How to Lose Government Contracts: Key Mistakes to Avoid in Federal Government Contracting

Figure 1 Don't make the mistakes that cost you government contracts

In last month’s newsletter we offered up seven of the most important tips on . This month, we are taking the opposite perspective on government contracts, and looking at some of most significant and common mistakes companies make when trying to secure federal business opportunities. Fortunately, there has been a great deal of research on government contracting to draw from. With decades of collective experience, our team can help you win government bids, and just as importantly, keep them. Here are some of the major pitfalls identified by our team and by industry researchers. Avoid making these mistakes on your government bids:

1. Failure to properly fulfill existing government contracts

The greatest threat to tomorrow’s government contracting is to mess up today’s government contracting. A failure to fully, accurately, and promptly fulfill your existing contract jeopardizes future federal business opportunities. As most government contractors are acutely aware, firms are evaluated by their performance on past contracts. Not only do federal procurement agents carefully consider these score cards before awarding contracts, but they also share information with one another. They are extremely hesitant to award government contracts to firms that have made them look bad or held up projects in the past. It is best not to win government bids unless you can successfully fulfill them on time. Here are some of the biggest failures we see:

The paperwork of existing government contracts

Without a doubt, the paperwork involved in federal business opportunities can be long, complicated, and detailed. It is no wonder that administrative or paperwork errors, then, are the most common mistake in securing federal business opportunities. According to The 100 Worst Mistakes in Government Contracting, by far the largest number of mistakes in attempting to retain a government contract happen under what it calls "contract administration." Fully 35% of the mistakes in government bids they found to be "contract administration," more than twice as many as any other category.

Perhaps the most common error in contact administration is to simply over look one part of the government contract requirements. Many firms have no problem providing the required documentation, but simply are not cognizant of the requirement and end up having to try and "back-fill" overlooked steps as their shipment is ready to roll out the door. Some of the other most common mistakes in government contracting are the failure to correctly identify and submit a claim for constructive change, or defective specification.

Another example of predicaments clients sometimes share with us is following verbal directions that deviate from the government contract language. Government bids are landed with set expectations and specific contract clauses. As a general rule, those clauses supersede any directions, promises, or changes that a government official may verbally initiate. Nonetheless, government agents sometimes try to change or redirect things after the government bids have been finalized and the contract signed. Feeling pressured to act quickly, firms may follow directions from an unauthorized official in defiance of the government contract, and unwittingly setting themselves up for failure. The official in question may or may not be authorized to provide directions and institute these changes. It is vital to get any such changes in writing and, as much as possible, to vet the official’s authority.

Each firm needs to develop their own government contract management system and best practices to make sure that no steps are overlooked and everything is documented. The key take-aways are to get everything in writing, and effectively store documentation in order to avoid the most common mistakes made in government contracting. This is the area where the typical firm that has landed government contracts is most likely to stumble, so it deserves extra attention.

Getting the appropriate drawings

Failure to quickly find the right drawings can delay a bid, stall the completion of a project, or in extreme cases, even lead to manufacturing the wrong component in error. As most businesses submitting government bids are aware, the original equipment manufacturer typically has exclusive rights to the drawings they have created for government contracts for ten years, after which they become the property of the federal government. In truth, the time does vary under certain circumstances and arrangements. These government-owned drawings are then published in collaboration folders, or c-folders for any parties interested in submitting government bids to access. However, there are only two ways to find the drawings your firm is looking for on government websites – peruse thousands and thousands of c-folders or have the drawing number. Govgistics has a better solution. Using the Govgistics database, simply entering the national stock number can take you into the drawing, saving untold hours of work. The Govgistics site makes it so much easier to find the right drawings, that many of our clients report that they save 20-90% of time on this step, compared to the way the used to do things before discovering Govgistics. If you are having trouble finding the drawings you need, please contact your Govgistics rep, so that we can streamline this step of the government contracting process with you.

Not accounting for specific materials or components needed to fulfill your government bids

Surprisingly, one of the most common problems our Govgistics reps encounter (far more than the national averages would indicate) are clients who have won government bids, and run into problems getting the specific materials or components required to fulfill the government contract. We suspect we may encounter this problem more frequently than "normal" because our clients realize that we can help often help them solve it.

Make no mistake. We strongly advise all clients to have a complete picture of the entire supply chain -- from acquiring raw materials through shipping -- before submitting government bids. That said, many clients have won government contracts only to discover that a particular material or component that they thought would be easy to find is either back-ordered or very difficult to obtain. This could be anything from a particular type of metal required to meet military specs, to an odd sized bushing or spacer, to a vital electrical switch or generator that for some reason is in short supply. It may also include those items that are often forgotten until very late in the process. For instance, many government contracts for the DOD require labels that meet specific military standards, or call for shipments to be made in government-approved packaging. Fortunately, Govgistics can be a huge help in many of these instances. We have relationships with thousands of vendors, and know who has experience manufacturing what. We regularly work with distributors who have warehouses full of parts needed on government contracts. We also have great relationships with many brokers who can further extend our reach for hard to find materials or components. Govgistics is one of the nation’s top resources for connecting businesses engaged in government contracting.

Failing your government contracting audit

Even though audits only account for about 6% of the most common mistakes when trying to secure federal business opportunities, they are very serious. (Read more…) No matter your business, no one likes to get audited. The full scope of federal audits for government contractors will vary from case to case, and may involve quality control, accounting and financials, security and ITAR compliance, and more. While we lack the time here to fully explore the ramifications of each type of audit, here are a few tips to get through the audit in the best possible way:

  • Cooperate with the audit. Be fast and friendly and make the auditor want you to succeed.
  • Get a letter or entrance briefing explicitly stating the scope and purpose of the audit. It is OK to gently remind them of this if you feel the audit is veering from its stated scope and purpose.
  • The contracting officer should provide you with a written request to access your records.
  • Provide a single point of contact from your firm to serve as liaison, spokesperson, and coordinate everyone from your team.
  • Ask the auditors for an exit briefing to report their findings, and get as much of this on record as possible.

