How Powerful Is the Financial Influence Game in Government Contracting?
How powerful is the financial influence game in government contracting?
Do small businesses that want to grow and that do not want to be relegated to subcontracting roles, need to pay someone in order to obtain a substantial fee contract as a prime contractor?
I received a series of emails from a couple of GovWin members who believe that financial influence plays a powerful role in whether or not small businesses can secure a government contract.
In response to the invite to our Virtual Roundtable, “Securing Government Contracts: Lessons Learned from Successful SMBs,” one member wrote:
It may be true that a number of small and mid-sized businesses “struggle with operational processes and identifying the tactics necessary to be successful” in pursuing government contracts. However, I do not believe that is the major problem. Political influence goes a long way in deciding who will obtain government contracts and who will not. Unfortunately, political influence involves financial persuasion in many cases. Surely there are many honest, ethical, moral “tactics” that can be used to obtain government contracts. Many businesses seem to be willing to play the “financial influence game.”
This statement, of course, does not mean that everyone who receives a government contract has used financial influence.
However, this one member believes strongly that many small businesses who want to grow need to pay someone in order to obtain a substantial fee contract as a prime contractor. The payment takes the form of political influence through lobbying and other activities (some legal and some not).
So, what is the solution?
The GovWin member who wrote me said that is was important that “those who are perceived as not being successful are not necessarily incompetent, incapable business people. Nor are they lacking in their operational processes.”
In this member’s view, the problem is that more needs to be done to make the process fair for small business.
Do you agree? Please submit your thoughts to this post below.
Comments:
Call me naive, but…
Added 05/18/2011 – 15:16 by JoeLoong Expert
I think this perception is, at the least, overstated. We’ve heard from a number of agencies (the Veterans Administration being a recent one) about the trouble they’ve had getting any companies to bid on some proposals, especially during their Q4 rush.
So even if you believe that there’s political payola going on, what about for the opportunities that are going unbid? Or the proposals that DOD is having to extend proposal periods, because they only got one proposal in 30 days.
Joe, The perception may get
Added 05/19/2011 – 11:01 by lcharles Expert
Joe,
The perception may get overstated at times, but generally it’s correct. I understand that some agencies are not getting bids, but it is probably likely that they aren’t advertising the contract opportunity or are requiring demands that only 1 company can meet which is the company they want to hire anyway. The one bid may draw out the process, but they hire the guy they want to get and lock it in with a sole source justification.
Back to the VA
Added 05/19/2011 – 13:16 by JoeLoong Expert
Hi Leona — thanks for adding your perspective. I can’t argue your own experience, though I do note that from the VA event we covered this month, VA’s Steve Schliesman specifically addressed this point for his agency: “How many of you think that, if an RFP is on the street for seven days or less, it’s pre-wired for someone? It’s not. I’m here to tell you that we’re not smart enough to pre-wire them.”
It’s specific to the VA, and you would of course expect an agency representative to say this, but it is food for thought…
President of a VOSB
Added 05/18/2011 – 18:17 by tips@govwin.com Expert
Yes. My company has been trying to get government contracts for a while now and some things can be only done through the big Prime contractors that only do management of the contracts and insufficient money comes down to the small business to make it viable. We have put in for around ten (10) SBIRs through government agencies without success. The latter translates into about a $50k loss in invested time for one $100k grant.
So basically, we are not going to do any more SBIRs. We may do other work if we can bid directly but not subcontracting through Primes anymore.
[Posted on behalf of a GovWin member who emailed their comment to tips@govwin.com]
SBIR and Other views
Added 05/19/2011 – 11:24 by johndig Expert
hi i a sorry to tell you the ratio for winning SBIR’s is extremely bad for someone that is new to working with the government. with SBIR you need to have all your pieces in place, which not know what you do/have done, i am not commenting on your proposals. but in general, 10/1 is about right. don’t give up…but also find out where you are losing out on…have you asked for a post award conference? if not, then you are missing an opportunity to find out WHY your losing.
on the issue of “paying to play”, i am sure that somewhere, sometime, over all the contracts that the government writes that might happen. but let’s put this in perspective, the Fed’s wrote over 10 million contracts last year, again, i am sure that somewhere it’s happened, but in the majority of cases, the VASTE majority of cases, it’s you being competitive and knowing what your doing, where you should be bidding and what is the competitive range. i am sorry but the idea that pay for play is common is a very naiveté view and is basically an uneducated opinion or spin.
learn the market, and bid, you don’t win all the commercial contracts you bid on, what makes you think you’re going to do that in the government market? it takes time and effort for someone to enter the market…figure at least a year (with help). since a lot, a very lot of the basic IFBs out there are completely computer driven and awarded BY the computer..who are you paying? 🙂
NOTE: I was asked by one
Added 05/20/2011 – 11:28 by Michael Hackmer Expert
NOTE: I was asked by one our members, in fact the original catalyst for this discussion, to post his entire set of comments relating to this issue. Please find his comments below:
I am writing in response to the invitation to participate in the upcoming webinar: “Securing Government Contracts: Lessons Learned from Successful SMBs”
It may be true that a number of small and mid-sized businesses “struggle with operational processes and identifying the tactics necessary to be successful” in pursuing government contracts. However, I do not believe that is the major problem. Political influence goes a long way in deciding who will obtain government contracts and who will not. Unfortunately, political influence involves financial persuasion in many cases. Surely there are many honest, ethical, moral “tactics” that can be used to obtain government contracts. Many businesses seem to be willing to play the “financial influence game.” I am not and I know of other businesses that share my view of not “paying to play.” The acceptance of the practice of lobbying government officials is a nice way of saying bribery is legal in the United States government systems. Do not misunderstand me. I am not saying that everyone who receives a government contract has used financial influence. It just seems that small businesses that want to grow and that do not want to be relegated to subcontracting roles, need to pay someone in order to obtain a substantial fee contract as a prime contractor. Many public servants in government have forgotten that they are in positions to serve the general public and not to serve themselves. It appears that they have their own personal agendas and are of the mindset of being served by tax payer dollars rather than serving for the common good of all people they are appointed to serve.
When it comes to government contracting, major attention has been given to mega-corporations. However, equal attention should be given to small businesses and in particular African American businesses in order to ensure that they are treated fairly. Effective regulations can be put in place to do that. Severe penalties should be put in place for government contracting officers and policy makers who do not comply with mandates to contract with legitimate small and African American businesses. But the question is will anyone have the “guts” to enforce the policy? And yes, the penalties should apply to anyone (staff members) who has a part to play in who is awarded government contracts. The intent should be to grow these businesses to be mega-corporations if that is their business goal. Obviously, mega-corporations have had some assistance in order to become the size that they are. There must be a genuine effort to grow and to support these small businesses and to honestly seek to know why these businesses are not being sustained.
Mr. Hackmer, I applaud your efforts in conducting the Virtual Roundtable webinar. But I think you should let your participants know the entire story when it comes to government contracting. Yes, there may be a few success stories. However, those who are perceived as not being successful are not necessarily incompetent, incapable business people. Nor are they lacking in their operational processes. The problem is not complicated. The answer to the problem is not complicated. Someone needs to just step up and do what is right.
-Anonymous-
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