Too Small to Compete?

Time and time again, we are reminded how the smallest competitors can often be the fiercest in the dog world. Small dogs often excel in Agility and there have been smaller dogs who can jump well over 20 feet in Dockdiving. But can this model be used in the human world of small business? Likely, not without policy shifts.

Competition for and administration afterwards looks very similar for government related contracts, regardless of firm size. Is this fair?

Government agencies in most states require a certain percentage of their work to be awarded to certified business entities, such as WBEs or MBEs. In fact, if a Prime or Project Manager does not meet the established requirement on their team, they may not be awarded the contract or there could be other consequences further down in the process. One would believe this is advantageous for the sole proprietor or the micro business. But is it?

With government contracts, come paperwork. And lots of it. Monthly requirements include validation of project payment to all consultants. And that also includes the consultants having papers notarized to confirm they have received previous payments. Since many of the consultants may be a small firm as well, the paperwork becomes a burden for them also.

When a large firm is awarded government contracts, they often have a marketing person or department who worked on the proposal,. They will have a contract negotiator or are able to financially afford to outsource this piece to a law office. When it comes to monthly contrwct administration and the financial administration of the contract, again, they likely have at least a bookkeeper, if not an entire accounting department to handle this aspect. And what does the sole proprietor professional have? Just themselves, operative word being sole.

Witnessing first hand the struggles of professionals who are sole proprietors and certified business entities working through the paperwork of a government contract is painful. There is no other way to describe it. Every hour they spend on the administration of the contract is an hour that is not billable for the actual work under the contract.

At some point, the sooner the better, it would be a relief to see requirements modified for the professional sole proprietor or micro busienss.. Could there be a secure online portal where all contract consultants access and confirm work completed and payment received? Could the contracts be less onerous and more standard for micro businesses, often defined as 5-10 employees, including the owner. These are but a few suggestions to consider in ensuring that firms are not too small to compete. This is a conversation that needs to elevated.

If you are involved in any step of government contract administration, consider the impact of applying the same requirements to a firm with 100 employees and a firm with just one. Changing policy is always a monumental task, but if the desire, the drive are there, it can be eventually accomplished.

Be well.