Why Capital is America’s Differentiating Asset

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-As shared by Katie Bilek

The December launch of the Office of Strategic Capital by Secretary of Defense Lloyd Austin is an initiative that seeks to harness the power of American capital markets in support of our national security. The role of private capital in US DoD projects is a differentiating factor in what can tip the scale in our admittedly precarious geopolitical stance.

For the last few decades, we’ve witnessed the gradual decoupling of the defense markets and commercial R&D.  Our leaders and policymakers look back upon great historical examples of government and industry collaborating together – Skunk Works! IBM Research! Raytheon BBN! – where both government and private funds were leveraged to build incredible technologies.

At present, we lack that same level of collaboration and financial commitment from the private sector with government. Only the most basic understanding of economics is required to grasp why the average small business choses to pursue commercial work that generates higher margins in a shorter timeframe than defense work that could take years to secure (and additional compliance dollars to execute). Meanwhile, investment firms boast record fundraising levels, newly minted funds, and profuse amounts of dry powder ready to be put to use.

At a recent OTA educational event hosted by govmates and ATI | Advanced Technology International, we covered a key point that so many of these talking heads seem to be missing – the need for fund managers to generate returns for shareholders.  Simply put, financial investors operate a business where returns to shareholders take priority – not national defense. While it can be a concurrent interest and one that they passionately support, financial performance dictates their existence, period.

America has the most robust capital market system in the world. We have regulatory bodies who are increasingly willing to intervene in the interest of national security (i.e., the potential delisting of Chinese ADRs). We have infrastructure and distribution channels that enable all types of investors – from institutional to retail – to deploy capital and engage in the financial markets. We have technological advancements that bring heightened levels of transparency and transactional speed.   And we have the dependable appetite for returns that will always drive investors to seek that next opportunity.

My career on Wall Street gave me a front-row seat to the extreme velocity and volume of capital in our financial markets.   Capital can support the creation of new products, facilitate entry into new markets, provide the currency for acquisitions, and so much more.  Capital – simply put – is an asset unmatched by other nations.  It is time that the DoD learned to harness its transformative power to support the mission in a way that can benefit us all.

OTAs | Why They Work

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-As shared by Meg O’Hara

In the innovation space, it’s no secret that many developing technologies are created outside of the Federal ecosystem. In fact, some of the most forward-thinking technology is housed solely within the commercial space. As that is the case, how can the government discover, adapt, and deploy new solutions without sacrificing risk-mitigation?  You guessed it, OTAs. Other Transaction Agreements are what we in the business like to call a form of “alternative procurement vehicles,” which is a fancy way of saying another method to get Federal backing for researching and developing innovative solutions. Sounds like an absolute win, right? But how does it work?  

The OTA process is designed to be more streamlined when it comes to solicitation requirements and the businesses that are competing for those opportunities. For government entities with a portfolio of needs, of the OTA consortium model is a great model to enable them to meet their R&D requirements in an efficient manner. Each agency with OTA authority has a number of specific consortia through which they are able to feed technology-vertical-specific requirements for proposals. Think of it as fishing in a large lake – if I’m only fishing for bluegill, why would I want to waste my bait (resources) and time catching a bunch of trout? I wouldn’t, right? So, in a similar way – within the research and development process of defining new solutions to innovation-heavy challenges, it makes sense to go directly to the groups that know and do that type of solutioning best. Hence, the need for technology-specific consortiums.  

The OTA process works because CMFs (Consortium Management Firms) take on administrative burdens from the government that result in a more streamlined experience for small and non-traditional businesses. It also mitigates the risk to the government of working with new-to-the-Federal-landscape businesses by having a guide (the CMF) who knows the arena, the regulations, and the requirements of Federal procurement. Additionally, and probably most importantly of all, it allows new technologies to make their way into the hands of the end users who need them most to keep our country working at a high level of defense and breakthroughs.  

We’re not saying that OTAs are the only way to mitigate risk or allow non-traditionals the opportunity to work in the Federal space. But they do provide a legal framework that enables fair, rapid procurement for R&D or prototyping needs. If you are, or know of a non-traditional business that may be able to bring their technology to our warfighters in a way that promotes safety, protection, and the ability to perform their duties at a high level, we welcome a conversation with you. You can reach out to govmates on LinkedIn or directly to our team at matchmaker@govmates.com. Furthermore, if you’d like a few specific examples of businesses that have found OTA success, we have several examples that we’d be happy to share.  

