Navigating The Process
Over the years, we have worked with government partners to build many digital products. Our engagements have been tremendously positive, but one thing is certain: the thicket of departments, approvals, forms, and requirements in the bidding and contracting process (at both the state and federal levels) can seem a bit complicated.
If you’re a vendor who wants to dip your toe into government contracts, here are some best practices to help you navigate the process and set the right expectations on all sides. These insights came about from a candid discussion in our CTO Lunches group. I especially want to thank Jacob Ablowitz from Valid Eval, who has deep domain expertise in this space.
1: Set up a Separate Business Unit
Anybody getting serious about selling to a government should set up a little parallel business unit with a contract management specialist and a financial management specialist. They can be part-time people. There are people who will sell their services, who know how to do business with each individual local government.
The significant overhead in doing business with the U.S. government, however, is all the back and forth on the contracts and requirements. Moreover, the cost and compliance, if you don’t know what you’re doing, can be exceptionally high. In a multifaceted problem-solving environment, specialized expertise dedicated to government processes can significantly expedite government bidding. In comparison, the time it would take to learn everything from scratch is considerably longer.
2: Handle Cost-Type Contracts With Care
A cost-type contract is essentially for research and development. Tech requirements in these contracts can be very, very general (to the point of murkiness).
You typically encounter them when agencies and departments aren’t sure what requirements are needed for a fixed-price contract. If you encounter a cost-type situation, aim for Waterfall to do Discovery, Design Specifications, and everything else. Agile will just add to the confusion.
3: Propose Fixed-price Level of Effort
Focus on effort, not selling specific requirements fulfilled or deliverables. We’ve negotiated what’s called a fixed price level of effort, which means we are selling hours for a fixed price. We are not selling outcomes. We’re not selling specific requirements getting fulfilled, and the reason for that is the uncertainty. It creates more management effort for them and for us to try to prove that we’ve satisfied the thing they wanted, rather than to take a classic Agile approach.
A “fixed fee, flex scope” can be deadly. Never go there. Get into that and you’ll find yourself in a never-ending back and forth of, “We’re out of budget. Yeah, well, it’s still not done. Ok, what is done? Well, we don’t know the time. We’re still defining time. We have to move forward.” And on and on.
Be honest and forthcoming about the financial impact of losing money on a project – they will most likely be empathetic.
4: Avoid Major Faux Pas
Never say to a government official that you think you’ve won the bid. Respect the individual, respect the office, respect the institution.
No gifts, lunches, or drinks. Never give swag, either, that invites conflict of interest, ethics clauses, etc. If you’re hosting a customer visit, put out a jar and a list so they can Venmo you the cost of the lunch or put cash in the jar. It’s vital to be a good community member and bolster anti-corruption in the government. They are mission-driven people, and it’s important to support their integrity.
There are a whole bunch of conflict-of-interest provisions applying to program managers and contract officers that govern their behavior. Acknowledging that upfront shows that you respect the integrity of their values and the rules they live by.
5: Don’t Underbid…but Minimize Your Scope
Never underbid. We’re proposing that you minimize your scope and make it really simple. If it’s one page, tell the government you’ll make one page with four buttons and that’s it. It’s going to cost this much, and then let them fill in the gaps for the rest of it, because a lot of times they don’t know what to ask for. Limit your scope to get the price.
6: Understand The Process From the Other Point of View
Vendors commonly assert that government program managers do not receive rewards for success, but rather face punishment for failure.
Often the people making purchasing decisions are, by and large, mission-driven professionals. Be honest and forthcoming about the financial impact of losing money on a project – they will most likely be empathetic.
But remember: stakeholders will immediately ask any manager who doesn’t choose the lowest-priced bid, “Why didn’t you pick the lowest price?” Managers will need to explain the reason, and your job is to provide a simple answer to that question.
When we feel we aren’t the lowest price, then we articulate the risk responses we bring in making a decision that costs the taxpayers more money. It takes a lot of oversight to bring people to the moon safely (and beyond!)
Do Good, Be Good
Tom and I are Eagle Scouts. “Do Good, Be Good” leads our core values, and providing services to any government entity is, in essence, serving the people of this and other great nations. If our skills can help people, then we’re happy to share them.
Questions about government contract bidding? Let’s talk!