Is Federal Contracting Right for You? Takeaways from the Fed Con Convention

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ℹ ABOUT THIS EPISODE

Is federal government contracting right for you? Wade and Stephen discuss the pros and cons, opportunities, and steps to get started in federal contracting. Fresh off attending the Fed Con Convention in Washington, D.C., Stephen shares valuable insights on the vast amount of construction work required by the federal government, primarily military and infrastructure projects. 

He highlights the importance of small contractors, navigating the bidding process, and the potential for consistent, lucrative work in this realm. Tune in as they debunk common misconceptions and provide practical advice for anyone considering this path.

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⌚️ In this episode:

• 00:22 Insights from the Fed Con Convention
• 01:52 Opportunities for Small Contractors
• 03:24 Understanding Federal Contracting Processes
• 06:19 Specializations and Partnerships in Federal Contracting
• 10:48 Pros and Cons of Federal Government Contracting
• 16:00 Getting Started with Federal Contracting

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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

Transcript

Wade Carpenter: [00:00:00] Is federal government contracting in your future? Have you ever thought about it, but wonder if it's right for you? What are the pros and cons of it? Today, we're gonna unpack that with Stephen Brown, who's coming right back from the Fed Con Convention, and he's gonna give us some lot of great information.

This is a Contractor Success Forum. I'm Wade Carpenter with Carpenter & Company CPAs, alongside Stephen Brown with McDaniel Whitley Bonding and Insurance. Stephen, welcome back from Fed Con. Tell us what it is, first of all.

Stephen Brown: Fed Con is associated general contractors, Federal Contractors Convention, and it's up in Washington, DC and it's a great event if you do federal contracting in any way, shape, or form, or you're interested and you're a member of the AGC. This is a great way to just come and get a feel of how to do federal contracting work.

I guess the main thing I got out of it, same I get out of every year is the incredible amount of construction work that is required by our federal government. The majority of it is military spending, of course on different military bases. But there's also [00:01:00] infrastructure, there's drainage. The US Army Corps of Engineer is in charge of all the drainage of our waterways and systems. The protection to keep folks from being flooded, to keep people safe. Why is the Army doing all that? They're just really good at planning and they're engineers and they've proven over hundred years or more how incredibly solid platform they are for getting things done to help us.

So you can say every government entity wastes money and does things inefficiently. And I would argue you're wrong. Nothing's perfect in any world, but in the federal contracting world, there's always something you can do. You can make money and you can get paid and you can also narrow down your competitors. If you're stuck competing against the same 20 or 30 people on every single job, maybe you ought to reconsider what other kind of work you want to do.

Wade Carpenter: Great point. I'm sure a lot of our listeners here are probably wondering, am I too small for even talking about federal contracting? How do I get into it? Does [00:02:00] it really make any sense for me? I know you were talking beforehand, you sort of made the comment that they want smaller contractors in this. Can you talk about that? Is there a contract that's too small?

Stephen Brown: The amazing thing is, in a government world what they define as a small contractor is not what a lot of people consider small. But that's not the point. The point is you qualify as a small business to do these projects, even if you're doing a pretty good volume.

But if you're not, and you're small and you're starting off, you gotta realize that the government has to get these projects done, and they need you to help them get them done. 

So, the best thing as we talk about all the time is getting started. The Corps of Engineers, Fed Con, your AGC, they can all get you started with construction gatherings and fairs where they're there to help recruit you and convince you that you can do federal contracting, and that there's a lot of resources to help you get started and understand.

A lot of people have the misconception that the paperwork [00:03:00] involved with government contracting turning a bid is just impossible to do. And, that's not true either. Are there frustrating aspects to federal contracting that you wish you had learned from someone else? Of course, but that's the same everywhere. That's the same no matter who you're doing work for. Branching out and considering whether it's something you wanna do is not an expensive proposition. It's more of a learning curve.

Wade Carpenter: Let me jump into one of the biggest questions that you may wanna lead into, but I wanna hit this one off the top. Does it make sense? Can you make money doing federal contracting? Are you gonna be bidding against 50 other people like you do in private? Can you consistently make money in federal government contracting?

