In this session, discover the inside track on how small service firms can punch above their weight and land lucrative government contracts. This session guides you through strategic partnerships with large contractors, providing the roadmap to navigate the complexities of government procurement processes. Learn the secrets to leveraging these alliances for growth, stability, and success in the public sector marketplace.
TRANSCRIPT
Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast. brought to you by Collective 54, the first community dedicated to founders of small service firms that are trying to grow, scale and maybe someday sell their firms. On this episode, we’re going to talk about how small service firms can win government contracts by partnering with larger firms. And we have a fantastic Collective 54 member with us. His name is Paul Karch, and Paul is an expert in all things government contracting and was gracious enough to come on today’s podcast with us and share what he knows. So, Paul, with that, it’s good to see you. Would you please introduce yourself to the audience?
Paul Karch [00:01:04] Absolutely. My name is Paul Karch. I’m founder and CEO of an organization called Gardant Global Garden Global is a 17 year old organization that has been focused on government contracting for 17 years. And our claim to fame is we’ve won about $300 billion worth of business for our clients over those years. Well.
Greg Alexander [00:01:22] You know, on one hand, I’m super happy that you delivered so great for your clients. On the other hand, it makes me somewhat uneasy that the government spent $300 billion because I wasn’t spending more. I know. I mean, so hopefully they’re spending it wisely. But anyways. All right. So first, I want to I’m going to ask some basic questions. And I should say, Paul, as a maybe jumping off point as a general comment, our members are mostly focused on the private sector and it’s a growth opportunity for many of them to expand their business into government business. Right? And yet they don’t know how to do it. So today is going to be very basic for you after doing this for 17 plus years. But for our members, it’s going to be, you know, somewhat eye opening. So with that as a backdrop, I’m going to start with my very first question, which is can you define for me what a quote unquote large government contractor is and maybe name a few to give us some context?
Paul Karch [00:02:21] Certainly. Well, the term large business, large government contractor is determined by the next, quote, North the North American industry classification system. Okay. So it’s a given. So to give you an example, Greg, a large for example, the NASA’s contract, which is up will be the RFP will be released in February. The small business size standard is $34 million. So any company below 34 million is classified as a small. Any company above 34 million is classified as a large. So the differentiation can be it could be looking at that as the next code is the large business. It could be looking at the organization as large business. So, for example, Lockheed Martin is the single largest government contractor that exists today. Okay, we’re talking billions of dollars. But Lockheed Martin, again, is in space. They’re in technology, they’re in homeland security. They’re across the board. And they would be classified as a they’re like the mega large contractors. But even a $35 million company on this, NASA’s contract would be classified as a large.
Greg Alexander [00:03:21] Interesting. And this $34 million line of demarcation is that. An annual revenue generated from government contracting? Or is that just an annual revenue of a firm in general?
Paul Karch [00:03:33] It’s running through your average of the firm in general. But remember, it’s based on the tax code. So there are next year’s like three, three, 4111, which is the hardware menu, tech technology, hardware, manufacturing tax code. And that tax code is defined by number of personnel. Any organization, it’s 1250 people or larger In population, an employee population is classified as large.
Greg Alexander [00:03:55] Okay.
Paul Karch [00:03:56] And small. So there’s differentiations here. But yeah, I mean, it’s you in that case, it’s a running through your average as far as are people concerned.
Greg Alexander [00:04:03] All right. Perfect. Now, you know, in previous sessions with members, we had some some of your peers that are in this space suggest to our audience, which are small service firms, that a good entry point into the government contracting world would be as a subcontractor to a large contractor. So that’s the reason why I started with. The first question is, you know, what is what is a large contractor? So why would somebody like a Lockheed Martin or another, you know, very large firm, why would they want to subcontract to anybody?
Paul Karch [00:04:36] Well, I think I think you’ve got you’ve got a lot of external you’ve got government pressures and external pressures, specifically for this from the Small Business Administration. So, for example, a Lockheed Martin is probably under under obligation to bring about 15 to 20% of all of their revenue through small businesses. That’s that’s a mandate and that’s a commitment they give. So under the large contracts that they’re awarded, every one of those organizations has to complete, which is something that’s known as a small business subcontracting plan. And when they do that small business subcontracting plan, they submit it with their bid. When they win the bid, they typically will be audited every year on their small business utilization. So that’s why they would have to continue to add to their small business portfolio, because if they are successful in bringing small businesses on by by default, the small businesses will outgrow their small business size standard in two or three years working with Lockheed Martin.
Greg Alexander [00:05:30] Yeah, but I didn’t know about that. Say that again. It’s a it’s a what was it? Terminology is their.
Paul Karch [00:05:35] Small business subcontracting plan.
Greg Alexander [00:05:37] Small business subcontracting plan in there it’s mandated have a.
Paul Karch [00:05:41] Mandatory it’s a mandatory piece for all government contracts that large businesses participate in.
Greg Alexander [00:05:46] Geez. They learn something new every day. That’s fantastic. So obviously, this idea lines up very well for our community because most of them would be in that definition of a small business.
