Announcements and news

DHS’ United States Computer Emergency Readiness Team (US-CERT),
developer of EINSEIN 3A intrusion detection and prevention system

In the aftermath of the OPM hack, which compromised the personal information of over 22 million people, and the subsequent resignation of OPM Director Katherine Archuleta, the Federal Government undertook a 30 day long initiative to shore up its cybersecurity. Federal Chief Information Officer (CIO) Tony Scott explained that federal-civilian agencies would increase their use of multistep verification, decrease the number of privileged users that have access to sensitive information, and patch known vulnerabilities (Boyd, 2015). After 30 days, all federal agencies will report their progress with respect to implementation of the added security features to OMB and DHS. Since the start of the sprint, CIO Scott announced federal agencies have increased their use of two factor verification by 20% overall with select agencies implementing 100% two factor verification for privileged users. With the assistance of DHS, federal agencies have patched more than 60% of known cyber vulnerabilities since May this year according to DHS Director Jeh Johnson. 

In an Op-ed in Politico, Federal Cybersecurity Needs Improvement, Director Johnson revealed that many of the new cybersecurity procedures being enacted under the cyber sprint are part of a much larger government strategy to tackle cybersecurity. DHS’ National Cybersecurity and Communications Integration Center (NCCIC) will perform a critical information sharing and coordination role in future federal incident response. Johnson stated that NCCIC is also responsible for the management of EINSTIEN, an advanced intrusion detection and prevention system. The latest version, EINSTEIN 3A, is deployed by 15 federal agencies covering roughly 45% of all federal-civilian employees; DHS plans to assist in the deployment of EINSTEIN 3A across all federal agencies by the end of the fiscal year. The government has also permitted EINSTEIN’s providers, AT&T, CenturyLink, and Verizon, to market the software to private sector firms: 

Sources

1. Contractor breach gave hackers keys to OPM data, Aaron Boyd, 2015.
   http://www.federaltimes.com/story/government/omr/opm-cyber-report/2015/06/23/keypoint-usis-opm-breach/28977277/
2. Home Depot Has Better Cyber Security Than 25 US Defense Contractors, Aliya Sternstein, 2015.
   http://www.defenseone.com/technology/2015/07/home-depot-has-better-cyber-security-25-us-defense-contractors/116995/
3. Suddenly, Everyone Wants the NSA’s Cyber Defense Tech, Aliya Sternstein, 2015.
   http://www.defenseone.com/technology/2015/07/uddenly-everyone-wants-nsas-cyber-defense-tech/117673/?oref=d-river
4. Feds on '30-day sprint' to better cybersecurity, Aaron Boyd, 2015.
   http://www.federaltimes.com/story/government/cybersecurity/2015/06/15/30-day-cybersecurity-sprint/71250654/
5. Cyber sprint increases use of two-factor authentication, Aaron Boyd, 2015.
   http://www.federaltimes.com/story/government/cybersecurity/2015/07/13/cybersecurity-sprint-two-factor-authentication/30087313/
6. White House touts 'cyber sprint' successes, Cory Bennett, 2015.
   http://thehill.com/policy/cybersecurity/247481-white-house-touts-cyber-sprint-successes 
7. White House sprints to patch security flaws, Cory Bennett, 2015.
   http://thehill.com/policy/cybersecurity/246827-white-house-sprints-to-patch-security-flaws 
8. Federal Cybersecurity Needs Improvement, Jeh Johnson, 2015. 
   http://www.politico.com/magazine/story/2015/07/federal-cybersecurity-needs-improvement-120061.html#.VaUvQPm3ExI
   

​The Pentagon has been keeping a concerned eye on Defense-related M&A activity since at least 2008, monitoring the U.S. industrial base to ensure that it maintained some level of diversity of suppliers.  The Department of Defense (DoD) has long been concerned with the small number of large firms able to bid on major weapon systems acquisition: four major contractors bid for the F-15, five for the F-16.  But the F-22 and F-35 programs attracted only two bidders each.  Last week, Pentagon leaders began to voice warnings to the industry: Secretary Carter told the press that “it [is] important to avoid excessive consolidation” and that he “[does not] welcome further consolidation among the very large prime contractors.”