If you take one thing from this piece, I hope that it’s to know that innovation is alive and well within the bridge between commercial and federal businesses – and that bridge is OTAs.  

MedTech and the DoD

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-As shared by Hannah Altman


Medical innovations can be transformative. As such, since the onset of COVID-19, there has been a renewed interest in public health technology. Here at govmates, we have hundreds of members on the cutting edge of medical technology. Let’s talk about three emerging innovations and what they can do for the warfighter and the DOD as a whole.  

  • TBI Research and Treatment 

Service members are one of the most at-risk groups for suffering long-term mental or physical health effects due to a Traumatic Brain Injury (TBI). While the majority are mild – a concussion – a TBI of any severity will increase a person’s risk of health complications. TBIs are also linked to a higher risk of death by suicide, and more long-term effects are being discovered at present. The U.S. government is investing in research and treatment that can prevent, treat, or mitigate the impacts of a TBI.  They are investing in companies like InfraScan, whose Near-Infrared (NIR) technology screens patients for intracranial bleeding, identifying those who would most benefit from immediate referral to a CT scan and neurosurgical intervention. Or non-profits like The Invictus Project, whose personalized treatment protocols aim to target symptoms of TBIs as well as PTSD. Prevention and treatment of traumatic brain injuries is a top priority for the DOD; we will hopefully see more potential solutions come to fruition as the government continues funding its TBI research.  

  • Drug Production and Delivery 

Pharmaceutical science is expanding and developing as fast as any field. Scientists are figuring out ways to make drugs last longer, produce fewer side effects, and further improve patient outcomes. Like Consegna Pharma, a specialty pharmaceutical company that reformulates known, safe drugs, and creates long-acting injectable (LAI) medications that can last from days to months. Or TFF Pharmaceuticals, whose proprietary Thin Film Freezing technology can safely turn medicines into powder, eliminating the need for injections. There are also companies working to create entirely new solutions. BrYet Pharma is developing drugs for the prevention, treatment, and cure of metastatic cancers using nanoporous silicon microparticles. Whether it is creating something new or improving an existing product, the advancements in drug production and delivery cannot be understated.
 

  • Next-Gen Devices and Therapeutics 

Innovations in technology have changed the way we use medical devices and therapeutics. Emerging technology makes medicine less invasive, easier to use, and more cost-effective. For example, Qidni Labs has created a process for dialysis that can operate without a power outlet and without purified water. NuShores Biosciences is using their patented technology to regenerate tissue and compensate for major bone loss while reducing the need for autografts and allografts.  Sonix Medical Device’s technology can help prevent bacterial infections and combat Antimicrobial Resistance without the use of antibiotics. With the right R&D, these technologies can help the warfighter perform necessary procedures in an austere environment, reduce recovery time, and improve recovery times.  

 

The above represent just a few of the priorities we have seen in the defense space over the past few years. I personally look forward to seeing where medical technology investments are being made in the future, as it will positively impact civilians and the general public for years and years to come.  

Why is Dual Use Technology So Important?

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-As shared by Katie Bilek

As it pertains to our federal ecosystem, the concept of dual use technology seems desirable.  What’s not to like? Building and creating a mutually beneficial technology or product leveraging economies of scale while enabling the performer to forgo the typical mind-numbing bureaucracy that ensues when doing business with the government seems like a definite win, right? 

The argument for fostering and perpetuating more dual use technologies in the federal community is an economic one, appealing to the stingiest of taxpayers and tip-of-the-spear operators alike.   For those stakeholders, program offices, and end users, the shared investment in R&D spreads the cost of the project while enabling them to take advantage of competitive requirements generated by the open market.  For the company that owns the technology, a commercially viable product that generates revenue independent of federal customer demand provides diversification, reducing concentration risk and reliance on a single customer.  

