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Why Can't Startups Get US Government Contracts?

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Re: Why Can't Startups Get US Government Contracts?

#61

Post by AndrewKemendo »

drewpc wrote: post #8

Startups can and do get government contracts, but the government isn't going to come court you. You (the startup) have to figure it out yourself. Selling to the government is very similar to selling to any other industry/company: you (the seller or maker) have to understand the customer's acquisition process. The big difference is that the federal government is the largest customer--millions of people and trillions o…

What you describe takes CONSIDERABLE time and money on the front end that start-ups don't have. Ok, but lets assume they do and they land a contract.

The FAR isn't just some document that you read and understand - there is an entire additional process for diligence and documentation that goes along with it.

Now you need 60 days of deliverables until you get paid from the government.

CACI and the rest of the major Prime contractors have hundreds of contract officers that work and maintain these contracts - often outnumbering the actual developers of whatever the products are.

What needs to change is the FAR and the budgeting process. Until then we will continue to ignore the government.

Re: Why Can't Startups Get US Government Contracts?

#62

Post by mindcrime »

I think they can, but a lot of it comes down to your willingness to play "the game". An example of what "the game" can look like is illustrated in this email we received from In-Q-Tel:

    Hi Phillip,

    I am with the investment team at In-Q-Tel
    (www.iqt.org), which is the strategic 
    investing arm of the CIA and other US 
    intelligence agencies. We invest in 
    innovative companies that are building 
    cutting edge commercial technologies that 
    may enable the agencies we work with to 
    rapidly develop and deploy new capabilities. 
    In addition to investing, we also in almost 
    all cases purchase some amount of product 
    and services from these companies. 
    Our customer agencies then frequently 
    make follow on purchases directly 
    with the companies.

    I recently came across some news 
    coverage of your company. I am contacting 
    you because your social collaboration 
    technology might be of interest to the 
    agencies we work with. Would you be 
    interested in having an exploratory conversation?

    Please let me know if you have some 
    time over the next couple of weeks to talk further.
So in this particular case, I think the implications are pretty clear - "take money from us, and become a puppet of the military-industrial-defense-espionage complex (MIDEC), and we'll help make sure the MIDEC buys lots of your product".

Possibly a good deal for people who are into that sort of thing, but we chose not to pursue it, as I don't have any interest in supporting the CIA/NSA/DIA/DHS/FBI/ETC.

Re: Why Can't Startups Get US Government Contracts?

#63

Post by mindcrime »

isthmus_ wrote: post #56
drewpc wrote: post #8

Startups can and do get government contracts, but the government isn't going to come court you. You (the startup) have to figure it out yourself. Selling to the government is very similar to selling to any other industry/company: you (the seller or maker) have to understand the customer's acquisition process. The big difference is that the federal government is the largest customer--millions of people and trillions o…

There's also the fact that your business needs to be built to handle long term contemplative projects. Stereotypical Silicon Valley startups are built for fast, reckless growth which cannot and will not happen with a government contract.

Stereotypical Silicon Valley startups are built for fast, reckless growth which cannot and will not happen with a government contract.

FWIW, there are plenty of us here who aren't in Silicon Valley and who aren't interested in building a "stereotypical silicon valley startup that is built for fast, reckless growth".

I don't disagree with your point, just wanted to point out that the audience here is broader than just SV people.

Re: Why Can't Startups Get US Government Contracts?

#64

Post by mindcrime »

eropple wrote: post #30
Afforess wrote: post #26

Earlier quoted context omitted.

Yes, it is ridiculous. I can not imagine how the choice to use tropical woods, or the number of minority employees would impact the final result of a business contract . The government should be concerned with the end result, not the minutia. This sort of detail-peddling is why only massive corporations can attain government contracts. Regulatory capture is the inevitable end result.

The government is concerned with the shape of the society it represents as well as the end result. Accepting some inefficiency for social good is a feature, not a bug. Even when it makes you mad. And, as described numerous times elsewhere in this thread, it's not that hard for small companies to get governmental work. But the process is different, for reasons that are not themselves unreasonable, and most don't reall…

The government is concerned with the shape of the society it represents as well as the end result.

No it isn't, it's concerned with perpetuating itself and its bureaucracy and maintaining whatever hold on power it and its people have established... and with grabbing more power when and where possible. Any social good the government does is just a happy accident / side effect.

Re: Why Can't Startups Get US Government Contracts?

#65

Post by mindcrime »

mynameismonkey wrote: post #36
Afforess wrote: post #26

Earlier quoted context omitted.

Yes, it is ridiculous. I can not imagine how the choice to use tropical woods, or the number of minority employees would impact the final result of a business contract . The government should be concerned with the end result, not the minutia. This sort of detail-peddling is why only massive corporations can attain government contracts. Regulatory capture is the inevitable end result.

