A bigger piece of the pie

For the past 15 years, Vibhaa Vermani has led a successful woman-owned small government contracting business, providing integrated technical solutions and services to numerous U.S. government agencies, including the Department of Defense and the Internal Revenue Service.

Vermani’s Virginia Beach-based company, Chitra, is one of many Virginia small businesses thriving in the federal contracting space. According to the General Services Administration (GSA), more than $24 billion in federal contracts were awarded to small businesses in Virginia in fiscal 2021, validating the fact that a business doesn’t have to be a huge Fortune 500 corporation to carve out a profitable niche in federal contracting. But the marketplace remains competitive.

In fiscal 2022, the federal government awarded $162.9 billion, a record 26.5% of total contracting dollars, to small businesses as prime contractors, an increase of $8.7 billion from the prior year, according to the Small Business Administration. Last year’s rate of small businesses receiving prime contracts surpassed the 23% target set by the Biden Administration, and small businesses also received $79.1 billion in subcontracting awards last year, accounting for 30.9% of federal subcontracting expenditures.

However, despite landing a bigger slice of the federal contracting pie than ever before, the number of small businesses receiving prime contracts has been cut almost in half during the past decade, shrinking from 121,270 to 65,428 between 2010 and 2021. 

“There have been a record number of dollars awarded to small businesses in the government contracting space, but the number of awardees is down,” says Jerry McGinn, executive director of the Greg and Camille Baroni Center for Government Contracting at George Mason University.

So, what changed?

Rose-colored reports?

“We’re seeing bigger contracts being awarded to fewer small businesses,” explains McGinn. “In many cases, this is due to a trend in government contracting called category management, where solicitations or offerings are grouped together to simplify procurement for the government but reduces the number of companies receiving contracts.”

Additionally, McGinn says, “there are definitely a lot more companies involved below the prime contractor level than are being reported, so if a small business is serving as a subcontractor on some of these awards, it may not be counted in the publicly available data.”

Randal Wimmer, founder of the McLean-based Government Contracting Academy, a company offering instructional courses for entrepreneurs trying to break into the industry, agrees. “The picture is not as rosy as the government makes it out to be,” Wimmer says. “Of the 24 government agencies that fall within the small business set-aside purview, 17 agencies failed to meet either their prime or subcontracting goals when it came to HUBZones [Historically Underutilized Business Zones], and the numbers were not much better for women-owned small businesses and service-disabled veteran-owned businesses.”

In many cases, says Wimmer, the government is using tactics like hiring small businesses to serve as resellers, using contract vehicles to place multiple orders for products and services with a preselected group of vendors over an extended period of time, and skewing the numbers when it comes to scorecards for small business set-asides, all of which limits the opportunities for small businesses seeking to break into the industry.

“I still believe this is the best industry going for small businesses and aspiring entrepreneurs,” Wimmer says. “However, whenever there’s a scorecard or grading system to measure their success, I think the government takes a lot more credit than they actually deserve on how they execute these programs and score themselves.”

‘So many opportunities’

For companies like Chitra that are already doing business in government contracting, challenges include keeping up with the needs of the agencies you’re serving, as well as continuously reevaluating your company’s offerings, says CEO Vermani.

“Before I started my business in 2008, I was doing commercial work in marketing and film production while living in Virginia Beach. I became aware that the Navy and the Department of Defense had a need for public service announcements and training videos and decided to look into that market to determine their needs,” Vermani says.

She connected with Virginia APEX Accelerator (also known as Virginia PTAC), a DOD-funded accelerator that helps small businesses learn how to navigate the procurement process and gain the training needed to participate in government contracting. It works in cooperation with the SBA’s Small Business Development Centers, which provides additional training, assistance programs and counseling.

“There are so many opportunities in the government contracting industry for women-owned small businesses,” says Vermani. “I did a lot of research about the government contracting industry and the agencies I wanted to do business with, got to know the small business officers at the various agencies, attended a number of conferences, then took a leap of faith and started bidding.”

Chitra, which recently branched into software development, now provides cybersecurity support and services, training and education, logistics support, and other services to the DOD, the Army, the Air Force, the Navy, the Department of Transportation and the Department of Homeland Security.