What's your thoughts on that?

Stephen Brown: It seems to me, Wade, that the ones that are consistently making money in federal contracting understand the system and what the needs are. And what's interesting is as a contractor, when you finish a project, they do what's called a CPAR, Performance Evaluation [00:04:00] Report, on how you did as a government contract. And you do a good job and you get a good CPAR report that only helps you get other projects. Because a lot of projects are hard bid, but they're also bid as a request for proposal. And they're looking for the best experienced, qualified contractor to do the work. And they're also giving bid preferences to, if you're a small business and you're gonna help them meet the small business goals. 

Wade Carpenter: Are you bidding against a hundred other contractors? Are you gonna see the same competition in bids that you would see in the private industry?

Stephen Brown: In my experience, and looking at bid tabs, bid results, who's bidding it, you may be looking at having probably a third of the amount of bidders you would have on a local utility job and a fairly good size demographic. As a general rule, there are fewer bidders. There's also programs that you can bid on called MATOCs and IDIQs. MATOC is a [00:05:00] multiple task order contract. They're looking for a pool of only five contractors to divide up a certain amount of work, maybe 10 million, maybe a hundred million dollars worth of work, and they wanna pre-qualify you and be able to let you work out that work and you're guaranteed they ask you to bid what's called a seed project to get started. You're guaranteed that you'll always have the opportunity to accept or reject every piece of work that's coming through that MATOC. And it's limited. So it's a way to help small businesses grow in federal contracting.

Wade Carpenter: Can you consistently make money doing that kind of stuff?

Stephen Brown: You can. First of all, it's wonderful from a cash flow standpoint. Because you can purchase and stock pile materials and be reimbursed for them. There's certain procedures for that. You can get paid like clockwork once you understand how to make your submittals for the progress and the work that you're doing. And good government contractors, it's sure easy to run a good business [00:06:00] in federal contracting. When you're able to make the profit margins that you need to make maybe more if a certain situation dictates it.

Isn't it a wonderful scenario when somebody needs something and they just have to pay what the going price is to get it. That's like the dream of every contractor. So in federal contracting, you're gonna see lots of stuff that just falls right in your alley and you're also gonna see how important partnerships are to grow in this type of work. Partnerships with other contractors that do this kind of work. Joint ventures are really big in federal contracting and it's an everyday occurrence. It maybe sounds complicated, intimidating, but it's not. And if you're interested in it, of course you can always reach out to me. I will be happy to help you.

Wade Carpenter: Yeah, I think we've talked about this in the past that joint ventures can be a great way to get some kind of mentor and work with somebody that you may not otherwise have been able to get. I know one of the things we talked about beforehand, we talked about some of the partnerships and some of the things you saw at like Fed [00:07:00] Con. People like you that specialize in federal bonds and some of the ins and outs of that. There's law firms and those kind of people. But can you tell me just in general about some of the specializations, some of the things that may need to consider partnering with somebody on? I know it's sort of a loaded question.

Stephen Brown: Sure. Whatever you do, whatever kind of contractor you are, Wade, you have a NAICS code and that you may have multiple N-A-I-C-S codes, it's a code that defines the type of work that you specialize in. You could put a hundred codes down is what you specialize in. But if you put the codes that you're really able and capable to do on a regular basis, you can go to SAM.gov and you can just see what opportunities are there, and you say to yourself, okay, let's just look at a job. This makes perfect sense to me. How would I bid it? How would I get started? What are the requirements? It's all spelled out for you in the bid specs. You don't have to kill yourself to get started turning in a [00:08:00] government bid. But if you're gonna get the bid and you want to get more bids, you need to understand what the rules are and how to improve your likelihood of being chosen to get the job.

And I would argue that good federal contractors absolutely helps them get more business in every realm. It's a great system for understanding what you literally have to do to get jobs versus a hard bid situation with maybe your local government doing the same work over and over again with the same group of competitors that are just killing you, because somebody is always bidding a job under profit and you're saying, how are you doing that job for that amount? You can't, it's impossible.