This warning was reinforced by Frank Kendall, the Undersecretary for Acquisition.  In the aftermath of the Department of Justice’s (DoJ’s) approval of Lockheed’s purchase of Sikorsky, he recommended Congress develop guidelines to constrain mergers amongst the major defense primes, and to preserve competition among bidders on large programs.  Mr. Kendall suggested that DoD and Congress “explore additional legal tools and policy to preserve the diversity and spirit of innovation that have been central to the health and strength of our unique, strategic defense industrial base, particularly at the prime contractor level.”
​
The current concern is primarily focused on the largest defense integrators, with less concern about the second tier and below.  This is not simply about appearances: the Defense Department prefers the optics of large numbers of Prime bidders as much as the potential cost savings. 

​But with the Pentagon, and potentially Congress, watching Defense M&A more strictly, what does this mean for the market? After all, Congress has yet to act, and the defense industrial base does not appear to be a high priority of either the Legislature or Executive.  Warnings like those last week are intended to head off ‘giant’ mergers before the Pentagon and Justice have to disallow them.  Yet the question remains: will the markets listen; will M&A activity continue on its current pace until it is forced to stop, or will self-discipline prevail?  For now, consolidation in the lower tiers can continue unabated.  At the end of the day, Boeing and Lockheed won’t be allowed to merge, but CSC, SRA, L-3, Engility, Exelis, Harris, ManTech, CACI, and all the others are free to roam.  

​The DC Chapter of AFCEA held a moderated Defense Health Agency panel discussion on April 26, 2016 focusing on innovative solutions for the military health system. 
 
The panelists were:

• James Craft, Chief Information Officer, Joint Improvised Explosive Device Defeat Organization, Department of Defense
• Steven Hernandez, Chief Information Security Officer, Office of Inspector General, Department of Health and Human Services
• Rose-Marie Nsahlai, Lead IT Security Specialist, Office of the National Coordinator for HIT, Department of Health and Human Services
• Dr. Joseph Lucky Ronzio, Deputy Chief Health Technology Officer, Veterans Health Administration, Department of Veterans Affairs 

The main topics of discussion were in relation to Mobile Health Technology, Interoperability and Cybersecurity.   
 
The discussion surrounding Mobile Health Technology focused on empowering the consumer / patient to be more active and collaborative with their providers when making health and wellness choices, and on embracing sensors and telehealth / telemedicine as alternatives to physician office visits.  The Deputy CHTO of the VA, Dr. Ronzio, argued that both provide a better patient experience, while lowering costs for all parties.  Moving forward, more emphasis will be placed on devices and mobility for both the patient and the provider.  NSA, for example, is working on a "thin" encryption that is specifically for health and wellness devices, so the security layer is a lower overhead for the device.

​All three agencies placed an emphasis on interoperability with respect to standardization of software and hardware technologies, in order to improve data exchange and communication between the agencies and reduce costs.  Companies that provide 90 percent of Electronic Health Records (EHR) used by hospitals nationwide, as well as the top five largest health care systems in the country, have agreed to implement three core commitments: 

1. Easy and secure consumer access to electronic health information;
2. No blocking of electronic health information / to adopt transparency; and,
3. To adhere to federally recognized standards and best practices. 

Given tightening budgets, all agencies voiced support for innovative solutions, assuming that a new solution replaces antiquated processes and systems, and, most importantly, saves money.
 
EHR security is one of the top priorities for DOD, HHS and the VA, particularly with the recent high visibility cybersecurity breaches that impacted numerous US hospitals, Anthem and OPM, just to name a few.  According to IBM X-Force Interactive Security Incidents data from Jan. 1, 2015 to Oct. 31, 2015, almost 100,000,000 health care records have been compromised due to malicious attacks.  A patient’s EHR can contain sensitive information such as SSN, addresses, financial and employment information in addition to medications, vaccination records, chronic conditions, etc.   By gaining access to a patient’s EHR, a cyberterrorist can pinpoint and act on vulnerabilities such as directed bioterrorism or withholding medication for an individual, including US military personnel.  DOD, HHS and the VA are continually looking to partner with organizations that can help mitigate these cybersecurity risks.

