The government shouldn't play matchmaker

A recent GAO report on government efforts to link small companies with prime contractors is fraught with risk.

government industry dialog

The Government Accountability Office's Dec. 11 report concerning the feasibility of using existing contract-reporting databases to connect small-business subcontractors with prime contractors suggests a course of action by the government that is fraught with risk.

I have worked for large and small businesses during my career and negotiated many teaming agreements, including multiple mentor/protégé relationships. Rarely have those exercises led to mutual success for the prime contractor and small business.

Small companies work in a particularly frenetic environment. Their priorities, resources, staff expertise and ability to honor long-term agreements vary greatly from year to year. Although they take their business commitments seriously, their ability to actually execute over time can be adversely affected by their contract wins or losses, the departure of key subject-matter experts, management turnover and ever-present cash flow pressures.

Simply put, their strengths and competitive advantages fluctuate. Therefore, their corporate information in a particular federal database might not be accurate at any given time.

FCW's Dec. 12 article about GAO's report implies that "matching" large and small companies for a program opportunity will facilitate enforcement of sought-after revenue-sharing goals. However, many factors affect how revenue might or might not flow to a small-business subcontractor. For instance, can the small company execute on its business commitments during the life of the contract? Does it still have the requisite subject-matter expertise? Does it have resumes on hand of qualified professionals to perform the work? And does its current leadership honor formal agreements established by its predecessors?

One large company I worked for had more 3,500 small companies in its partnering program. The data on each company was rarely updated after the initial registration process and did not include qualitative information such as the company's relationships with key government decision-makers.

Even when the database was used to vet a potential small-business partner, that company had to formally execute a teaming agreement with a prime contractor for each specific program opportunity.

Teaming agreements between a prime contractor and a small-business subcontractor contain many nuances. Issues associated with revenue sharing sometimes have murky prerequisites. For example, the types of work to be shared, whether labor categories are shared or not, and functional roles identified as swim lanes can strengthen or weaken a multiyear teaming relationship.

Furthermore, who is responsible if the relationship between a large company and a small business does not achieve stated goals -- e.g., if the large prime does not meet its small-business obligations and/or the small business fails to perform its obligations under the terms of the teaming and subcontracting agreements? If the small business receives no noteworthy revenue or expected program participation, which can happen for many reasons, who will be held accountable?

If I, as a large company, accept a specific small-business partner for a program opportunity after being "matched" by a government database and there are contract performance problems with either company, how can I be held accountable when I have done what the government recommended?

Instead, prime contractors that do not meet their small-business goals for a specific program should be held accountable by the agency in charge. The contracting officer should specify the penalty for failure to meet stated small-business goals in the request for proposals or task order and then enforce that penalty. The government should not be in the business of matchmaking in our complex industry environment.

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