The outlook for small government contractors in 2023 remains uncertain. The federal government has become increasingly selective with the contractors they collaborate with, leading the Biden administration to take action toward making federal contracting more equitable for small businesses.
For the growing share of small businesses losing out on contracts, lagging digital transformation plays a role. Many are delaying tech stack optimization due to supply chain issues, rising labor costs, and concerns over the cost of compliance. However, most government agencies are incredibly risk averse when evaluating potential partners, which means technical debt is a major obstacle when it comes to securing contracts.
Small contractors must upgrade their tech stacks to make it easier to scale operations and quickly respond to emerging business and compliance challenges. These improvements will enable them to strengthen relationships with government agencies and remain competitive.
How outdated tech weighs small government contractors down
Many small businesses aiming to secure new contracts have a narrow focus: delivering the best possible service or product to the government. Small contractors are experts in their fields but most lack the time and resources to experiment with the latest business technology solutions that optimize business resources or centralize project and financial accounting.
However, delivering premium products and services is no longer enough to win contracts. From the perspective of federal agencies, technology gaps are increasingly a deal breaker — regardless of contractors’ capabilities. For example, compliance with CMMC, NIST, and other regulations permeates every part of the project lifecycle for federal contractors. Contractors must comply with regulations governing their own cybersecurity architecture and personnel, as well as the handling of sensitive data from the bidding process through the project’s completion. And because end-to-end compliance is nonnegotiable for government agencies, they’re often obligated to award contracts to businesses that maintain compliance but may not offer the best solution.
Losing out on coveted contracts isn’t the only way outdated tech negatively impacts small businesses. Inefficient, siloed applications can also frustrate employees. Instead of driving value for the organization, employees have to waste time troubleshooting faulty applications or waiting for coworkers to provide access to documents.
Additionally, a lack of investment in tech deters potential jobseekers from considering your organization. Jobseekers want to work for contracting firms that have the infrastructure to make their employees’ lives easier — and, in turn, secure more contracts.
How can small government contractors set themselves apart?
With fewer resources than more established organizations, small contractors must find ways to set themselves apart. This means they must look beyond the product and recognize that government agencies want partners that prioritize security and compliance and are willing to evolve.
Adopt a long-term mindset
Many small contractors haven’t optimized their tech stack for fear of steep up-front costs, which is an understandable concern. Small contractors experience greater impacts during tumultuous market conditions. How can a small contractor worry about 10 years from now when the present is so uncertain?
Fortunately, contractors can instead focus on making incremental advancements in their tech stack to avoid steep up-front costs, while still preparing for the future. And while it’s easy to fixate on the overall cost of implementation, take a step back and consider how much inefficient tech is already costing you in terms of lost contracts. The rise of SaaS applications means the cost of entry for advanced solutions is much lower than it used to be. Easier access to advanced solutions means organizations no longer have to wait years to explore tech upgrades.
Focus on tech that can scale
Government contracting compliance evolves far too quickly for outdated tech stacks to keep up. Suppose the NIST releases an updated list of regulations contractors must abide by within the next six months. With an archaic tech stack, it may take you the entire six months to make the adjustments. But there’s no time to celebrate because another update to NIST or CMMC will inevitably come soon, restarting the cycle.
The solution lies in implementing flexible tech that can scale to meet evolving requirements. In addition to scalability, cloud-based solutions also equip your organization to tackle a wider range of projects, which makes them more appealing to government agencies. The key is that these solutions account for compliance at every step of the project lifecycle, ensuring your organization doesn’t make a costly misstep.
Likewise, an agile tech stack is necessary to accommodate a larger number of employees, many of whom may work remotely. Seamless collaboration, both internally and with government agencies, is essential to ensuring projects run smoothly.
Work with the right partner
Offloading tech responsibilities to a third party can free your organization up to focus on delivering quality services to your targeted government agency. However, your partner must be the right fit to guide you through what can be a major shift, especially if you’re transitioning into government contracting for the first time.
When evaluating potential technology partners, prioritize companies with proven experience monitoring and adjusting to regulations in your industry. For example, the shift from a generic, off-the-shelf accounting package to one tailored for federal contract accounting is significant. To ensure a successful transition and avoid unnecessary delays or outages, your partner must be responsive and understanding throughout the implementation process.
Optimized tech lays the groundwork for consistent contract wins
There are enough barriers preventing small contractors from competing with larger businesses for government work. The last thing your organization needs is to create more obstacles by neglecting the importance of back-office tech.
Fortunately, you don’t have to tackle the challenge of upgrading your tech stack alone. With the help of a trusted partner, you can optimize your technology, enhancing your visibility into the entire project lifecycle. In the long term, this investment will position your business to overcome evolving challenges and secure future contract wins that drive revenue growth.
Tony D’Ambrisi is the Senior Director of Product Management at Deltek.