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VAR’s | Speed = Money

As we move into the busy Federal Contracting proposal season, there is one category of GovCon that really feels the crunch at the end of government fiscal year – VARs (Value Added Resellers) or resellers.

This type of company is generally very different than the typical services company. They move to their own drumbeat. The name of the game is speed. When the government is ready to spend, resellers/VARs must be able to react quickly to go on contract, procure, and deliver – all while maintaining compliance with FAR, TINA, and other fun acronyms that govern our GovCon lives.  Oh, and they’re margins are slim – they make their money in volume. Or manage cash flow as they manage distributor and OEM relationships amidst a flurry of customer demands.

The upside? Streamline your process, know what you are doing and there is a ton of work out there with limited competition in the small business space.  Even better, you can do it with a heck of a lot fewer people.

Useful tips for VARs as you go into the prime selling season:

 

  1. Have a central repository for all of your contracts’ paperwork. We don’t mean just throwing the email into a folder and calling it a day. We mean utilizing a streamlined retention and organization procedure. The better organized you are, the easier it is to process.

 

  1. Utilize this streamlined process so you can easily look up and flow down terms as appropriate with the myriad of business relationships that VARs maintain (partners, distributors, vendors, etc.). Pass down the risk where you can and know who is doing what to whom. And do it quickly.

 

  1. Have solid agreement templates that you review at least bi-annually. This way you know, without a shadow of a doubt, what is in your agreement. You can negotiate quickly.

 

  1. Create automated features that allow the sales folks to do a quick data entry that is communicated to contracts – without the need for an email. You already have too many emails.

 

  1. Speaking of contracts, know your vehicles inside and out. How will your customer buy from you?  Do you have the vehicle they like to use?  If not, be ready to team if they procure via a different contract vehicle than the one you have.

 

  1. Sales teams generally rule the roost in most VARs. The company can live or die by them. BUT…they are quick to put the company at risk with quick acceptance of terms that may inflict more harm than good (especially at the end of a quarter!). Contracts folks identify and mitigate risk for a living. They should always act in the best interests of the company. But they should understand shades of risk, when they need to accept it and the speed in which business needs to move. Creating a culture where both the sales team and the contracts department value the other’s strengths and respect their differences and points of view is critical.

 

  1. Know your financing options. Be current with all your distributor partners and have a firm grasp on credit limits they have extended to your firm.  Will your distributor accommodate that one-off $3,000,000 order?  Should your flooring lines and vendor financing not be enough to cover surge season, be sure to have a plan B in place.  Preferably some sort of supplemental non-recourse receivables financing facility.

 

There are a lot of moving parts associated with resellers/VARs, but there is a great business model if you can get the battle rhythm. Take care of the back end now, before the fiscal year-end sprint begins.

BOOST has helped resellers/VARs with streamlining their contracts department, organizing their data and serving as an outsourced contracts administration house with contract authority of $10M+. If you need help, please email us at [email protected].  If you need reseller financing, we’re happy to introduce you to a trusted partner.

Institute Recap

GovCon Lifecycle:
Purgatory to Paradise

The second govmates institute, GovCon Lifecycle: Purgatory to Paradise met at the Northrup Grumman location in McLean, VA. In an authentic meeting-of-the-minds, industry experts discussed topics pertinent to growing the local govcon footprint.