You and I both know that folks that are hungry for work or bidding stuff and trying to figure out how to cut the cost after they get the job, we'll figure that out later. Kinda Scarlet, Scarlet O'Hara. Tomorrow is another day. So yeah, we've talked about that in Profit First but everything all ties together, Wade for what's [00:09:00] good in contracting. And again, I've said this before and we've done podcasts on federal contracting. Just look into it, give it a shot, and then if you want more information on the support, you might need to be better at it, then you can do it.

Had one of my federal contractors once explained to me about federal contracting.

It was on a military base, and he said they're gonna pay you X amount to hang a door. I said, you need to hang a door with all the casework around it, the locks and all of that. He goes, no, no, no. Hang a door in an opening. Hang a door, so it opens and closes. They'll pay you X amount for that. And if it's $50 a door and there's a thousand doors to be done, and you figure out how to hang that door for $20, then more power to you. Everybody's fine with that, but you got to figure out how to do that.

I thought it certainly makes sense. This is what you can do, this is what people charge to do this work. And remember the perception of a lot of people [00:10:00] is that doing federal contracting is just difficult. Oh no, I'm gonna have to go work on a military base. How am I gonna get my workers approved? If you got a bunch of thugs working for you, you probably won't get them on base. You know what happens when that base has a temporary shutdown or anything like that? It's frustrating, but you can recoup your expenses because you get delay days, you get rain days, you get change order days, you got scope of work delays, all these things that you can go back and have a legitimate charge to be reimbursed for. So good government contractors have figured that out.

Wade Carpenter: Yeah, it's tough to get out of a private owner, those kind of things you were just discussing. I know you talked about, there's like bonding requirements and there's things like sometimes certified payrolls. Can you talk about, just list the pros and cons just in general for us? I'm sure there's contractors out there that federal government contracting are not right for, so what are your thoughts on that?

Stephen Brown: The pros are maybe you limit the pool of people you're competing [00:11:00] against. You're gonna get paid on time. If you're good at what you do and you do good work and you're proud of it, it's a chance to showcase that and be recognized for it. And also you might get better profit margins.

It's a situation where the mechanisms for partnering up with other larger ventures are in place. Up at Fed Con there were just lots of meetings with contractors partnering up on projects and joint ventures. And as a bonding agent in those partnership I was involved with a number of them. But it's all very new and it's all very exciting when you get started. Those are the pros.

The cons are, you would say the paperwork. But like anything in life you learn it and you systemize it and you do what you need to do to communicate properly with the government and get the work performed. It's totally worth it, in my opinion. Other people may disagree.

But what other cons? You're working on their timeframe. But a [00:12:00] lot of times they're realizing now, especially at Fed Con, that the old system where the government would give you the designs of the work they want you to do and expect you to perform it, they're going more to a design build. We're gonna be seeing a lot more of that in the next five years. And the reason is because so many contracting officers are civilian and there's been hundreds of engineers that worked in that civilian group of engineers for the government that have retired, they've just gotten out. So we've got newer contracting officers involved. And it's always a frustration. Learning how to do business for federal contracting is making that contracting officer look good by doing what you're supposed to do. But isn't that the same in private work?

Wade Carpenter: I guess it is. Yeah. And I think that's interesting. They're maybe sort of moving to a design build type structure. But, one of the things I thought about, whether you're not a GC or whatever. We had talked a little bit about the different specializations [00:13:00] and, it goes back to your door thing. If you found your niche maybe you're not having as much competition, but you also get really good at it.

You talked about some of the things that the Fed Con, that they were pushing some niches. I thought it was interesting what you said about that.

Stephen Brown: I don't know if it would necessarily be pushing niches that I was referring to your particular niche. But I think it was more of trying to understand that these jobs are broken up in categories. There's general construction work, there's complete building renovation, and government like everywhere, schools municipal buildings, government buildings, jails, military bases, training centers. These buildings get old and have to be replaced. And we had a big glut of work that needed to be done from the buildings that were built before and during World War II. Buildings wear out. Things happen.