Paul Karch [00:05:56] So clearly.
Greg Alexander [00:05:57] So if I am a founder of one of these small businesses and I want to go approach, you know, a large government contractor and position myself to participate in this, how do I how would I do that?
Paul Karch [00:06:08] Well, first and foremost, it’s not for the faint of heart. So you have to be committed to doing it. This is not something that will happen overnight. It’s something that takes time and patience to do. I was a senior vice president of a very large defense contractor before I started guarding Global. I set aside Thursday morning from 9 to 11 to interview small businesses, and I would do 15 minute interviews every Thursday. I would pick the small business that was the most prepared, that was able to provide me a single page capability statement. I don’t want a long presentation. I didn’t want a book. I wanted a single presentation. But I also wanted to know that they understood the government contracting market. So what I wanted them to know, I wanted them to be registered in SAM, which is a systems for word award management, which they must be registered to do government contracting. I wanted to make certain that they understood the agencies that I supported and that they were coming to me to support. So for example, if ah, if one of the members wants to support Lockheed Martin, it would behoove them or they the, the way they would get in there is if they had a clearance, if they don’t have clearances, there’s no point in talking to Lockheed Martin because Lockheed Martin contracts require security clearances. So it’s really knowing your audience, knowing the agencies that you want to target with those large businesses, registering yourself as the organization and then moving forward, if that’s the route you want to take as a partner to a small business or to a large business.
Greg Alexander [00:07:28] Okay. And and I appreciate that it’s not for the faint of heart. And you got to hang in there. You know, I would suggest and encourage everybody to take a step in this direction only because the size of the prize is so big. And, you know, if you hang in there, I mean, it can really transform the business. Plus, it’s a diversification strategy, you know, as maybe the private sector goes through recession, you know, the government remains to be a very large purchaser of services. So it’s a good strategy from that standpoint. Okay. So I’m putting myself in the shoes of our members and I’m listening to your expert counsel here, Paul, and I’m overwhelmed and intimidated. For example, I don’t have security clearance. How would I get that? I don’t know. The SVP of a large defense contractor, if I get on the phone with him and he interviews me for 15 minutes, I’m going to lay an egg and ruin my opportunity. Like, So how do I guess how do I get myself prepared? Like, how do we even get started?
Paul Karch [00:08:27] Sure. Well, a couple of things. One, one, you could contract with a company, you know, similar to ours, but but more importantly, I think it’s so bringing someone or actually bringing individuals as consultants or as employees that have an an expertise in government contracting, not an expertise in DOD or and again, you don’t have to be you don’t have to be familiar with all the agencies. You just need to be familiar with the processes that are required because they’re exactly the same for all the agencies. I don’t recommend the members initially going for contracts that do require a security clearance because right now in the industry as it is today, a security clearance will take at least 24 to 36 months to get through for a single individual, and the company has to be cleared before they can actually hire cleared people. So you have to look at that. So my suggestion is pick agencies that are receptive to something called speedy trial, which is a Homeland Security protective Homeland security personnel directive, and that deals with just standard background checks for your individuals. Okay. That point, then you can start to look at agencies like Department of Health and Human Services, Department of Homeland. Department of Department of Commerce, Department of Education, Housing and Urban Development. But then it’s a question of do you own as an organization, are you in any way in a socioeconomically disadvantaged class? Because if you’re in a socioeconomically disadvantaged class women and minority hub zone, which is in a highly underutilized business zone, which is where you’re often where your facilities would be in, 35% of your employees have to be part of that. If you’re one of those types of and have the ability to do that, your first port of call should be with Small Business Administration to get sanctioned, to get certified with the various small business socioeconomic designations. So at that point, when you go to talk with any of these companies, you have that designation and that amount immediately moves you to the top of the pile.
Greg Alexander [00:10:29] Yep. So. So, Paul, I’m going to ask you, which is unconventional for me. And then you’re not offering it because you’re adhering to our code of conduct, which I appreciate, but I’m going to ask you to describe your services, because what I’m feeling right now is and I’m putting my shoes in the members, the easiest thing for me to do is just to hire somebody like yourself and have them hold my hand and walk me through the process. Tell me a little bit about how you start with a client and kind of what you help them do.