For decades, the US Federal government has limited its pool of eligible contractors by gradually imposing regulations and business practices on its contracting community that result in a specialized, expensive, and seemingly heavily regulated marketplace.  While our contractor community has evolved into a robust group of organizations that passionately support the mission (and they do a damn good job at it!), we must also applaud their ability to adeptly maneuver the federal procurement environment with pricey CAS accounting systems, endless patience for federal lead times, and a vocabulary of acronyms that could qualify as its own language.   They know the rules of the game, and they know how to play it – which means those who don’t have the rulebook are inevitably excluded from participating at all.  

While the nature of the federal space ensures the US government has access to organizations that can comply with all of their administrative and technical requirements, that does not necessarily ensure access to the best technology.   Technology development has continued to outpace the government, with DoD’s share of the R&D funding market significantly eclipsed by other funding sources.  

These comments are in no way intended to diminish the accomplishments and work of traditional defense contractors. Rather, I embrace the collaborative approach to funding dual-use technologies that can serve both defense and commercial missions.   When done correctly, this can help to accelerate development, reduce costs, and simultaneously encourage new entrants to the federal marketplace.  In our current era, let’s just hope that’s something we can all agree on.   

Teaming in GovCon: Why Does It Matter?

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-As shared by Stephanie Alexander

Government contracting is all about inherently helping the US government solve its problems. Those problems are solved using taxpayer dollars, and therefore there is a higher accountability than in other industries. This underlying truth is the basis of all things in GovCon.

With this truth comes the realization that most companies cannot do everything. They cannot solve every problem (at least in a timely and cost-effective manner). Nor should they solve every problem. There are other companies that can excel in a solution that your company may not. Enter…TEAMING.

At its foundation, teaming is a win for the government and therefore, the taxpayer, if done correctly (yup, that’s a big caveat). Teaming allows the best people to solve the problems. Teaming allows for different perspectives and different skill sets and for the utilization of small businesses. When done correctly, it provides a faster solution than what the original bidder may have suggested. It may also solve the problem at a cheaper price to the government, which we know is a major bonus.

So, why are companies sometimes reluctant to team? One reason is that it’s always good to be prime. Primes control the relationship with the customer.  Primes control the administration of the contract and sometimes, primes control the rates. Control always feels good. Except that the prime company may end up being more profitable if they utilized a sub that was faster or used less expensive staff.  Your company may not be able to hit the target delivery dates from the customer without adding the additional gas that is a robust team.

Another reluctance is a lack of knowledge about who is out there in the space with the capabilities you need. Luckily, that’s easily solved with a quick email to govmates (just ask us – happy to connect you!).

Where I think teaming gets a bad name is if you view it as only fulfilling a contractual obligation. It feels dirty when we talk about “I’ll give you 49% of the work.” Or if you are only hitting checkboxes to hit compliance on your subcontracting plan.

Think of teaming as enhancing your win probability, enhancing your past performance, enhancing your companies’ capabilities and further, setting your company up for long term mutually beneficial relationships. Work with people you trust and that have similar approaches to pricing and will put in the work.

For those that refuse to team, wanting only to prime, I’ve always said – “ain’t too proud to cash a check.” Who cares if you are subbing? You are paying your folks, solving problems and gaining valuable past performance. You have a higher p-win with a team approach most of the time. Not to mention, a percentage of something is a heck of a lot better than 100% of nothing.

So, ego aside, teaming is the approach to take if you’re looking to build past performance and healthy business relationships. Just be sure to come through with your contracted obligations. They say “Rome wasn’t built in a day” and it surely wasn’t built by only one person. We have our own “Rome” here in industry. Team together, work together, grow together. Teaming is the name of the GovCon game.

Looking for a partner or capabilities to round out your team? Reach out to us at govmates – we are happy to help.

Consortia and the OTA Space

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Early in November, Mica Dolan, Chief Operating Officer for ATI | Advanced Technology International joined Kevin Jans on the Contracting Officer Podcast to discuss OTAs and the Consortia Model. We highly recommend that you give this episode a listen to learn more about the space and what it means for small and nontraditional businesses.