Every now and then cities experience events that serve as a clear line of demarcation between “then” and “now.” In the case of Amazon's search for a home for their new HQ2, the 20 finalists’ regional leaderships are actively seeking a major event that will change their area’s landscape for decades to come. As part of the process to attract and win the opportunity to host HQ2, the decision-makers and influencers involved in each region’s bids are putting plenty of thought into preparing for the changes facing their communities should Amazon choose their location as the winner. Fortunately, they all can look at Seattle as a living laboratory and business case to get a good idea of how life in their region is going to be impacted. Based on lessons learned to date from Seattle there are four major areas that most likely be at the forefront of the conversations surrounding the unique changes that will face the region hosting HQ2, as follows:

1. Rapid and Specific Demographic Population Growth

Based on the population changes in Seattle - the city was the fastest growing metropolitan area in the nation twice in the past decade - we can assume that HQ2 will bring with it rapid population growth. And, continuing to use Seattle as a guide, it is also safe to assume that the population growth at HQ2 may be disproportionately made up of young (30-39 year old) professionals.

With HQ2 serving as a strong attraction, professional young adults will relocate to and settle in the winning region. So, what does this mean for the community? Improved transportation, the creation of more urban “green” spaces, and a rise in the types of commercial enterprises that cater to this specific demographic, such as customized exercise studios, boutique eateries, higher-end daycare establishments, etc, all seem par for the course. This will be good news for most of the area’s residents, especially those that can use the improved urban experience to lure highly qualified employees in their own sector, or if they run one of the businesses in high demand by this demographic.

2. Improved Infrastructure and Attendant Costs

Amazon was clear that efficient and reliable modern public transportation and urban green spaces are “must-haves” for any metropolitan area hoping to land HQ2. Plus, even if Amazon wasn’t specifically asking for these features, infrastructure improvements would likely be required to help accommodate a rapidly growing population.

In the long run, this change will likely be great for whatever region lands HQ2. The recent coming together of Maryland, Virginia, and the District of Columbia to finally agree and pass the desperately needed funding to improve and modernize the regional metro system is an example of the region changing to attract HQ2. But, while this decision is a response to HQ2 specifically, the resulting improvements could also lead to other companies who are looking to develop additional major campuses (for example, Apple) to prioritize this region ahead of others going forward. After all, improved infrastructure benefits everyone and is a very attractive characteristic for any company considering new office locations.

Updating or creating infrastructure, regardless of the necessity, is almost certainly an expensive undertaking, and current residents will most likely be asked to shoulder most of, if not all of, the improvements through increased taxes. Although Amazon has been clear that they aren’t interested in subsidizing these types improvements through taxes, this likely won’t be as significant a factor for whatever area wins HQ2 as it has been for Seattle.  Washington state does not currently benefit from having an individual income tax, so Seattle has not been the recipient of the rise in income tax revenue corresponding with the rise in highly skilled (and highly paid) residents, who work for Amazon as well as for the other large employers in the area. With the exception of four finalists (Miami, Austin, Dallas, and Nashville), every potential new home being considered on the short list for HQ2 does have a state-level personal income tax to help defray the necessary infrastructure costs.

3. State, Local and City Policies Become More “Pro-Business”

The job growth, population boom, and improved local economic activity that accompanied the meteoric rise of Amazon have served to underline just how essential Amazon has become to the city of Seattle. As a result, the local, city, and state governments in Seattle and Washington state are very aware of Amazon’s requirements as well as likes and dislikes. In the case of Seattle, Amazon has successfully displayed that the organization’s and Seattle’s best interests are frequently aligned, and has successfully leveraged their position as a large and growing employer to work to widen the city’s pro-business policies and influence their local environment to work in their favor by governing tax breaks and incentives.

Most recently, after the Seattle city council proposed a “head” tax on Seattle-based companies making more than $20 million in revenue annually, for the purpose of funding programs aimed at addressing homelessness as well as to help create more affordable housing, Amazon (and other large local employers) strongly balked at the initiative for a variety of reasons. In response, Amazon halted construction on their new 17-story office tower and threatened to sublease space in its downtown campus. They also accelerated their search for their new HQ2 site.

