The federal government spends more than $105 billion each year on contracts directly with small businesses. However, the government is a vast and confusing customer and the purchasing process is guided by thousands of pages of regulations. There are nearly infinite ways to start working with the federal government, but there is one pathway that we see as the most advantageous for our clients.
In the past, we’ve spent a lot of time talking specifically about the AFWERX program. That’s because both AFWERX and the SBIR program have some of the lowest barriers to entry to work with the federal government.
With that being said, there are more important components to the SBIR program that make it a great first choice for approaching the government. For those that are familiar with federal acquisitions, you know that it is a very competitive environment. There are countless pages of regulations outlining how purchases must be completed through competitive processes.
What this means is that working with the federal government tends to be an extremely competitive environment, often driving costs as low as possible and severely limiting profit margins. In a normal acquisition, it’s your company versus 10 of your competitors vying for a single contract award. The win rates are low, and the process is frustrating and can take months or even years.
SBIR allows a way around all of this. That’s why it’s so interesting.
Call it a congressional incentive program to support small businesses, call it a loophole, call it whatever you like. SBIR is a fantastic starting point to work with the federal government because the laws surrounding this program allow for a small business that’s won a Phase I contract to enter into sole-source contracts. The specific language under the SBIR program allows follow on contracts on a sole source basis that “derive from, or extend” the work being completed under the Phase I. That language is wide enough to fit a Thanksgiving day parade.
Imagine that your 5 closest competitors only have one way they can win a federal contract. That’s by competing against one another. It’s a lengthy, painful, and frustrating process for both the companies and the government contracting team that has to complete the acquisition.
On the other hand, as soon as you win a Phase I SBIR contract, you’re allowed to work directly with the government. This means that if your customer likes your technology and has funding they’re allowed to do this crazy radical thing- They can just work directly with you.
What does this mean?
What this means is that by winning a Phase I contract, you make it much easier for the government to work directly with your company. You are authorized by law as an exception to the pages and pages of competition requirements.
So when the Long Capture team and I talk about AFWERX and when we talk about SBIR programs, it’s with this strategy in mind. The goal is not an SBIR contract, that thinking is too small. The goal is to open the door to tens of millions of dollars in sole-source contract opportunities. This is the result we look for when we work with our clients. Winning an SBIR contract isn’t the point, it’s our launchpad and the journey has just begun.
How do you get started? Stay tuned, in the next blog post we’ll be talking about the starting point- Phase Is.