Whether working as a prime contractor or a subcontractor, teaming up with other small businesses can be a winning proposition for getting the scale needed to win contracts.

Even after 20-plus years of doing business as a government contractor, partnering with other small businesses has helped Suffolk-based Reed Integration expand its business opportunities with an array of federal defense and civilian agencies.

“There are so many opportunities coming out right now for small businesses that can work together as a team,” says Reed Integration founder and CEO Becky Reed. Teaming arrangements can increase small businesses’ competitive edge by allowing companies to pool their capabilities with those of others and focus the contracting officer’s attention on combined core capabilities.

Additionally, teaming up as a subcontractor to another small business can provide opportunities through programs such as the SBA’s 8(a) Business Development Program, which helps socially and economically disadvantaged owners of small businesses land federal contracts.

“Teaming helps keep us connected to previous 8(a) contracts even though we’ve graduated from that program,” Reed explains. “We’re able to maintain those relationships we’ve developed with our 8(a) customers by serving as a sub for our 8(a) team members, as well as serving as a prime for some of our partners that have gone outside of the small business arena.”

Most recently, Reed Integration has been awarded a contract to provide support services under the federal Advanced Distributed Learning (ADL) initiative for the Coast Guard’s Force Readiness Command (FORECOM) Training Division. Through the ADL contract, Reed Integration will support the Coast Guard’s transition of their training system into a learner-centric model with on-demand access to learning and performance support products.

Listening for needs

For Robin Mack, CEO of Mack Global in Richmond, starting as a subcontractor helped her get her foot in the door as a woman-owned small business in the federal contracting arena, and it gave her the confidence to go out and bid as a prime contractor on future projects.

“I had a background in state government and understood how it operated,” says Mack. “In 2008, I began doing telework consulting, providing training to managers to put together policies to help them develop a robust program for staff to be able to work from home in some capacity.” She began working on telework initiatives with the Virginia Department of Taxation, which led to government contracts with the Virginia Department of Rail and Public Transportation, the Food and Drug Administration, and the GSA.

“Over the years, what has been a recipe for success for us has been a combination of diversification and making sure that we have prime opportunities, as well as subcontractor opportunities,” says Mack.

In addition to telework solutions, staffing and training, Mack Global now offers project management, youth and family services programming, professional development and training, and transportation management services for government agencies. One of the company’s most recent contracts includes working with the Federal Bureau of Prisons in Petersburg to provide spiritual guidance services to inmates to help them transition to life after incarceration.

“Through our Life Connections Program, we’re providing inmates with a curriculum that will help with their reentry back into society,” says Mack. “The program aims to strengthen participants’ understanding of what it means to live and work effectively in the community. While it’s not what you’d think of as a typical government contract, we’re providing services that impact our community in a positive way and help to support our country.”

For companies looking to break into the government contracting industry, there are myriad opportunities.

While the SBA’s 8(a) Business Development Program has been temporarily suspended for new application submissions, the SBA’s Small Business Development Centers offer counseling and training to small businesses seeking assistance with procurement of government contracts, informational tools and support, and financing/loans for business startups and existing business expansions.

Other agencies aiding small businesses looking to get involved in government contracting include the DOD’s Office of Small Business Programs, Women’s Business Centers, Veteran’s Business Centers, and trade associations such as the National Association of Government Contractors, the Government Contractors Association, the Coalition for Government Procurement, and the National Contract Management Association. In addition, many government agencies provide information on their websites about how to reach out for contracting opportunities.

“The availability of government contracting opportunities definitely goes in cycles,” says Reed. “There seem to be a lot of opportunities coming up through the Department of Transportation, due to the Infrastructure Bill, as well as through OTAs [Other Transaction Authorities] on the research and technology development side of things. We’re also seeing more chances to partner with academic and research institutions. Doing your research and working with other government contractors in the industry can definitely help you get your foot in the door.”

Adds Vermani, “The need for government contractors is there; you just have to listen. The trends are favorable to people who want to innovate, create and are willing to learn. I am grateful to be doing this work, and I’m thankful for the encouragement I’ve received from small business program offices, contracting officers and CIOs who have been willing to look at our products and contract with us for our services. It has been an exciting journey from our start as a video production company to moving to training, cybersecurity and now software development. I can’t wait to see what the future holds.”