When it comes to HQ2, regional business leaders will benefit from Amazon’s ability to unite and rally both the local business community and all relevant government entities, establishing an environment that is very “pro-business”, and possibly attracting even more large business headquarters in the process. After all, the notable and very public objection from Amazon, along with other leading voices in the business community, did not fall on deaf ears in Seattle. The Seattle City Council didn’t abandon the tax entirely, but they did make an effort to involve Amazon and other business leaders in the conversation and approved a moderated and more business-friendly version of the head tax.  Amazon has resumed construction on its downtown projects, however, they have made it known publicly that they are still keeping the option of subleasing its office space on the table.

4. Increased Unpredictability

As unbelievable as it seems now, Amazon got its start in Jeff Bezos’s garage as an online bookstore. Now as a multi-billion dollar conglomerate it is hard to predict exactly which market segments and offerings Amazon will be moving into, and dominating, by the time the new HQ2 is complete. And if it’s hard to predict what Amazon will look like in a year two, it’s almost impossible to predict where Amazon will be focusing in a decade. As an organization, Amazon is continuously growing, developing, and pushing past established norms to create new ones, making wherever their HQ2 lands an attractive and energetic place for that region. And while Amazon’s unpredictability is undeniably exciting, it also requires its host region to plan for and attempt to predict the infrastructure, cultural changes, and challenges that will follow. As Amazon dives further into the autonomous revolution as an innovator and expands into other major verticals, such as healthcare and pharmaceuticals, the rapid shift caused by their innovations in these areas will first cause ripples into whichever local communities are affected. The bottom line: although we many not be able to predict exactly how the organization grows, we know (based on past years results) that it does grow, and the area surrounding HQ2 will benefit from this growth in turn.

Over the next year, one of the HQ2 finalists will have their landscape permanently shifted when Amazon accepts their proposal and signs the dotted line. Growth for all businesses, with or without Amazon, will remain a constant challenge in today’s ever-changing and volatile environment. Amazon’s HQ2 coming to your region just accelerates the pace. At growth[period] we are experts at helping our clients grow and thrive regardless of the current environment and have great success stories of achieving excellent results we would be happy to share with you. Please contact us at info@growthprd.com to set up a time to speak or meet to learn more.

Congress and DOD Address the Roles Cybersecurity and Price Play in Evaluating Defense Contracts

On August 1, 2018, Congress passed the National Defense Authorization Act (NDAA) - clearly defining the role Lowest Price Technically Acceptable (LPTA) will play in evaluating cybersecurity or IT contract proposals. By passing the NDAA, Congress publicly backed concerns put forward by industry trade groups; namely, that placing too much value on a proposal’s price creates an environment in which contractors build their bids around LPTA, sometimes at the expense of presenting the best solution. Although fiscal responsibility remains an important consideration when evaluating bids for federal contracts, relying on LPTA as the deciding factor in the decision making process can prevent the government from getting the most value over the duration of a project. After all, no one really wants to fly in a plane built by the lowest bidder!

At the same time that Congress passed the NDAA, Deputy Secretary of Defense Patrick Shannahan discussed the Department of Defense’s increased focus on cybersecurity when evaluating bids for Department of Defense contracts. Deputy Secretary Shanahan was careful to say that the DOD will not consider paying extra for cybersecurity, likening it to the DOD’s existing policy of not paying extra for quality. However, he went on to describe cybersecurity as “...the fourth critical measurement” upon which the DOD will evaluate proposals. When examined alongside the NDAA, these policy changes will fundamentally alter how successful organizations structure their proposals. Contractors may find it challenging to meet the DOD’s new higher cybersecurity requirements if LPTA dictates their ability to proffer their best technical solution.  Recognizing the potential issue, the DOD will consider paying more money for the best cyber solutions - as long as the solutions proposed are the most appropriate for the government’s demands.

