Dec 31 2009

Think Small

By forming relationships with one another, large and small providers of information technology help agencies meet their small-business purchasing goals.

Photo: Gary Landsman
"Without the Small Business Consortium, we wouldn't have had the exposure or skills that have led to our successes," Betis Group President Hernán Cortés says.

Almost 18 years after Congress mandated that government channel contracts to small businesses, some agencies still struggle with finding partners with the skill set and operational expertise to handle large information technology projects.

The Small Business Act mandate stipulates that small businesses have the maximum practical opportunity to participate in providing goods and services to the government. Yet small businesses and agencies often find it difficult to establish that initial relationship.

A General Services Administration tutorial for small businesses highlights one problem: "Your business must be well established with funding and delivery solutions in place before you approach the government."

That's not easy, especially for the startups that comprise a large part of the market. The upshot: The mandate has generated a matrix of creative partnerships between small and large IT providers that benefits all the parties involved.

As one an example, CDW Government Inc. started the Small Business Consortium (SB Consortium) in 2003 by seeking partnerships with woman-, minority- and veteran-owned companies, certified small and disadvantaged businesses, and companies located in federal HUBZones. (A HUBZone is an area designated by the Small Business Administration as an "historically underutilized business zone.")

Through a competitive request for proposals, CDW•G has selected 20 small businesses to participate in the consortium. Each competes for federal contracts by providing its own niche services and products, while leveraging CDW•G's electronic-commerce, service, product and distribution capabilities.

Take Betis Group of Arlington, Va., for example. The 8(a) HUBZone information security, networking and enterprise management service provider found it difficult to get high-service levels from large technology distributors.

"While there are a great many small firms, small firms by their nature have limits. It is a challenge for agencies to find reliable, stable companies that are prepared to do business with the federal government," says Hernán Cortés, president of Betis Group. "Thanks to CDW•G, we are able to provide agencies the flexibility to purchase from a small business with the support of a Fortune 500 company."

How Agencies Can Help Small Businesses Succeed
Examine procedures and processes for qualifying small businesses and streamline wherever possible.
Educate small businesses about your agency's opportunities and criteria by publicizing them widely on the Internet and in other sources.
Leverage the services of large companies, such as CDW•G and SAIC, that have established small-business programs.
Provide large vendors with the names of small businesses that meet your agency's evaluation criteria.

Before partnering with CDW•G in 2000 and then becoming a charter member of the consortium in 2003, Betis Group had 15 employees after five years in business. Due to consortium contracts, Cortés has grown Betis Group to 57 employees after landing federal contracts with CDW•G's backing. One recent project in San Antonio with the Defense Department prompted Betis Group to open an office there.

"When an agency makes a large buy, that introduces a warehousing challenge," he says. "Holding large amounts of product in a warehouse is costly. In several contracts with DOD, CDW•G supplies the products while we provide the integration and support. Time and labor between the supplier and the end user are reduced. It's a winning situation for the agency as well as our firm."

Cortés also appreciates the mentoring—in areas such as standards processes, quality assurance and best practices—that CDW•G has offered to support Betis' government sales. "Without the Small Business Consortium, we wouldn't have had the exposure or skills that have led to our successes."

Another example of the SB Consortium in action comes from T3 in Centreville, Va. The security and networking specialist, a certified disadvantaged small business, generates more than $13 million annually from government sales.

"Federal agencies and prime contractors appreciate CDW•G's backing, making T3 more likely to win contracts than if we were bidding on our own," says Wendell Norton, vice president of sales and marketing for T3. "Agencies get the small-business credit from working with T3, but they also get CDW•G's guarantee of delivery."

Agencies benefit from the innovation provided by small businesses and the positive impact on their preference goals.

Bringing small businesses into the fold gives the larger companies niche expertise and a competitive edge when competing for contracts. Association with larger, more stable companies enhances the small businesses' credibility, and they gain national exposure. And the country benefits when such partnerships help small businesses garner a fair share of federal spending.

Better Chances

"If a six-person small business wants to bid on a $10 million federal contract, from an agency's perspective they are an unlikely choice," says Robert Collins, president of Collins Consulting, a small business technology provider and charter member of CDW•G's Small Business Consortium. "If you team that small business with a Fortune 500 company like CDW•G, everyone wins because you've improved the probability of success."

Few would disagree with the program's value.

To help small businesses prosper, the Small Business Administration negotiates annual procurement preference goals with each agency and reviews each agency's results.

Governmentwide, the target is 23 percent of all prime contracts to small business, with smaller percentages of prime and subcontracts set aside by type of small business: disadvantaged, woman-owned, HUBZone and service-disabled veteran-owned.

In addition, when the government awards a prime contract worth more than $500,000 ($1 million in construction) to a large business, the prime must provide a subcontracting plan that includes small business goals.

Though the program has been largely successful, agencies aren't always able to meet their goals. In addition to the challenges of getting acquainted with federal agencies, small businesses must also pass federal audit requirements.

"Unless you understand the government's needs in areas such as financial accountability, legal requirements and even security clearances, getting government business is going to be difficult at best," says Mark Amtower, president of Amtower & Company. The Highland, Md., company is a marketing consultant to government contractors.

Agency personnel can face information overload when faced with the large number of small businesses, making it difficult to locate the right company for the job. Even when a small business appears qualified, there can be questions about its financial stability and staying power.

By Category

It is also challenging for agencies to find sufficient numbers of qualified companies in specific categories such as disadvantaged businesses, woman-owned businesses, HUBZone small businesses and service-disabled veteran-owned small businesses.

"We provide a logistics engine to our consortium partners," says Kevin Adams, vice president of federal contracts for CDW•G, who spearheaded the Small Business Consortium for CDW•G two years ago. "Knowing that a $5.7 billion partner is involved and providing best-practice training and distribution takes a lot of the risk out of handing a large-scale project over to a small service provider."

Partnerships involving the CDW•G Small Business Consortium aren't limited to federal agencies. Its members add value to many relationships, such as a recent partner agreement involving Collins Consulting, CDW•G and $7.2 billion federal integrator Science Applications International Corp. of San Diego.

"We are excited to enter into this leading-edge agreement with SAIC," Adams adds. "Integrating the Small Business Consortium into this agreement is a win for everyone. SAIC benefits from working with small businesses, and the small business receives maximum exposure. And CDW•G is able to satisfy the needs of both its customers and partners."

Different units within SAIC sell approximately $30 million annually in computer products to fulfill government contracts. To reduce costs and streamline operations, the company wanted to source all such products from a single distributor. CDW•G proposed that SAIC utilize the consortium. SAIC put out a request for proposals to the consortium members and selected Collins.

SAIC and the agencies it deals with receive low aggregate prices backed by CDW•G's e-commerce, service and distribution capabilities; SAIC and the agencies also receive coveted small-business credits.

"It is SAIC's procurement practice to implement and, wherever possible, to exceed the intent of the government's small-business objectives," says Kristine Petka, assistant vice president and director of strategic spending at SAIC. "We are eager to help small businesses grow, and this contract allows us to integrate them into the process and provide the best prices to our customers at the same time."

SAIC plans to add additional SB Consortium members to the contract in the near future, Petka adds.

Big Bump

Collins says he expects the new agreement will boost his company's revenue by 500 percent.

"The agreement gives us the ability to expand our IT services, work with federal agencies and gain experience working with major contractors—both SAIC and CDW•G," he says. "At the same time, it allows SAIC to work toward its goals for contracting with service-disabled veteran-owned small businesses—with a high probability of success."