Best practices for young tech companies considering a federal contract opportunity

Tech startups are eying the federal marketplace, the Biden administration is broadening the playing field of government contractors, and “customer success” teams are ramping up as critical enablers to support clients via contractual deliverables and more. At the same time, companies tend to focus on winning the contract and can overlook the importance of ensuring that actual contract execution is set up for success. Doing some initial diligence, particularly relating to the services aspects of...

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Tech startups are eying the federal marketplace, the Biden administration is broadening the playing field of government contractors, and “customer success” teams are ramping up as critical enablers to support clients via contractual deliverables and more. At the same time, companies tend to focus on winning the contract and can overlook the importance of ensuring that actual contract execution is set up for success. Doing some initial diligence, particularly relating to the services aspects of the federal contract your tech company is considering — whether you are a current or prospective employee or an investor — will pay dividends. Here are fundamental, but sometimes neglected, steps to take before moving forward:

Study and understand the actual contract documents

You might be surprised how many federal contractors have never accessed nor read the contracts they work on, including a proposal, scope of work, and other components.

  • Is the timeline feasible, considering requirements such as the lengthy process to achieve Authority To Operate? Check that, for example, time has been allotted to conduct any initial assessments, stand up a program management function, develop materials, or develop more detailed plans.
  • Are the deliverables articulated and achievable? If you do not understand what constitutes a particular deliverable, your client probably does not either, which will make it difficult to agree on when it has been completed.
  • Are some deliverables expected to be commercial off-the-shelf? If so, confirm with the client that they will be acceptable rather than assume that your existing software or approach toward services for commercial clients will be appropriate for a federal client–tailoring may be necessary.
  • What is the contract type (e.g., Indefinite-Delivery/Indefinite-Quantity) and its implications? For example, suppose the company’s accounting team assumes revenue flow for contract deliverables or option years that the government might not exercise. In that case, financial projections could end up skewed and concern investors.

Ensure that the company has the resources and expertise to execute the contract

Suppose this opportunity is primarily a way to get a foot in the door, with contract deliverables that are misaligned with the company’s vision, mission, and sales strategy. In that case, inadequate preparation risks a negative first impression with the client – and among company employees – that could threaten longer-term success.

  • Do the available personnel have the right skillset to make the contract successful? Particularly if the contract opportunity is outside of your typical lane, verify that you have the skills and knowledge base needed to fulfill the deliverables; for example, if you need to provide training, you will likely need instructional design expertise as government-provided training typically has a higher set of standards than what your company engaged in previously.
  • If cleared personnel are needed, are they on staff, or is a feasible recruitment pipeline in place? As a finite pool of talent, identifying and hiring personnel with the required security clearances, in addition to the appropriate skills and experience, is usually a lengthy process, and – even when you find and onboard them – a government client may not look favorably on a contractor team that is entirely new to your company and product.
  • Does the company have an experienced government contracts officer? Having a contracts officer will help ensure that potentially costly mistakes are avoided; similarly, a skilled facility security officer is essential for navigating the security-related requirements of a federal contract.

Check that critical groundwork has been laid with the client

  • Has the client’s current state been assessed? If not, it should be done as soon as possible to ensure that the contract deliverables and ultimate goals are appropriate and make sense and that potential hurdles are identified.
  • Are key client stakeholders supportive of the contract, its goals, and associated activities? Even a reluctant government interlocutor could pose a significant risk to effective contract execution; if the original contract sponsor has moved on to a new assignment, make an effort to contact and interview them for potentially vital background information.
  • Is the client the government, or is it a prime contractor that you will work under? If you are working with a prime, ensure that doing so is in your mutual interests and that there is a common understanding of how you will engage–you want to avoid surprises such as the prime serving as a gatekeeper for any interactions with the government client.

Whether it is your tech company that is new to federal contracts or you are, careful consideration in advance of whether and how to proceed will stave off potential pain further down the road. The excitement of winning wears off quickly, at which point the real work begins.

Marguerite Benson is the founder of Sticky Wicket Advising. In addition to recent experience at tech companies and McKinsey, she served for more than a decade at the Central Intelligence Agency and other federal agencies.

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