In order to be awarded contracts with the DoD that have cyber security components, organizations now can focus on offering the best solution - and structuring their proposals to clearly explain how their solutions present the government the best technical path forward. Contractors are now expected to shift back to telling a story that differentiates their solutions; not just offer the cheapest bottom line. One strategy that we have found to be particularly effective is for our clients to underscore this narrative with the theme that by implementing our client’s technical solution the USG can get the best result technically while at the same time saving them money in the longer term - as a direct result of increased efficiency realized.  The experienced executives at growth[period] work alongside contractors every day to craft successful strategies that set their solutions apart from their competition and lead to wins. Contact our team today to learn more.

At growth[period], we are grateful for our veterans each and every day of the year. We believe that all veterans and their families should have access to the support and resources necessary to ensure they have the ability to live full and rewarding lives. Hope for the Warriors, a four-star Charity Navigator rated nonprofit organization, has just such a mission. We are proud to have worked alongside Hope for the Warriors for more than 10 years in support of its goal of creating opportunities for the veteran community, to include expanding its brand recognition as a first-tier nonprofit, increasing its donor base, and establishing a formal relationship with NASCAR.

The growth[period] team identified a key demographic overlap between the veteran community served by Hope for the Warriors and NASCAR’s constituency and devised a strategy to develop a partnership between the two organizations that ultimately led to a formal agreement. The effects of this partnership were immediate and significant, as Hope for the Warriors reported a three-fold increase in donations in the first year of the partnership alone, along with other valuable and tangible results.

Hope for the Warriors continues to provide valuable services to the veteran community, and its success in doing so has raised expectations for the future. On this #GivingTuesday, we encourage you to learn more about what Hope for the Warriors does - and explore how you might be able to help.

While holiday parties demand time and effort to execute, they are worth the effort. If you’re feeling particularly swamped, it might be tempting to host a scaled-down event or eliminate the party altogether. But, that isn’t usually the right call. When done well and within budget, holiday parties boost employee morale and set the groundwork to promote your organization’s brand in the new year.

Consider a “Widely Attended Gathering” (WAG):

To facilitate your ability to invite a wide audience to your holiday party, your legal counsel can get the event designated as a “widely attended gathering.” This designation will ensure that customers can legally attend the event in compliance with the appropriate ethics guidelines and laws. If you do throw a “WAG” holiday party, it becomes a great opportunity for customers to mingle with you and your staff. The holiday doldrums are usually less present at parties, which allows for more informal and upbeat interaction with your customers, targets, and teaming partners.  (Just make sure to control, or stop, the alcohol flow to save yourself some headaches!)

How can a holiday party promote growth?

1. Introduce your customers to your staff: Your party is an opportunity to get more members of your key staff in front of potential strategic partners or customers- allowing you to brag about your team in a social environment and help the groups connect, even if networking on their own isn’t their strength.

2. Expand your network: If you’ve spent some time assembling a robust invitation list, your party can also strategically expand your network. Don’t underestimate the value of face time with valuable contacts in a pleasant and casual environment. The relationships that you build at your holiday party may prove invaluable come after the new year.

3. Improve brand perception: A professional and well-planned holiday party can help create goodwill around your brand. This is particularly valuable for smaller businesses, as the event will reinforce the fact that you are a stable, profitable, and well-run business. Also, if you have a strategic invitation list, your holiday party will get your brand in front of a larger-than-usual audience, including some potential new contacts, for a feel-good reason.

Hosting a successful holiday party each year can lead to new opportunities in the future. The experts at growth[period] can create a plan that will lead to a strong start in the new year. Contact us to learn more about how we can help you develop a plan for strategic and sustainable growth.

The challenges inherent for government contractors in today’s environment are literally historical. While as difficult as this period is, as a business owner you can also try and make use of the extra time you now have (and did not want) to focus on how to help your company grow, not just with a short-term focus on when the government starts fully functioning again but for the long run. As Bill Gates famously pointed out, the most valuable asset anyone has is time - and as a business leader you rarely have time to spare! Try and use some of this time to regroup and figure out if you are positioned where you want to be for your company’s future. Here are some things to consider as you think through your current growth plan.