But the runways, there's the drainage, there's the water systems, there's electrical systems, there's roofing, there's painting [00:14:00] contracts. Lots of paving and sidewalk contracts. If you're a concrete contractor, a ton of that type of work. There's fencing there's trails, roads, lighting, and we're not talking about just all the things that you have to put in these buildings to make it work. That's called the GSA, that's a completely different animal. But we're just talking about construction and construction only. And the volume is just unbelievable.

If you say will I run out of work? No. But if you are in the military or a lot of people that were ex-military or ex contracting officers at naval bases they get started in federal contracting. And those kind of people that if you want to get started, you hire someone like that, that understands how to help you get more work and how to be compliant. It's worth its weight in gold.

So again, the niches, the NAICS codes, being able to say this is what we do and this is the type of work we're looking for. You can literally put it [00:15:00] in your search engine and you can find all the opportunities that are available where you wanna work.

Wade Carpenter: So do you have to be a general contractor? That's where I was going with this. Some of the subtrades, concrete or electrical or plumbing, can these people get into federal contracting if you're not a general contractor?

Stephen Brown: Yeah. I mean there's so much. There's demolition. There's grading, drainage. There's so much work that has to be done. And it'll be easy to find out who's doing most of the work as a general contractor out on the base. And you might wanna approach them about subbing some work for them to get started. But there's standalone projects that are right in your niche, so to speak, and right in your wheelhouse. It's there. You just have to look for it.

Wade Carpenter: Yeah. Any other things that you wanted to make sure we got in today? I know you had. A few years ago, we had talked about the SAM system and getting started with that. I know you've helped several contractors. You've always been very generous with your time. Just said, pick up your phone and you're glad to talk to them.[00:16:00] 

But anyway, what are your thoughts on getting started? Can they give you a call? What do you think?

Stephen Brown: They're welcome to give me a call and I'd be happy to talk to them and just find out what it is you wanna do, what you want to go after, give you some ideas, how to get started opportunities and federal contracting. It's a fantastic line of work and I can honestly say that most federal contractors are making the money that they need to make on it. They're understanding the system, and they're excited by the opportunities.

And I can tell you that from everything that I heard at Fed Con this year, they're really hungry as always, but especially hungry for contractors. And they're really being pushed. This federal funding that pays for these projects to help smaller contractors get started and get the work done.

It's a constant juggling act that they have to do to get these projects knocked out. So it involves a lot of collaboration and teamwork. And I'm really impressed with the government [00:17:00] contracting system. The military that oversees a large amount of it. They run things with military type precision, so, if you're comfortable in that environment, if you're comfortable understanding what the rules are and how to bid work and how to get work, then this could be for you.

Wade Carpenter: That's a great message. And I know you told me there was a bunch of statistics that came out of there. Maybe we could unpack that in another episode.

Stephen Brown: Sure.

Wade Carpenter: But if somebody is interested in getting into federal government contracting, how can they contact you about this?

Stephen Brown: They can reach out to me on my email address, Stephen, S-T-E-P-H-E-N @ mcwins.com, M-C-W-I-N-S.com, or they can give me a ring at 901-340-8085. They can check out the website SAM.gov. sams.gov. They can also reach out, go to the US Army Corps of Engineer and find their local district. Every region of the country has a district that they work with. [00:18:00] And just looking online and seeing their section on getting started doing business and who the contacts are, and then reaching out to them on the phone and talking to them about getting started, letting them help you find projects that are in your wheelhouse, they can help you do that too. I'd say give it a shot. If you need some help, I'll be happy to help you however I can.

Wade Carpenter: Okay, thanks for bringing this to us today and again, maybe unpacking some other things as we go along in the few coming weeks. We appreciate you joining us today. We do this every single week and if you got any thoughts, comments, we'll put Steven's information in the show notes as well.

Let us know and as always, we appreciate it. Like share, subscribe. It always helps us out. We do this every single week. So we'll see you on the next show. Thanks.