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Too Small, Too Big, or Just Right

Midsized government contractors find themselves in a challenging position, squeezed between the advantages afforded to small businesses and the resources available to large corporations. While small firms benefit from set-aside contracts and large enterprises have the capacity for significant growth, midsized companies often struggle to compete for both small and large contracts due to restrictive requirements and certifications. (Washington Technology May 2, 2024)

The government contracting landscape favors small businesses, with an increasing number of contracts set aside for socio-economically disadvantaged enterprises. Conversely, large corporations have the financial backing and resources to pursue growth through acquisitions. This leaves midsized firms in a precarious position, with limited opportunities for growth and survival. (ibid)

Structural impediments further compound the challenges for midsized contractors. Stringent compliance requirements and certifications are necessary to win larger contracts, but acquiring these credentials can be a catch-22. For instance, firms may need certifications like the Contractor Purchasing System Review (CPSR) to qualify for certain contracts, but they can only undergo these reviews if they already have contracts that require them. (ibid)

For instance, the Defense Contract Management Agency (DCMA) may require companies to undergo a Contractor Purchasing System Review (CPSR) to verify their efficiency and effectiveness in managing government funds once their anticipated annual sales surpass $50 million. This requirement is logical. However, if a firm lacks an ongoing contract mandating the DCMA audit, they cannot undergo the review, making it nearly impossible to pursue new contracts with similar requirements. This lack of flexibility defies logic. (ibid)

Despite these challenges, midsized firms can leverage the Goldilocks Effect to their advantage. By combining the agility of small businesses with the resources and experience of larger corporations, they can offer tailored solutions and personalized attention to agency customers. Strategies such as tailoring solutions, demonstrating delivery success, and cultivating long-term relationships can help midsized contractors establish themselves as reliable and innovative partners for government agencies. Through patience and differentiation, midsized firms can transform obstacles into opportunities and position themselves as valuable partners in the government contracting ecosystem. (ibid)

Midsized firm looking to capitalize on your experience through innovative partnerships with government agencies? Give us a call.