First: do you have a strategic growth plan? If yes, then look at it with a critical and, if possible, dispassionate eye. Does it really fit your company’s identity and future goals? If so, great! If not, then sit down and figure out what your realistic growth objectives are and in what time frame you want to achieve them. One thing to keep in mind is whether you have an objective for your growth trajectory, i.e. is your goal to be acquired someday? If so, in what time frame and for what multiple? Are your goals for both realistic given the market environment? If you want to grow to sustain- and continue to be a “lifestyle” business- do you have the customer intimacy necessary to maintain the incumbency you have currently? Do you have the correct talent in place whom the customer respects - and what is your plan to retain them in the long term, especially if no equity event is ever anticipated? If you do not have a current strategic growth plan email us at info@growthperiod.com and we are happy to create one with you!

There may be only one thing that's certain in business: uncertainty is a growth killer. So, thriving businesses might see laws and regulations as providing a necessary element of certainty. They tell us the rules of the game. However, laws can also create uncertainty. When this happens, it can be tempting to tune out.

But there's danger in complacency and often ignoring the issue is not a viable option. So, what's a business owner to do? The way to win this game is to stay engaged without letting the uncertainty make you crazy. Let's look at a recent example of legislative uncertainty to see what we can learn.

"Small" Business and the Small Business Administration (SBA)

If you are running a business that bids on government contracts or have clients in that vertical, you probably know that the Small Business Administration (SBA) defines what counts as a "small" business. You may also know that there are no federal definitions for businesses that exceed the SBA's small business size standards. There's no definition for a "mid-size" business, for example. As a result, the category of "other-than small" businesses encompasses firms that barely exceed the "small" limit all the way up to multi-billion dollar corporations.

This categorization (or lack thereof) puts many businesses in a serious bind. Imagine having an amazing growth year that disqualifies your business from competing for small business contracts (the very contracts that have been the drivers of growth) and from receiving SBA assistance — Congrats on climbing that ladder! Now figure out how to compete with the titans of your industry.

Many businesses caught in this situation have to make tough choices such as:

• Selling, often at a devalued rate
• Being subsumed into the supply chain of larger competitors
• Being forced into disadvantageous subcontracting partnerships with other firms
• Deliberately impeding their own growth and passing up opportunities to maintain their "small" business designation

For too many small businesses, "graduation" day spells the end of growth or the worst circumstances can be the end overall.

Enter the Small Business Runway Extension Act.

Recognizing the pressure graduating from small business status can put on companies teetering on the edge, Congress passed the Small Business Runway Extension Act to help bridge the gap. The bipartisan bill signed into law in December of 2018 allows small firms additional time to solidify their growth and beef up their infrastructure to compete against much larger companies.

Here's the CliffsNotes version of the legislation: Whereas prior to the legislation, the SBA used a three-year average of annual gross receipts to determine whether a company is considered small, the Act extends the look-back period to five years.

And there was much rejoicing...except there wasn't because the SBA threw a curveball. Shortly after the Act was signed into law, the SBA stated that the amended law would not go into effect until the SBA issues new regulations to implement the extended look-back period. This is problematic because it will (obviously) take time for the SBA to issue regulations and in the meantime, small business contractors are left wondering which period (three years or five) counts.

Why It Matters

If the Small Business Runway Extension Act affects whether your business is designated as "small" or "other-than small," you already know all the ways the effective date impacts your business growth strategy. Planning how to invest in employees, equipment, software, infrastructure, and business development is tough enough without having to navigate this kind of uncertainty.

Here are a few inadvertent consequences of the current reality which could occur:

• Suppose a contractor wins a small business government contract after electing to calculate size based on five years of revenue (in anticipation of the change to the law). The contractor may find itself the subject of a size appeal raised by a competing bidder or some other stakeholder. Should the appeal be successful on grounds that current law says size must be calculated on the basis of three years of revenue (and the firm is "other-than small" on this calculation), the contractor could be penalized by the SBA for violating the size requirement.
• Or suppose a contractor wins a small business government contract based on the current three-year look-back period. The contractor could later experience two years of growth pushing it over the "small" limit on a five-year calculation and find itself the subject of a size appeal arguing it is "other-than small" once the Act goes into effect.