Overestimating your capabilities to meet federal business opportunities.

We hate to say it, but one of the things our reps occasionally run into is a client who overestimates their production capabilities. They simply find themselves unable to manufacturer product quickly enough, or unable to meet stringent government requirements. Once again, our network of OEMs, brokers and distributors may be able to help, but we strongly encourage all of our clients to have a realistic understanding of their processes, from start to finish, before making any government bids. It is better to lose a government contract than to be unable to fulfill it.

2. Misunderstanding the RFQs when submitting your government bids

Research indicates that 11% of the mistakes in government contracting happen before government contracts are even signed. Non-conforming bids, non-compliant proposals and a misunderstanding of government standards are the primary culprits. These errors can prevent you from starting a relationship with government agencies, or jeopardize the one you have. Whether it is a failure to understand the difference between an IFB, an RFP and an RFQ, or realize how unilateral offers eventually lapse, or grasp how a specific military standard applies to your project, misunderstandings at the beginning of the process are the second most common mistakes in securing federal business opportunities. Once again, Govgistics can help. We can direct you to the specific regulations being referenced so that you can access them yourself. Our team has worked with them so often that we can sometimes share helpful insights. Most of all, we have a small network of select firms who specialize in helping businesses trying to land federal contracts to come into complete regulatory compliance. We would be happy to refer you to an expert in government contracting regulations.

3. Developing "tunnel vision" when it comes to federal business opportunities

One of the most common and under-reported mistake that businesses make when trying to when government bids is to develop "tunnel vision." They tend to focus on one government agency, one government website, and sometimes even one government project. Meanwhile scores of federal business opportunities that would be perfect for them slip by unnoticed. Adept and frequent use of the Govgistics website is the perfect antidote to this problem. By consolidating the information from multiple government websites and agencies into a single, more user-friendly database, we have opened up a wealth of federal business opportunities to our clients they would have otherwise missed. Moreover, because of the searchability of the site, clients save an enormous amount of time and energy, as opposed to scrubbing government websites. Don’t underestimate the power of an efficient, extra-wide net in government contracting.

4. Blowing the opportunity for the face to face interaction with government contracting agents

While submitting government bids is a paperwork-heavy process, good government contracting is about building trust. That often means personally meeting federal procurement agents and building relationships. There are many opportunities to meet with federal procurement agents, including:

These are fantastic federal business opportunities, so we advise clients to take them very seriously. Dress well. Be prepared. Know your corporate strengths, certifications, and differentiators. Don’t go in with the mindset of selling, but rather building long-term relationships. Please note that federal procurement agents can not personally accept gifts of any significance, but agencies can sometimes accept free samples of your work as proof of craftsmanship.

5. Not having your credentials up to date for federal business opportunities

Your firm must be registered with SAM (the System for Award Management) to even submit government bids. In addition, it wise to make sure the following codes are current, complete:

In addition, as we discussed last month, there are very significant advantages in claiming membership in a specially designated category, when pursuing federal business opportunities. There are some government contracts that are "set-asides" for businesses that meet one of more of these specially designated categories. In addition, many government procurement agents try to give preferential treatment to businesses that fit into these categories on government contracts that are not "set asides," as well, in order to hit government procurement goals. As such, when pursuing federal business opportunities, if there is any way for your business to claim one or more of the following designations, it is imperative that you have the documentation complete and ready to go:

  • Small business status
  • Veteran-owned or service disabled veteran-owned status
  • Owner qualifies as disabled American
  • Women-owned status
  • Black Americans-owned status
  • Hispanic Americans-owned status
  • Native Americans-owned status
  • Asian Pacific Americans-owned status
  • Subcontinent Asian American-owned status
  • Personal experiences of substantial and chronic social disadvantage in American society, not in other countries
  • Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s) status
  • Business located in a Hub-Zone

6. Having delinquent tax liability

There is not a lot of data on this particular pitfall just yet, because the law was formally changed in late 2016. We do want to make sure that our clients are aware of it. The DOD, the GSA and NASA, formalized an interim regulation that prohibits the federal government from awarding government contracts to corporations that have a delinquent federal tax liability or felony conviction, unless a suspension or debarment official concludes that such an action is not in the best interest of the federal government. Pass-through businesses, like S-corps and partnerships, which engage in government bids may need to be extra cautious about ensuring individual executives and shareholders pay outstanding tax liabilities. In essence, the federal government has finalized rules barring those with outstanding tax debts and felons convicted of federal crimes within the last 12 months of being rewarded government contracts. Under the new regulations, government contractors responding to federal solicitations are required to disclose any delinquent federal tax debt and any federal convictions in the last year. The government contracting office is prohibited from granting an award to the company unless the suspending official determines that denying the contract is unnecessary to protect the government’s interests. The bottom line is that if your firm or any principles in it have any tax liability, it would be smart to resolve those before pursuing federal business opportunities.

7. Not getting the help you need to land government contracts

As you can see, there is do much more to government contracting than submitting the lowest government bids. This is a complicated process with many ways to misstep. Nobody does it alone. Getting help can make a huge difference in your bottom line. To find the best federal business opportunities and land them, you need to avoid these common mistakes and leverage every advantage that you can. Our staff has decades of experience in the industry, and is waiting to help you overcome each of these hurdles and land the government contracts best suited for your business. Please give us a call.