Lessons Learned on How to Win Sub-Contracts in International Government Contracts

I am the recipient of multi-year award sub-contracts under approved LCAT's for Program Management, Project Management, SME, IT, and Cybersecurity and I hope this helps many of you.

As many small business navigate todays landscape it is apparent that larger businesses dominate the entire process from bid to award and even contesting award decisions. It may often feel like they have a monopoly on the entire process so this information is truly to assist you. Non - Art Intelligence written information.

Quick Story. Left the military in 2015 arrived back to the states and landed a 90k job just shy of being able to say 6 figures which at that time was the target. Was an E-5 in the military so at the time 90k was a major jump. Within 6 months I began doing what most contractors do - contract jumping. Meaning looking for more pay while working in a lessor pay job. I was successful and was brought in on the next contract for 115,000. Felt good. Did that for 6 months and then I started to see different firms. Some were the primes like Leidos, CACI, etc and others were less know firms. The small business SME's. They were exceptional at their work and performing in specialty areas. One day I sat with one of them and they gave me the breakdown on the LCAT and rate structures. At the time I had no idea just how important it was to know Fully Loaded Government Bill Rates (FLGBR). This is the maximum you can charge the government and the primes are pretty good at knowing the ceiling and competing in the ring with their competitors.

At 115,000 my hourly rate is about 55.29 dollars per hour as a w-2. Now they told me as a sub-contractor the rates for my LCAT role started at 110 and could go as high as 150 per hour so lets say we went for 150.00 per hour the annual would be around 312,000 give or take a few days off for vacation as under this structure you cant bill for holidays. I found it hard to believe. But I needed to know and little did I know that some day soon I would be having to negotiate a rate. So fast forwarding to positioning which you need to know. Everyone does it different but few have actually managed to win so heres just one story.

Great quality work stands out and going the extra mile gets you a vouch event if underpaid at the beginning. Please note when you're a mature business I dont recommend free labor however to win it requires strategy and positioning. So lets say I met those two criteria and the day came not in a pleasant way but during the time the prime contract that I was on was coming to the end as my employer did not win the recompute. We received a notice of 6 months to begin to look for alternate jobs. Most people freak out and I was one of them. Some jump ship quickly while others are on the boat hoping for one of two miracles: 1 the contract has a chance of being rewarded (0%) or 2 the incoming contractor will offer options to join their team for operational contingency. In most cases people get some kind of offer potentially if they are needed to fulfill a function. I stayed on the boat and didn't see any lifeline. One day I was asked are you going to transition to the incoming contractor and I said how can I.

Then I began learning about structure and hierarchy of decision power. for small businesses do not assume you know even if it looks simple. In this case my target was one of the Program Managers not the Contract Program Manager. This manager had recruiting and hiring authority for sub-k's. Sub-contractors and then thats when I remembered that conversation. Went home did my numbers and hadn't built up the confidence for the 90 an hour but I said ok 128 that what I want. So after weeks of trying to get the persons attention they quit and were no longer on contract. Imagine that. So I was back at square one and more time had passed. so I doubled down increased my workload and engagement with the government. GS-13's and below may be too timid to push you forward. Generally GS-14 and 15's are more authoritative so keep that in mind. So lucky for me I was told the contractor Deputy was looking for me. Astonished of course and I said how do I get to him. They said schedule a meeting and gave me the information.

Crazy Part Next: Arrived to their corporate office, went into the room. This deputy was a businessman - not known for small talk. Says this..... Government really l likes you and we have heard great things about you. You're currently in a very important position for the contract and it's one of our most import areas coming on to the government contract. so how do you want to transition. you get three choices, option 1 w-2, option 2 1099 direct to corporate and option 3: sub-k under a tier one contractor with an FCL aka a facility clearance. Had I not had the conversation I might have said W-2 because it felt safe.

Perhaps I might have thought being a business owner was too difficult. But I said well the hell with it . I want to be a sub-contractor. next question whats your rate. I was so nervous lol - years ago and I said the number.. Response oh I thought you were going to ask for more. lets lock in that rate.

Pause here with me. I was so afraid to ask at that time. just to find out had I know their Fully loaded government rate I could have negotiated another 20 dollars an hour and just to understand the impact of 5, 10, 15, 20 dollar intervals means in the case of 20 dollars 40,000 dollars in profit. Morale of the story know your rate and try to know their ceiling. Leave them some room for profit. Understand your leverage if you have backing and if your role is important you have higher ground. Dont be greedy and never cost all your lifes problems in to one pitch.

Now for the closing heres my recommendations and happy to share any additional advice here on negotiation. I will write another one on international government contracting later.

1. Research you bill rate (I.E in the U.S The Department of Labor publishes market rates and if you're really advance read the GSA if you're in the Government space" The rates are published and primes won't be happy if you get very smart but hey the goal is for small businesses to win whats rightfully yours and compete. They would do the same.

2. Know and find out who the Program Manager and Deputy's name and their Tier one sub-contractors (these are their trusted lieutenant's for large contract execution)

3. Find a mentor who's done and avoid those who have not they either come in the form of being poor, pretending to know things without having done it themselves, or simply too talkative and like to waste time. Money doesn't waste time and as you know neither do bills, family expenses, or etc.

4. Dress to impress - have a custom made suite (men), women (have a business look), some fabric looks cheap and signals lack of money and decreases your bill rate perception. This isn't just an ego statement you need to win and its true you're only ever truly one negotiation away from 300k or 700k or 1m plus.

5. Learn to present information in the buyers language. It doesn't always have to be pretty. Our prime was very good at basic, Bottom Line up front, and reporting. you'd expect a pretty graphic. Excel with numbers kept certain reports simple and to the point with contracting officers

6. Trust can actually be an advantage if you find honest business leaders. Dont go into this thinking you can be a solopreneur it simply won't work. Anyone saying dont trust anyone dont believe it you have to have some deal of trust but you will only trust a very limited number of people in this business structure. it might very well only be one person.

Hope this is informative and I wrote this by hand so if spellings and punctuations are off bill it to us in the next one. Wishing you all success and you deserve to win. - Roosevelt