Either way, contractors face significant uncertainty that can be paralyzing and have beyond the single contract being pursued. For instance, if a firm is found to be pursuing small business contracts in violation of the size-requirement, not only does the contractor lose the contract it has won, but it is also banned from bidding on future contracts until it has been recertified by the SBA.

So What's a Business Owner to Do?

First, our experts would not recommend a business stay intentionally small on the basis of uncertainty alone. Growing a business entails certain risks and making smart business decisions means figuring out which risks you can tolerate. If your firm falls within this three-year vs. five-year gap, the best plan is to be as prepared as you can be.

This means:

• Know your numbers cold
• Gather whatever data you need to be ready to pursue any opportunity that makes sense
• If you plan to bid on small business contracts, talk to your legal team about a potential size appeal

But above all, pay attention to the committee hearings and information being released about the Act going forward. For the latest update, watch this video recording of a March 26 hearing of the Committee on Small Business. Not only will it bring you up to speed, but listening to other small business owners discuss the impact of the Act's uncertainty will help you understand how it could impact your business.

In fact, even if the Small Business Runway Extension Act doesn't immediately affect your business, paying attention to this issue could benefit you in less direct ways. Your clients may be holding off on business growth in ways that impact your bottom line, for instance. Staying engaged may not make this uncertain mess any clearer, but it does ensure that you're in to shift as soon as the SBA declares an effective date.

If after reading this, you're left wondering what to pay attention to in this fast-paced and often uncertain business landscape, you're not alone. At growth[period]Connect with us and let's discuss how we can be your partner in realizing intelligent growth with sustainable results.

Government contractors strategize less about how to expand to support commercial clients than their counterparts in the private sector strategize about breaking into the government market. This is strange. Setting aside weapons systems, the government buys many of essentially the same products and services as businesses in commercial industries. So, opportunities for growth abound for the smart government contractor looking to grow.

Few federal sector small businesses successfully expand to support commercial clients simply because they do not set up properly to realize the value of growing this way. Going commercial can be a challenge and it’s reasonable to wonder if it’s worth the trouble. Let’s talk about the major benefits of expansion and how to increase your odds of success.

Major Benefits of Expansion Into the Private Sector

It isn’t hard to see why many government contractors hesitate to go after commercial markets. After all, focusing on RFPs, monitoring legislation, and keep track of all the other relevant information put out by the government regarding procurement is enough to keep any business busy. Besides, no savvy business leader wants to expand into a new market at the expense of current operations.

There are three reasons why going commercial can be a smart use of resources under the right circumstances:

1. Commercial buyers move faster than the Federal ones.

The procurement process for government contracting is comprehensive and the cyclical nature of government work can leave you in limbo waiting until the next big opportunity gets green-lighted. By comparison, commercial buyers move lightning quick. As long as you are prepared to deliver in line with commercial expectations, you will likely find the private sector pace to be invigorating.

2. There are fewer barriers to entry in the private sector.

There is less of a learning curve when it comes to selling to the private sector. Whereas with government contracts, you must wrap your mind around complying with strict government regulations, procurement, and thousands of acronyms, there is less to learn in the commercial space.

While the federal government customers will tell you exactly what they need and expect you to explain exactly how you will deliver, commercial clients flip the pitch. If you expand to support commercial clients, they will expect you to figure out what they need, develop the product or service to solve the problem, and convince them that your solution is best.

3. You have more negotiating power with commercial customers.

Whereas the supporting federal customers require that you maintain accounting records in a particular way, can penalize you for offering discounted rates to other customers, limit your profits, and terminate your contract for convenience, with commercial customers, you can negotiate terms that are more favorable. Overall, working with commercial customers gives you more leverage and flexibility when it comes to pricing, delivery, and negotiating terms of your contract.

How to Expand to Support Commercial Clients

When we discuss lateral growth with clients, one big hurdle seems to be an unwritten rule that once your business heads down the government contracting road, there’s no turning back. But as long as your corporate structure doesn’t make expanding into the commercial space prohibitive, there are few reasons not to grow this way.

So, let’s look at the actionable steps you can take to expand into the commercial market.

