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Hi,

We are a startup with a novel product in which the USG has great interest. We have been in talks with one prime contractor. We need revenue asap. Wondering if it would be a bad idea to approach its competitors with our product. Is that frowned upon or expected?

Thanks!

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  • 2 weeks later...

I am assuming you are speaking with a prime contractor about a project that is currently being solicitated for quotes/offers (before evaluation/award). 

On 4/9/2021 at 8:42 AM, Pascuale7 said:

Wondering if it would be a bad idea to approach its competitors with our product. Is that frowned upon or expected?

As a business matter, you have a product and your goal is to sell as much of it as your capacity/inventory/operation will support - So no (not a bad idea/frowned upon). 

As a contracting matter, the government works with the prime and has no privity with sub-contractors/before or after award - So no. 

As a matter of fact, I work in the construction realm these days and normally have the same 4-6 prime contractors bidding on projects. More often then not they all use the same set of subcontractors for different purposes (mechanical/electrical/plumbing/etc.) - So no. 

The only other thing I will add is that if you are offering something to the prime contractor that will give them an advantage over competitors, they may not appreciate you shopping it around. Doesn't sound like the case here but wanted to mention. 

 

 

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On 4/9/2021 at 5:42 AM, Pascuale7 said:

Hi,

We are a startup with a novel product in which the USG has great interest. We have been in talks with one prime contractor. We need revenue asap. Wondering if it would be a bad idea to approach its competitors with our product. Is that frowned upon or expected?

Thanks!

Unless you have signed a Teaming Agreement that requires exclusivity, then there is no problem talking to as many primes as possible. You can also reach out to USG Small Business Advocates and see what existing contract vehicles might be available for you to sell directly to USG without a middleman. You can also see if there is a GSA schedule available for you. 

Finally, you say you need revenue ASAP. (Don't we all?) My assumption here is that you don't need revenue as much as you need cash to continue to operate until the work comes in. Here's my advice on that (with no knowledge of your company): get a loan, either from SBA or from a bank. If your product is as attractive as you suggest it is, you should be able to obtain a loan.

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1 hour ago, Constricting Officer said:

The only other thing I will add is that if you are offering something to the prime contractor that will give them an advantage over competitors, they may not appreciate you shopping it around. Doesn't sound like the case here but wanted to mention

There might likely be some type of advanced arrangement or teaming agreement between the prospective prime and sub in that situation. 

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1 hour ago, Constricting Officer said:

I was hoping they wouldn't ask if such were the case.

Beginners Forum. Never hurts to be careful and to overexplain when feasible to do so.

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Thank you all so much for this helpful info (and I do appreciate the overexplanation!).

I should have clarified two things: 1) We haven't signed anything with any prime yet, we have only been in talks with one (well, now 2, since I posted). But the product we offer is so new, and only 3 other US startups do the same thing (and I'm not sure how many of them are doing business with the government), so I believe it would indeed give a prime a significant advantage. 

here_2_help brings up the USG Small Business Administration and the idea of doing business directly with the government. I have worked with federal contractors for 20 years as a writer. I'm no expert on the FAR and have the impression that as a startup we would also be out of our league in attempting to understand the FAR and other regs as they apply to deep tech. Do you all think it's safest for us to stick with the subcontractor route? I don't want to enter into a direct agreement with the USG and then be overwhelmed by a sudden need to understand all the red tape, with no one guiding us. Seems like a huge liability. But please tell me if I am misguided. 

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45 minutes ago, Pascuale7 said:

Do you all think it's safest for us to stick with the subcontractor route?

I don't have an answer to your question, but I will say that you shouldn't get into government contracting without first-rate legal and accounting advice, which is, admittedly, expensive. Government contracting is a howling wilderness of rules and procedures, and your company could be badly hurt out there, even ruined.

On the other hand, large companies can be ruthless when dealing with naive smaller companies.

In short, if you want to survive and prosper, then you need professional advice and counsel before entering into any kind of deal with anyone. You will skimp in that regard at your peril.

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32 minutes ago, Vern Edwards said:

I don't have an answer to your question, but I will say that you shouldn't get into government contracting without first-rate legal and accounting advice, which is, admittedly, expensive. Government contracting is a howling wilderness of rules and procedures, and your company could be badly hurt out there, even ruined.

On the other hand, large companies can be ruthless when dealing with naive smaller companies.

In short, if you want to survive and prosper, then you need professional advice and counsel before entering into any kind of deal with anyone. You will skimp in that regard at your peril.

2000% agree with Vern's comments. I have seen, first-hand, deep tech companies go into bankruptcy as a result of bad government contracting advice. 

1. Get a loan to fund adequate working capital

2. Get some good, experienced, advisers on board (legal & accounting)

3. LISTEN TO YOUR ADVISERS

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@here_2_help@Vern Edwardswow thank you, you have sufficiently scared me! I don't suppose you all could name some companies that struggled with this stuff? Stories I could share with the founders to help them understand the gravity of this need for us to invest in advisors with the right experience? I have read about Senseye (https://www.inc.com/magazine/201906/tom-foster/senseye-david-zakariaie-eye-monitoring-military-technology-government-contract-startup.html) but would love to present other business cases to them. If not, thank you anyways as you have already helped me a lot. 

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See this: "Identifying and Eliminating Barriers Faced by Nontraditional Department of Defense Suppliers"

https://apps.dtic.mil/dtic/tr/fulltext/u2/a609831.pdf

And this: "Government Contracting: Terms, Risks & Sanctions"

https://www.crowell.com/files/Government-Contracting-Terms-Risks-Sanctions-San-Fernando-Valley-Bar-Association-April-2012.pdf

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49 minutes ago, Pascuale7 said:

@here_2_help@Vern Edwardswow thank you, you have sufficiently scared me! I don't suppose you all could name some companies that struggled with this stuff? Stories I could share with the founders to help them understand the gravity of this need for us to invest in advisors with the right experience? 

https://docplayer.net/14046423-United-states-court-of-appeals-for-the-federal-circuit.html

 

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I should also add that I'm aware of several small businesses that figured out how to thrive in the world of government contracting. It wasn't an easy path, but they persevered and their dedication was eventually rewarded. Some thoughts in that regard:

1. They knew their (government) customer and what it needed

2. They partnered with an established prime until it was time to go on their own

3. By the time they were on their own, they had learned enough -- and invested enough -- to comply with the rules. Key point: They were willing to accept that they didn't know what they didn't know.

4. They continued to invest in key non-technical workforce hires (contracts, accounting, IT infrastructure) and to engage consultants (legal) for years

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