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Top planners in the Pentagon and in the armed services have talked for years about the need to obtain innovation from small business. But according to my next guest, would-be companies new to the Defense market say they have trouble getting an audience, much less a contract. And that has implications beyond the small companies themselves. Federal sales and marketing consultant Larry Allen joined the Federal Drive with Tom Temin for more.

Interview transcript:

Tom Temin: And what’s the reality with respect to small companies that are not doing business? Your understanding is they have trouble even getting a foot in the door after all this innovation talk?

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Larry Allen: Tom, for the most part, small businesses — those that don’t have a marquee name — really do have difficulty getting in front of Pentagon leaders. They might have the ability to talk to those offices that are specially purposed for doing innovative acquisition. But there are only a handful of those and they’re scattered throughout the country. Not everybody also wants to take the innovation path because some people have brand new, ready-to-use technologies that don’t need to go through a development process. And for them, they want to talk to people who actually are in the mainline operations, mainline acquisition part. Very difficult for those companies to get a meeting, Tom. And if they do, it’s usually the type of meeting that says, hey, thanks for stopping by, this was really interesting. And that’s the end of it, almost never any follow up.

Tom Temin: That helps kind of the established companies, as you put it, become gatekeepers to innovation, which may not be healthy for anybody.

Larry Allen: Well, that’s really the irony, Tom. Defense leaders say that they want to talk to new businesses. But unless it’s one of those few isolated areas that are specially purposed to talk about innovation, most defense people really want to talk to the companies that they already know — the established business contractors, the ones that they feel they can rely upon and trust. The result of that is that these small firms, who have a difficult time getting in front of Pentagon people, they’ll go right next door to the established defense contractors, and try to partner with them and pitch their solutions to those companies, so that the established defense industry becomes a gatekeeper advocate, perhaps for the smaller innovative businesses that DoD says they want to talk to themselves.

Tom Temin: So in many ways that gives those companies kind of a thumb on the pulse, really, of innovation by being in between the innovators and the Pentagon itself.

Larry Allen: Right. If you’re an established defense company, Tom, this is a great place for you to be. You’re not going to face a lot of challenges from smaller and innovative businesses to get the ear of a DoD customer or prospect with their new and innovative solution. Instead, you’re going to be the person who gets to develop — to deliver — that new and innovative solution, along with the partner, to your prospect, to DoD. So you get a chance to manage the business. You keep yourself in the supply chain. You keep yourself in the driver’s seat for contracting. The innovative business may get some business, but they get it as a subcontractor through you. Your DoD customer’s happy because you’re managing the risk of that smaller business that they’ve never heard of. They get the benefit of the innovation. But in the meantime, you’ve got this kind of roundabout way of getting to where the Department says they want to go.

Tom Temin: We’re speaking with Larry Allen, president of Allen Federal Business Partners. This comes in the context of a more current problem. And that is that because of the ongoing CR and other conditions — distractions — the federal market is kind of slow right now, in your view.

Larry Allen: I think it is slow. And I use the phrase in my newsletter this week that says there’s a veritable county fair, full of distractions and sideshows, in the federal market. And there really is: If you think about a county fair, they’ve got the ferris wheel, they’ve got the pickle-eating contest, whatever they’ve got. It’s all the stuff that takes away from the main part of business. And while I don’t think there are pickle-eating contests right now in the federal market, you have an administration that seems to be keyed in on making sure that every federal employee rolls up their arms and gets a COVID vaccination, even though many of those workers end up working remotely. Congress, down at the other end of Pennsylvania Avenue, they have their role to play to and for them that’s not passing FY22 appropriations bills. Here we are into January, and it’s a month at least until we get “final” appropriations bills for the current fiscal year. That makes it really difficult to do any long-term planning or project management if you’re a fed. Not least it’s frustrating for contractors, it’s very frustrating, Tom, for federal managers because It gives them a half a year at best to manage their full-year project. Add to that we have another snow distraction this week for Washington employees. They recently got a couple of days off for snow anyway. Their individual things going on at different agencies that are distractions from the corpsmen mission. A great example of that is DHS employees — they’re now being mandated to take climate change training. You can be all the favor managing climate change, Tom, but the Department of Homeland Security really ought to be focusing on Homeland Security. So I think it’s a distracting time and probably a frustrating time, whether you’re a contractor that’s trying to sell a new solution into the market, or a federal agency that’s trying to meet its core mission, and maybe do something halfway innovative along the way.

Tom Temin: So for regular contractors, then what can they do to jumpstart business, if there’s anything right now? It’s the Twilight Zone.

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Larry Allen: No. So Tom, I’m recommending the contractors do a couple things right now to try and jumpstart business. And one of the things at the top of the list is making better and more concerted use of social media. If you’ve got a prospect base that is mixed between working in a federal office a couple of days a week or working at home, they’re not always going to be around. You know, they’re not going to be able to meet with you in person. It may even be difficult to show them what you want to show them in a zoom call. So I’m recommending using social media to reach out to your federal prospects. Whether it’s a video or an audio or podcast, this is a great way to make sure that you get your message out. And if you’re going to do that, Tom, I’m recommending that people do it professionally. It’s one thing to stand in front of your computer and record something like a Tik Tok video. You know, our kids do a better job of that than we do. But this is your business, and you need to invest accordingly in it. Make sure that your social media message is multi-platform and professionally done. So that’s one thing I’m recommending. Another thing that I’m talking to companies about, if you’re a large business or even a regular small business, remember that the administration has said they want to increase business opportunities for small disadvantaged businesses. This is a great time to vet those companies, Tom, to partner with ones that are responsible and responsive and have a real ability to bring something to the table in addition to their size status. So if you haven’t talked to small, disadvantaged businesses, I think you’re really a little bit behind the curve right now. Those are at least two things that I recommend that companies do in order to try to jumpstart their business and be ready for when Congress does get around to passing appropriations. That’s going to be a very busy time.

Tom Temin: Yeah, the evidence is they’re getting around to that right now. So perhaps the full-year appropriation will happen in mid-February, if we’re lucky.

Larry Allen: I think February is going to be the earliest. We certainly hope that could happen. It’s going to take some collaboration among the Senate leaders, especially. Here’s hoping

Tom Temin: Larry Allen is president of Allen federal business partners. As always, thanks so much,

Larry Allen: Tom. Thank you and I wish your listeners happy selling.

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