Paul Karch [00:10:58] Sure. We actually we begin with obviously, we we look for a corporate overview. I’ll give you an example. We’re kicking off with a number of clients right now, been asked to contract with a number of companies that are very, very limited in their government contracting, but it’s a $100,000,000,000.10 year technology contract that will be awarded to about 150 companies. Wow. It’s for technology, hardware, software and hardware services, both enterprise and in individual services. The very first thing we do is we like a corporate overview in a corporate presentation of what that company does so that we can feel what you do. Well, then we’ll validate. I have a compliance group that will validate if you’re registered in the SAM systems to award management or not. If you’re not, we’ll take care of registering you so that then you are now sanctioned to do government business. And from that point forward, we will develop the capability statement for you. We’ll look at all of the different aspects and the mandatory as they’re required for this contract itself. So I’ll give you an example. The NASA’s super quiet contract requires ISO 9001 2015 certification. If you’re selling into the hardware space, ISO 9001 2015 is an interest or international standard for quality. Some of our clients that have come forward for this contract don’t have it, so we’re helping them achieve that certification. Now we then walk them through the audit while we’re bringing them to the altar of bidding. The proposal itself, if they’re looking at the services side, the services side actually require ISO 9001 2050 and see MMI Cinemas driven from the Carnegie Mellon Institute and that’s Am I in services or CRM? Am I in development will also help them with that and get that certification. Once they have that certification, we bring them together. We work on the proposal and remember, we’re starting a proposal. We started with some clients in August. The RFP will not be released till February or March. The due date won’t be until next June. So we’ve started six months, eight months, ten months in advance of a specific opportunity that we want to go after. That is what a small business and the members need to be able to do in order to position themselves to win that first contract. Second contract, third contract, like I mentioned. It’s not for the faint of heart. It really is not. But we helped and or I’ll give you an example. We up an organization when the predecessor contracted this eight years ago, they won the con where they won the contract. They hadn’t done any government business before, won the contract and then worked the contract for about six months and then sold the contract on to another company, you know, for for, you know, 10 million plus.
Greg Alexander [00:13:27] Wow. I didn’t realize you could do that. That’s interesting.
Paul Karch [00:13:29] As long as they can. No baited across. As long as you have the same certifications, the person buying it as the people that had it.
Greg Alexander [00:13:35] Yeah.
Paul Karch [00:13:36] Okay. And they have sanctioned. But you know, again, you can do that. So there’s value and there’s value. There’s gold and then their health, so to speak. Yeah.
Greg Alexander [00:13:43] And is the process the same or different when you consider, you know, federal, state, local, etc.?
Paul Karch [00:13:50] It’s very it’s it’s very it’s the same. It’s a great question. It’s the same but different. And I’ll tell you, the registrations, the certifications in many cases are the same. I ran state and local for a large technology company a number of years ago. And the difference with the state and local market is it is state and local. So you must need you need a local presence to win business in a specific state that you’re in. So if, for example, I’m you know, I’m based in South Florida, I would probably if I wanted to do direct Florida business, I would actually put an office in Tallahassee. Okay. And I would have people in Tallahassee calling on the state capital, because that’s that’s how you that’s how you win the state business, because it’s always somebody’s brother, somebody’s cousin, somebody’s friend, somebody’s college roommate, somebody, you know, in Tallahassee, it’s all Florida State. Yeah. So if you are a state grad you’re in if you’re from University of Florida, you might not be in. Yeah.
Greg Alexander [00:14:40] Or Miami Hurricane. Exactly.
Paul Karch [00:14:43] My wife is Miami Hurricanes. So that’s that’s her thing.
Greg Alexander [00:14:46] Yeah. Okay. And your firm helps at all tiers of government?
Paul Karch [00:14:51] Absolutely. We help at all tiers. Again, the state and local markets a little bit more. It’s a lot more fragmented. So it’s a it requires a different a different focus. Yeah, but but again, the idea is if you’re if you’re in a jurisdiction and state, local markets are great, but the federal the federal market I always classify as Fortune one.
Greg Alexander [00:15:07] Yeah.
Paul Karch [00:15:08] Because they spend more money than anybody else.
Greg Alexander [00:15:09] Yeah. Yeah, for sure. You know, I’ll, I’ll maybe conclude with this little brief success story. So I was working with a member during office hours, and he’s thinking through his ideal client profile, and we’re discussing this concept of a look alike analysis. And I won’t bore you with the details of that, but what it basically means is, who am I best clients? What do they look like, and are there other people that that are similar? And he stumbled on the fact that he was he had 30 MSP clients. These are recurring revenue clients he’s in the world and ten of them ten of them were local municipalities. And he didn’t realize it. And he said, Geez, I wonder what’s going on here. Like, why did these little ten municipalities see such value in our services? And he determined that that was going to be one of his ideal client profiles. And he’s pursuing that. And they’re they’re sizable contracts. They’re profitable. You know, they got healthy client relationships. The employees that work on these contracts are happy. So it’s just an example of what the opportunity is. So. All right. Well, listen, you know, Paul, on behalf of the membership, I wanted to thank you for certainly offering your overview here on this podcast. And I’m really looking forward to the follow up that will have which will be the one hour private exclusive Q&A with members. They’re going to have a ton of questions. Excellent. So I look forward to that. So thanks on behalf of all the members who are coming on.
Paul Karch [00:16:28] All right, Greg, thank you very much. Anytime.
Greg Alexander [00:16:30] Okay. All right. And for those that that are listening, just three quick calls actions. As I mentioned, members attend Paul’s session. We’ll get that invite out to you shortly. If you’re not a member and you want to become one, go to collective 54 dot com and fill out an application. We’ll get in contact with you. And if you’re just someone who wants to learn more, check out my book, The Boutique How to Start Scale and Sell a professional services firm. You can find that on Amazon. But with that, until next time, I wish you good luck as you try to grow a scale and sell your firm.