See the original post and listen to the episode here: https://contractingofficerpodcast.com/podcasts/395-otas-and-consortia-with-mica-dolan/  

Government Contracting and the Buy America Act

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-As shared by Hannah Altman

In his first week in office, President Biden signed Executive Order 14005, “Ensuring the Future is Made in All of America by All of America’s Workers.” This executive order calls for a review of, among other things, 1933’s Buy America Act (BAA). Passed during the Great Depression, BAA is designed to show preference to American industry and disincentivize foreign competition in government contracts. While that is all good in theory, what do small businesses need to know about EO 14005 and how it will affect their government contracting practices?

1.      Know your End Product

If you are selling a product or good to the U.S. government, you must consider both the finished product and the components that go into making that product. In order to qualify as domestic, your product must be manufactured in the United States, and at least 55% of its components must be manufactured in the United States as well. Make sure you know where your component parts are coming from, because the percentage of domestic production required will only increase! A new rule that recently went into effect increases the domestic content threshold significantly over the next several years: from 55% to 60% on October 25, 2022, then to 65% in calendar year 2024, and 75% in calendar year 2029. (Side note – did you just find out that you are going to need to find a new component supplier? govmates can help with that! Just shoot us an email and tell us what you need.)

2.      Don’t get too comfortable with waivers

The executive order also cracks down on companies looking for a waiver for the requirements explained above. Previously, an Agency or contracting officer could issue a waiver if the components were too expensive or too scarce to source or from the United States. The Biden administration has added extensive oversight and transparency to the process by creating a Made in America Office – housed in OMB. In order to obtain a waiver, the Agency must submit a justification for the use of foreign components to the Made in America Director. The Director will then publish its decision on a new website, also established by the executive order. If you are a company using foreign components, start the waiver process early! Agencies will likely be reticent to use waivers unless totally necessary, so consider which component parts are critical.

3.      Transparency, Transparency, Transparency

Executive Order 14005 is promoting transparency by establishing MadeinAmerica.gov. The website lets businesses find information on waivers and contact information for points of contact at each granting agency. Agencies will also be required to report to the Made in America Director twice a year regarding their implementation and compliance with the Buy America Act, with an opportunity to share policy prescriptions for improving BAA’s outcomes.

While all of this may create a longer lead time in your process, it helps to ensure the security of products made for and used by government customers. As evidenced by the recent changes to many programs regarding R&D, Manufacturing, etc.., your customers are paying attention. Not heeding the requirements of these Executive Orders may mean the difference between winning new work or not.

Defining the Valley of Death

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-As shared by Katie Bilek

What is the Valley of Death? According to the Defense Acquisition University (DAU), it is “a phenomenon faced by many startups when trying to do business with the Department of Defense … where a vendor transitions a prototype or commercially available product to a DoD contract.”

This acquisition gap period typically lasts for 1-2 years, during which time that startup – starved for contracts, cash, and endurance for working on the government’s timeline – may wither and die in the proverbial desert valley.

At the time this post was written, Deputy Secretary of Defense Secretary Kathleen Hicks had tasked an innovation steering group to map out this transition process from prototype to contract with the goal of identifying bottlenecks and cliffs that a small business may encounter. In theory, if those milestones are addressed, we can do more tactically to shepherd these fragile startups through the sweltering valley into technology transition and real procurement dollars.

A 2015 GAO report noted the Valley of Death “exists because the acquisition community often requires a higher level of technology maturity than the science and technology community is willing to fund and develop.” While a more recent update from GAO points to progress on this front, the problem still persists.

So, what’s going on behind the scenes during those 1-2 years after the prototype has been completed? Simply put – acquisition bureaucracy. Now – before we all pile onto the bandwagon of bashing our federal procurement system (as irresistible as that may be), this very system has built major programs of record, deployed technologies and systems across decades of military initiatives, and fielded trillions of dollars for industry to support federal missions.

For those of us in industry, we cheekily revert to the phrase that this is “good enough for government work.” But, given our current geopolitical positioning, the sobering reality is that the most mission-critical technologies, developments and initiatives are simply being protracted, suffocated ,and seemingly left to fade away.

The Valley of Death is real – nobody knows this better than those of us in industry. Let’s prioritize mitigating the impact of the Valley of Death so that we can continue to deliver the best solutions and technologies to the warfighter.

