That’s why all customer comments about quality come to me,” said Brandt. Marine Hydraulics International (MHI), an AMH subsidiary, holds several awards and certifications, including a Master Ship Repair Agreement with the U.S. Navy and certification by the American Bureau of Shipping (ABS). Both instruments allow MHI to compete for business that otherwise would go elsewhere.
Seeking federal business is also impacted by the nature of a contract or potential contract. A key source of business for MHI is a multi-vessel contract that serves as a pre-competed, repetitive pipeline. Because the contract covers all vessels within a given class, all enhancements and repairs of those vessels are routed to MHI. They do not require an extensive Request for Proposal (RFP) and proposal submission process for each vessel. MHI participates in the planning of the repairs, enabling both MHI and the Navy to make efficient use of the vessel’s downtime.
Another technique that plays a major role in the federal prospecting cycle is the use of teaming arrangements with other service providers. Valkyrie Enterprises uses the teaming approach to great advantage.
“We have over 60 teaming partners with whom we share business opportunities. This allows us to complement our services by filling gaps in our service profile,” Lisota said. “The majority of our business comes from teaming partners.”
Valkyrie Enterprises presents a strong case for the effective use of teaming. Founded in 2007, the firm has grown to a revenue level between $17 and $20 million — a very unusual and enviable achievement.
Brandt is also a believer in the teaming approach, because it allows MHI to present “a blend of specialties.” This demonstrates both breadth and depth in MHI’s service offerings and allows MHI to enhance their productivity, especially on the multi-vessel contracts.
“Because we compete as a low cost, high quality provider, high productivity enables us to provide savings to the Navy,” said Brandt.
Brandt also explained MHI’s use of formal joint ventures as a way to strengthen their competitive position through cost containment. Brandt said, “In the typical prime-sub arrangement, each firm in the chain adds a markup. This results in a higher price. In a joint venture, a single profit pool is established and each member firm agrees to accept a percentage of the pool, if a profit results.”
Joint ventures are not without risk. Gary Lisota said, “Some clients are leery of them. This can result from the new entity being perceived as weak.”
Both leaders agreed on the nature and utility of the various websites and databases — some free, some not — that publish federal government solicitations and awards.
“We do a great deal of data mining among several of these sources, including the Federal Register,” Lisota said. While many databases provide incomplete information, he identified two he considers the strongest: Centurion and Input.com. He commented on the completeness of their data, often including the history of certain procurements. Both sources require a subscription fee.
Additional sources of potential business also can be found on the websites created and maintained by the individual military commands. These commands now have a vehicle — the Internet — that allows them to attain a higher level of outside awareness than they enjoyed in the past.
Both also agreed on the futility of pursuing RFPs published by governmental entities in which your organization has no point of contact or track record. This is very similar to the commercial world, in which proposals from distant strangers are rarely given serious consideration by the purchaser. Lisota commented, “We probably have zero percent chance of winning one of those.” Therefore, he frequently lets those opportunities pass by.
While prospecting in the Federal sector brings a certain level complexity, mainly in the understanding and execution of different types of procurement contracts, it also shares a number of characteristics with the private sector:
1. Networking with individuals in both buying and selling communities is essential to success.
2. There is no substitute for a strong reputation as a trustworthy, high value provider of services.
3. To be effective, you must utilize all of the information available to you.
4. As the seeker of business, you have to exercise judgment when deciding which opportunities to pursue and which ones to pass up.
- Photo by Paul Chin, Jr.