The federal government is not a for-profit corporation intent on profit. Consider it more as a social service mission driven non-profit. Federal contracting is mission-driven by specific regulation, whether it be defense or health or transportation or whatever. The US govt. is not about end results, it's about process which hopefully leads to end results. The US, as a people, through the voice of the elected federal…

The federal government is not a for-profit corporation intent on profit.

Not on paper, no. In practice, it's a massive mechanism to transfer wealth to the rich, connected, insiders and the sycophants who hover around them and suck at their teat.

As with any customer, your goal should be to give the customer what they want, while educating them about what they need. At the end of the day, you need to make your customer happy, and for a federal agency that often means don't fail, don't get their name in the paper. Which generally comes from doing it in a predictable fashion with incremental change.

So very true. "Not getting their name in the paper" is probably a good idea for most customers.

Re: Why Can't Startups Get US Government Contracts?

#66

Post by something123 »

rhodysurf wrote: post #55
something123 wrote: post #28

In my own experience working in defense, there are tons of small businesses working on contracts, the government is forced to spend so much money on small business that they often simply throw away money. I worked on R&D for a military system which I 100% knew the gov't didn't care about and threw in the garbage. All the big projects force the big guys to subcontract to smaller companies The problem is actually compl…

Its true, but as long as you aren't chasing the next billion and you have a solid product, SBIRs aren't a bad deal and you can win sub contracts from the larger companies and agencies.

Of sure. And small businesses keep chugging away and can make their millions.

But I think the implicit goal was to have a certain mobility in the market where new more nimble player can float to the top and crusty old companies can sink. And the system doesn't accomplish that. If it did, maybe it would justify all the incredible waste involved

Re: Why Can't Startups Get US Government Contracts?

#67

Post by ArkyBeagle »

mynameismonkey wrote: post #54
ArkyBeagle wrote: post #50

Earlier quoted context omitted.

My understanding is that it's entirely possibly for just the contract pursuit process to overrun a project before one jot of work is expended on actual fulfillment. That's less likely than in transactions with private companies - although for IT projects...

I once had a 60 day contract take a year and a half to get signed after I won it. We had to be ready each and every day of that year and a half to start the work...

Some friends of mine will probably never actually execute on a contract that's been in the works since 2009. It's not a trifling system, either. And it's done. All that's left is the deployment and whatever paperwork needs to be done after.

one of the guys just soldiered on because he wanted to understand the technology.A few dozen weeks, but still.

They got paid what they could show in time and materials, but that's not the full award.

Re: Why Can't Startups Get US Government Contracts?

#68

Post by mshaler »

I personally executed several first-time transactions with multiple government agencies (mostly IC) while our start-up was still less than 100 people. It's not fundamentally different from typical enterprise sales, just involving different tactical obstacles.

The follow-on transactions, however, were much more challenging as the Beltway Bandits (prime contractors) dramatically increased the friction for us to be able to expand our footprint. We still succeeded, mostly because our technology was superior and we had the right agency (not contractor) advocacy.

Re: Why Can't Startups Get US Government Contracts?

#69

Post by rebootthesystem »

JPKab wrote: post #49
drewpc wrote: post #8

Startups can and do get government contracts, but the government isn't going to come court you. You (the startup) have to figure it out yourself. Selling to the government is very similar to selling to any other industry/company: you (the seller or maker) have to understand the customer's acquisition process. The big difference is that the federal government is the largest customer--millions of people and trillions o…

" The federal government's Small Business Administration (SBA) attempts to help companies with fewer than 1,500 employees win government contracts. The SBA's goal was to award 23 percent of all federal prime contracts, and 38 percent of all federal subcontracts, to these kinds of businesses. But Holman says they have "failed miserably in getting anywhere near that goal."" As a former employee of an SBA favored, minor…

The phrase "fills me with the urge to defecate" come to mind.

Re: Why Can't Startups Get US Government Contracts?

#70

Post by tsotha »

A relative of mine worked in contracts while he was in the USAF. He hated to deal with small companies, because you could never count on them to deliver. On more than one occasion while he was there the Air Force took delivery of a half-finished doo-dad (satellite or sensor or whatever) because the company that won the contract went out of business before they could finish. Picture the shell of a satellite with wires hanging out next to a big stack of documentation of questionable value.

And then there were the companies that couldn't deliver on time but hadn't gone out of business yet.

"What do we do here? We could fine them a bunch of money for being late, but if we do they'll go out of business and we'll never get the thing they're supposed to be making for us. I guess in theory there's a chance they could still deliver if they're still around."

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