The Future of SBIR/STTR Programs & Information on SBIR Program Reauthorization

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We all enjoy the opportunity to win new work – no one more so than the innovation community. We are constantly striving to create and adapt technologies and processes to create new solutions to support mission-critical endeavors. Recently, I joined a LinkedIn Live panel with other industry enthusiasts to discuss the current state of the SBIR/STTR program as we awaited the vote by the House of Representatives to determine exactly what would happen next. I was invited to join Matt “Mohawk” Denny 🧨, J.R. Mullis, Dr. Dolores Kuchina-Musina, Chelsea Meggitt, and Kathryn Logan 🐘 to discuss our individual experiences with these programs and the ecosystems we each support. You can watch the replay here: The Value of SBIR & STTR

Some key takeaways from the discussion include:

  1. The SBIR and STTR programs allow for government agencies and commercial companies to refine and adapt their technologies via research and development – typically as a solution for a specific agency challenge. Many companies have found success once they discover how the model can best work to support their initiatives. This has brought into light the current discussion surrounding “SBIR/STTR Mills,” or those companies known to produce mass quantities of revolving SBIR/STTR relevant work. As one of the panelists mentioned, some companies identified as possible SBIR/STTR Mills find themselves in that bucket unintentionally. They’ve discovered what works for their R&D process and have made it repeatable. They don’t want to be on the constant churn of Phase I and Phase II work, but they find that it is the best way to support their growing endeavors for innovation and technology development.
  2. The SBIR/STTR programs have come under fire recently and some important changes have emerged as a result. Most notably would be the SBIR/STTR requirements for small business eligibility. One new requirement demands all companies disclose any potential foreign risks, thereby limiting the security risks from small businesses who are utilizing foreign technology, materials, or who have individuals that may have significant foreign interests. The second involves minimum performance standards for experienced companies. The bill states that businesses who have received 50 or more Phase I awards over the last 5 years must have at least two Phase II awards per four Phase I awards or face a limit on the number of Phase I and Phase II awards they can receive in the next year following the substandard performance review. Additionally, where Phase II and Phase III awards come in, the bill would increase the amount of aggregate sales and investments per Phase II awards for those in the 50+ awards and 100+ awards categories.
  3. Many submission programs, government-wide, need an overhaul regarding the user experience. We had several individuals in the live video comments as well as our panelists who identified areas that could use improvement as part of the process as well as those who provided suggestions for future consideration. Many times, the agencies don’t recognize the plight of the user’s experience until it is identified – but more than pointing out a weakness, providing a potential solution may be the key to change. There’s no timetable on when this change might come to SBIR/STTR, but it’s best to be ready for the change when it happens.

Following our live video discussion, the Senate passed the SBIR Program Reauthorization, huzzah for small businesses! Fun fact – they passed it only two days before the program was set to lapse. Talk about down to the wire. The bill now goes to the President for his signature; once signed, the program is safe from expiration for the next three years. The new expiration date for the program will be September 30, 2025.

What does this mean for SBIR/STTR interested businesses? More reporting, so document everything, and more strict requirements on the outcomes of Phase I and Phase II awards. We at govmates are big fans of alternate procurement opportunities because we like to see businesses, especially the small and nontraditional ecosystem, win more work. SBIR/STTR provide valuable opportunities for small businesses, much like OTAs do. So, go forth and SBIR!

5 Tips for Conference Season 

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-As shared by Meg Kerns.

“It’s the most wonderful time of the….” wait, scratch that, wrong season. But conference season is upon us. I had quite an informative conversation with Chelsea Meggitt of Collaborative Compositions about the best ways to make conference season work for you and your business. You can listen to the conversation in its entirety on the govmates podcast here. From that conversation and my personal experience, I’d like to share five tips that I found to be most actionable for small businesses going forward.  

