TOO MANY RULES FOR COMMERCIAL CONTRACTORS? COMPANIES VOTE WITH THEIR FEET
Consider these three facts learned last week:
1. At least 100,000 companies, mostly small firms, have left the ranks of government contractors over the past year according to data gathered by the House Small Business Committee.
2. Small companies that have stayed end up getting larger contracts.
3. Over 80% of service business goes to approximately 150 companies. These statistics make it abundantly clear that a company must know how to run the traps of government contracting in order to be successful. Few, if any, companies can just walk into the market and do well.
It’s no wonder that DOD’s high profile effort to attract bleeding edge tech firms is meeting with mixed success. There are simply too many rules governing the acquisition of commercial services and products. While some government people may shrug at the 100,000 number, it’s a big deal indeed if feds can’t get the national security or other mission critical solutions they need because companies view the federal market as not worth being the effort to figure out.
It’s always tempting to implement social policy, and a host of other perceived goods, via government procurement rules. Leaders should resist this temptation and make sure they create a market that attracts, not repels, the types of businesses they claim to want.