1. Determine What the Impact on Your Business Will Be

It’s important to realize that growing your business does not mean abandoning your current operations. The first step to successfully expanding into any new market, then, is knowing that your business can survive the demands of the new market. To ensure this, you will want to assess the full impact of expansion on all aspects of your business.

Ask your team the following questions:

• In what ways will expanding to support the commercial market affect our government contract work? Map it all out.
• Will team members need to split their time between supporting the current market and the new market?
• Will you need to hire additional team members? In what capacity?
• Will you need additional resources to support your new commercial clients?
• Will you need to raise the bar on your business processes and systems?

2. Choose Your Route to Expansion

The move from government contracting to the commercial sector is easier the closer you stay to your current strengths. One common area where we see a lot of movement between the two markets is in the area of cybersecurity. Many security firms move easily between supporting government agencies and supporting IT departments in large corporations. This makes sense since cyber security pain points are basically the same regardless of what type of work you’re trying to protect.

There are opportunities in small and mid-size companies too. For example, one of our clients, Nathan Associates, Inc., has successfully expanded, with our help, from working with the federal government to working with commercial clients. Nathan Associates is a leader in providing diversity training, among other offerings. Working together to successfully adapt their diversity training program from a focus on government agencies, such as USAID, instead for commercial clients, including Capital One Bank and Leadership Greater Washington, was fairly straightforward and has been very successful.

Which brings us to the next point:

3. Align Your Current Business Model with the New One

It helps to think of expanding into the commercial market as if you’re developing a new business, not simply launching into a new market. Many government sector businesses choose to create an independent subsidiary or LLC to build out commercial offerings, for instance. This also can help you surmount pricing issues that may arise if you want to vary your prices based on your client focus.

However, while it may help you to think of the commercial side as separate from the public sector side of the business, if expansion requires an overhaul of the core of your business, it’s probably time to pump the brakes. Playing up the overlap between your current business and the newly expanded business will always result in a more seamless transition.

4. Do Your Research

So far so good. Are you ready to pull the trigger? Not quite. Expanding to serve the commercial market takes time, energy, a diversified sales plan and staff, new collateral and branding, and financial resources. You have to look at the data and make sure it confirms your instinct that this is the right next step for your company.

Step #1: Clearly define the commercial market for your product or service you’re entering.

Think hard about what the new market looks like. Hire a market research team if you aren’t 100% sure you can do this work yourself.

State in definite terms:

• The demographics of your target market (age, gender, occupation, etc.)
• The psychological profile of your target market (attitudes, aspirations, values, etc.)
• Location (actual physical location or geographic data for an online audience)
• Problem (what problem are you solving?)
• Solution (the complete details of the products or services you provide)

Step #2: Validate the new market

Validate that there is a place for your offering in the new market. There are four factors to consider:

• Make sure the problem you’re solving is a big enough pain point for your customer.
• Test your product with a few target users and listen to their feedback.
• Make sure the target market is large enough to justify expanding to fill this need.
• A problem, a product, and a market do not necessarily get you to profitability. You also need to be pretty sure your target audience will pay you for your solution.

5. Decide How to Position Yourself in the New Market

The last step is to figure out how to position yourself. There are likely competitors in your space that will be entrenched within an existing customer base. So the best edge you have is to differentiate yourself in a way that helps you capture their attention. The good news is that since you’ve been selling to the public sector, you already know a lot about how to pitch a successful value proposition to customers. Ask yourself what specific value you can add to a commercial customer and how to adapt your pitch to resonate with them.

When we worked with Calibre Systems, an employee-owned consulting and information technology solutions company supporting the federal government, we helped them continue to diversify their customer base into the commercial sector. They had been successfully leveraging their network of veterans with automotive mechanic skills with commercial auto companies and have been highly successful working with Ford and Range Rover, among other companies. Having a focused approach to the market with a target market for your offerings, like they have, is also essential for success.

At the end of the day, if the benefits of expanding to support commercial clients are enough to entice you to enter this new market, following the above actionable steps will help you position properly for success.

And of course, it always helps to have the experience of a team who has guided other government contractors down this path. The experts at growth[period] are ready to deliver smart growth for you. If you’re ready to talk about diversifying your business growth into the commercial sector, connect with us today!