  1. Have a Plan. There’s no willy or nilly here. You should know where you’re going, why you’re going, and who you’re planning to meet before you even slap down your company card for a ticket to each conference. What does the conference offer your business and how does it align with your future goals? This might be a chance to network or appear in person alongside a unicorn customer or potential teammates. It could also be to learn from industry or government leaders about a specific topic or vertical. Sometimes it’s only one of those and sometimes it’s both – but don’t overdo it. Additionally, “because everyone goes” is not a conference strategy. As part of your plan, reach out to those in your network who are also planning to attend. If you’re traveling cross country, maybe squeeze in a day beforehand if you can to catch up with local people. Coffee meetings, quick, scheduled chats in a nearby lunch location, or quiet couch space may yield better results than ten unplanned booth visits. Tan Wilson (Entellect, LLC) also recently mentioned creating a slack or other messaging channel to connect with peers throughout the event for popular parties, event tidbits, and takeaways. Use the value of connection to get the most out of your event attendance.
     
  2. Prepare Your Collateral. Business cards, yes – but make them memorable. No one is going to care if it’s “eggshell with Romalian lettering” or the “subtle coloring and tasteful thickness,” but they will care if they’re useful. I always recommend having some space on the back, in a corner, wherever, with a light color that makes it easy for people to take a note. This allows them to directly connect you with the conversation you had for better follow-up. Do this to their cards as well. Write a note about the conversation or how you need to follow up directly on the card, so you’ll be able to better keep things collated. If you have a one-pager or handout, make it memorable and useful – a checklist, a fact sheet, something that they will want to hold on to rather than a list of your capabilities. 
  3. Know the Layout of the Event Space. Print out the exhibition hall floor plan (normally available on their event websites in advance) because it typically has company names and booth numbers. From there I highlight or star the ones I know I want to stop by whether it’s to visit with peers or for business-building opportunities. I go a step further and include the agenda if I can as well. I’ll add important sessions to my calendar with a 20-minute reminder set ahead of time to ensure I don’t miss out on sessions or speakers I intend to attend. Determine how you’re going to get from session to session, where the lunch or networking spaces will be, and how you plan to utilize any downtimes you may have. (Though truthfully, I rarely find downtime at conferences, especially the good ones.)
  4. Pack Smart. You’re going to be in sessions, meetings, or the exhibit hall all day, and chances are if you’re budget conscious, you’re not staying directly on location at the event. If you don’t have a “home base” booth or otherwise for the event you’re going to want to have everything on hand. I don’t recommend a computer unless you know you’re going to be doing dual-hand typing or similar tasks. If you bring your computer all the way to an event and haven’t pulled it out during the day, even once, it’s just an expensive paperweight that is taking up valuable swag space. My go-to is usually a backpack/bag that has my file of important conference information (my agenda and floor plan notes), phone, charger, and/or power bank, headphones for any calls that come up, business cards, a small notebook, and a couple of pens. I would also suggest a refillable water bottle, ChapStick, and your wallet (most likely with your vaccine card these days). More intense tasks such as email or conference follow-up can be done back in your hotel room or home office where you can kick off your shoes and have a snack while you work. You’re there to cover serious conference ground (hello step-counters) not to be an office supply pack-mule. 
  5. Follow Up with a Purpose. I send LinkedIn requests to those I’ve had a quick conversation with at a booth or in passing directly following the meeting. I have a note saved on my phone that I can copy and quickly adjust to mention pieces of our discussion that seemed memorable and relevant. This can be done on the walk between booths or while waiting for new sessions to begin (hence the phone charger mentioned previously). The individualized touch is what makes the connection healthier and more valuable to all parties involved. Post-event I categorize my new business card collection by task value: 1. Those who need specific, direct follow-up come first, followed by 2. Those who have a general parallel or mutual interest but no immediate actions to keep the connection fresh and 3. Those who require a handoff or introduction to someone in the company or elsewhere. Note that I’m not condoning the mass import to your CRM for next week’s newsletter blast, but I would recommend including an earlier newsletter in your follow-up and asking if they’d like to be added to future outreach communications.  

Whittling this list down to just five important things proved to be a difficult task as there are a variety of ways to find value in the conference and networking circuit for our industry. I would encourage you to try out one or two at a time to see where the value exists for your flavor of connection and growth. For more tips, I encourage you to listen to the govmates Next Gen podcast (linked above) and follow the conference savvy connections you may have on LinkedIn (don’t forget to add govmates to that list). We’ll see you on the conference scene!