How Sept. 11 Changed Government Contracting Forever

When terrorists hijacked four planes to use them as weapons and killed thousands of innocent people in the process, a chain reaction started that quickly swept across the country. Today we live with many of those changes, from heightened security checkpoints at airports to more requirements to get a driver’s license. Government contractors saw their market changed overnight, with a rush of government spending on new security priorities, creating an abundance of business opportunities. Ten years later, contractors still feel the impact, including the types of business opportunities available, the role of the financial markets and the relationship between contractors and government agencies. But other changes have been at work as well. Some are counteractions to the reaction to the Sept. 11 attacks. Others would have happened anyway. Either way, contractors have been in a near-constant state of evolution over the past decade. That condition is likely to extend well into the next decade.


A Need for Speed
The biggest game-changer was the sudden awareness of the security vulnerabilities that threatened the United States and the need to address those vulnerabilities. Before the attacks, terrorism was thought of as something that happened somewhere else. “What Sept. 11 brought home was that we were vulnerable. The government reaction was to rapidly start addressing security issues, which meant the allocation of funds and the awarding of contracts. First, there was the creation of the Transportation Security Administration and then the Homeland Security Department. Other agencies such as the Justice and State departments increased their spending on security. More money also began flowing to state and local governments in the form of grants. The heightened security concerns also led the United States to launch the wars in Afghanistan and Iraq, and supporting those efforts also helped fuel an explosion of spending with government contractors. In fiscal 2000, the contractors on Washington Technology’s Top 100 rankings had an aggregate of $26.8 billion in prime contracts. In fiscal 2010, the number had climbed to $132 billion. Much of that growth was driven by the need to support warfighters and to support intelligence and homeland security initiatives. “The clock speed of contracts and task orders increased significantly,” “With 9/11, money moved very quickly, and companies had to adjust and modify their business development efforts and response times.”The government wholly embraced the use of indefinite-delivery, indefinite-quantity contracts because agencies could move quickly to address a need. That trend has become a fact of life in the government market as these large task-order contracts have become the vehicle of choice for buying services and products. “The increased use of IDIQ contracts and the quicker turnaround of those activities has changed how we do contracting,”

DOD Urged to Speed up Small Business Contracting

Defense Secretary Leon Panetta has warned the Defense Department's senior leaders that they will not reach the small business contracting goal for the fiscal year if they keep moving at the current pace.

“With only six weeks left in this fiscal year, we are falling short of meeting our departmentwide small business contracting goal of 22.3 percent,” he wrote in a memo on Aug. 24. “Secretary Panetta urge senior leaders and everyone in their organization who is involved in the acquisition process to review all planned acquisitions for the remainder of the year to identify opportunities for increased contracting with small businesses."

Ashton Carter, under secretary of defense for acquisition, technology and logistics, would issue more guidance, Panetta also wrote.

“Dynamic small businesses play a central role in strengthening the Department of Defense industrial base and improving our acquisition outcomes,” he wrote. “Small businesses not only lead the nation in innovation, they are also proven drivers of competition and incubators for business growth.”

In a letter sent to Panetta on Sept. 2, Sen. Mary Landrieu (D-La.), chairwoman of the Small Business and Entrepreneurship Committee, offered her full support because Panetta had made small-business contracting a priority. She recommended that DOD consider small businesses when officials write policies that influence how acquisition officials and program managers interact with contractors.

Small Business Jobs Act of 2010

On Sept. 27, 2010, President Obama signed into law the Small Business Jobs Act, the most significant piece of small business legislation in over a decade. The new law is providing critical resources to help small businesses continue to drive economic recovery and create jobs. The new law extended the successful SBA enhanced loan provisions while offering billions more in lending support, tax cuts, and other opportunities for entrepreneurs and small business owners.

·       New Law Puts More Capital in the Hands of Entrepreneurs and Small Business Owners

·       New Law Strengthens Small Businesses’ Ability to Compete for and Win Contracts, Including Implementing Recommendations from the President’s Task Force on Federal Contracting Opportunities for Small Business

·       New Law Promotes Small Business Exporting, Building on the President’s National Export Initiative

·       Law Expands Training and Counseling

·       New Law Provides $12 Billion in Tax Relief to Help Small Businesses Invest in their Firms, Create Jobs

·       Treasury Department Provisions

Please read more about the Small Business Jobs Act of 2010 at the following link: http://www.sba.gov/content/small-business-jobs-act-2010

Congressman Questions Agencies on Small-Business Advocates’ Authority

Senior executives at several Cabinet-level departments received letters Aug. 5 that asked why their small-business advocacy offices have not been given the authority the law dictates.


Chairman of the Small Business Committee’s Contracting and Workforce Subcommittee, wants to know why departments’ office of small and disadvantaged business utilization (OSDBU) officials don’t have access to top officials to deal with small-business problems, such as contract bundling and paying firms promptly.


The Small Business Act requires that heads of a department’s OSDBU should “be responsible only to, or report directly to, the head of such agency or to the deputy of such head.”


It’s not happening, according to a Government Accountability Office report from June.

The Small Business Government Contracting “Past Performance” Challenge

As a small business begins the proposal submission process to federal government agencies or to prime contractors the past performance challenge is a major challenge. By definition a start-up company in government contracting has no direct government agency past performance projects to site in meeting the requirement in requests for proposals (RFP’s) for historical references to similar projects in terms of size, duration and complexity.

Past performance data must be specific to the enterprise bidding a contract. It cannot site historical references to performance of individuals now in the company when they were with other firms, achievements by predecessor companies or successful projects that the current company did not perform as its current entity. The purpose for this rigid perspective by the government is to avoid "Fronting" a new enterprise with misleading information to obtain a high past performance rating.

So how can a new organization or one that is new to government contracting muster a response to the past performance challenge?

One of the Steps that Supports Emerging Small Businesses in Doing Business with the Government is Identify and Analyze Opportunities and Risk.

Before you pursue an opportunity, you first need to analyze the elements of opportunity and risk to understand if it is a worthwhile. Companies do not  have infinite resources, so it is essential that your company employ a standardized methodology for all sales personnel to assess and prioritize opportunities. Having developed an understanding of the opportunity, you will next want to understand your competitors. You will want to identify each competitor or competitive team, what they plan to offer, and how they and their solution are viewed by your customer.

To be effective, you need to develop a “win strategy.” To do this, you need to answer two simple questions from the customer’s perspective: 1) “why us”, 2) “why not our competitor”. Part of this win strategy will also include a “customer positioning and contact plan” with specifics on who, when, and how to convey this message to key executives and decision-makers in the customer’s organization. The win strategy will also serve as the basis to develop the proposal win theme.

10 Tips for Better Contracting: Relationship Advice for Contract Managers

1. Learn about the program manager’s expectations and goals. Contractor and customer need to figure out milestones that point out progress.

2. Establish goals for the program that deal with cost, schedule, and performance with top management based on the contract’s requirements.

3. Get agreements in writing to be clear on issues.

4. Build a solid team in order to meet all parts of a contract, have a strong financial manager and strong contract specialist.

5. Arrange a schedule for meeting regularly, whether in person or otherwise, whichever fits the circumstance.

6. Meet the points of contact in the program manager’s office. Contractors need to develop more than arm’s length relationships. It’s also important to know the chain of command in the program office.

7. Realize that bad news doesn’t get any better with age,  a program manager—or anyone, for that matter—doesn’t want to be blindsided with problems.

8. Grow tough skin. Contractors need to learn patience, and when people get upset, they should take the high road.

9. Don’t take comments personally.

10. Finally, learn from the mistakes that were made.