Highlights from the institute include:

Purgatory: That Awful Time Between Submission and Award

  • BAFO’s, How to respond to government requests, FAR compliance, “Gotcha’s”“Proposals are rarely won at submission, but they are lost. If you get an EN – correct, don’t defend.”
    Barry Landew – Wolf Den
    “To mechanically lower your price during ENs make sure you revisit trends to see where you can adjust.”
    Avantika Singh

30-60 Day Transition & Ramp-Up

  • Recruiting & Operations (Transition planning, Re-badging, Quality Planning, Customer interaction) –
    “Be sure to stay in touch with your key personnel and others that you bid after you submit your bid.  Fostering this relationship will cut down on your recruiting time.”
    Mary Holmes – BOOST
  • Contracts (Sub-K’s, Negotiations) –
    “Best advice that is not only the most obvious but the most overlooked – did you read the entire contract award and do you know what you are signed up for?  Make sure everyone on the team is aware.”
    Amanda Tyson – BOOST
  • Accounting (Accounting system set-up, Billing requirements, Types of contracts)
    “Make sure you get the labor category paperwork done up front because you could lose money if they don’t meet the qualifications.”
    Giacomo Apadula –  BDO

Opportunities in Loudoun County

  • “Insider baseball on AWS is coming to Northern Virginia. There is still a ways to go, there will be another downselect based on sites.”
    Steven Hargan – Loudoun Economic Development

Now That You’ve Won – How Do You Pay for It?

  • Have your contracts folks review the financing document.  It’s a contractual document – CEOs make sure you know what you’re getting into and completely understand the terms.“Be careful and read the fine print to make sure you’re actually getting the rate you think you’re getting from your financial providers.”
    Matt Stavish

Capture & Business Development for FY2019

  • Be strategic about your capture process – make sure it’s a rolling 36-month pipeline.
  • Focus on both getting onto some of the larger IDIQs (hello Oasis!  GSA Schedule 70!) and on agencies that award independently – who buys from you? 
  • Yes, there seems to be less direct sole sourcing opportunities and more competitively bid set-aside work for 8a’s.
    Kim Pack, Wolf Den

Join govmates to be updated on future opportunities for continuing education and targeted matchmaking! 

March Madness in Federal Government

So much for our brackets (okay, Va Tech was a long shot, but what the heck UVA?), we’re extending our musings on a few bouts of madness that we’ve observed this year within the government.

  • Budget – Everything about it is broken. Everything. The Continuing Resolutions. The riders for pet projects. The need to “use or lose” all the funding. The complete lack of accountability for your actions. I must believe that most agencies would agree. Yet, where is the call for actual, real reform? We beat our chests every time we get close to a government shutdown, but otherwise, there is no discussion on making real changes to the process. Industry can provide suggestions, but this is fundamentally government responsibility impacting all Americans. Fix this aspect of government and there is a waterfall impact that positively impacts the economy. Come up with a better budgeting process.

 

  • RFPs – While absolutely no one enjoys writing an RFP, nor responding to one, having a clearly articulated RFP with transparency regarding your agency’s needs is critical. With clarity, the industry can provide their best solution at their best price in response.  Imagine the source selection team reading qualified, thoughtful solutions. The government wins. Spend time pre-RFP to talk to the industry and tailor your RFP to meet your needs. It’s not illegal…it’s encouraged!

 

  • Same Old Contractors, Same Old Solutions – I completely understand that we all have our favorites, but ask yourself, has your favorite really helped your agency move the ball or are they just checking time? Instead of going to your old standby or short list, how about giving a new player a chance? How often have you sole-sourced something as a check in the box without really looking to see if there are other players in the industry who can meet the need? Have you looked beyond the three same contractors who respond to your RFP? Outreach is not hard and it serves the agency to have fresh blood in the mix. Expand your network and reach.

 

  • Responsibility. We get that as for-profit contractors, we are often viewed as beltway bandits.  In reality, many are small businesses trying to make a difference. Holding up contract mods with funding or approving invoices in the billing system has a direct impact on our business.  What seems like a mundane task is one of the most important for a small GovCons. We operate on thin margins and don’t have the cash to float months of payroll. Process the paperwork in a timely fashion.

As a government official, you have a lot of responsibility – not only to your agency but to the taxpayer. Taking the above into consideration benefits all of us in the ecosystem.

They say madness gets worse before it gets better, but how much worse are we willing to stomach? If each of us does our part to make the RFP process, solution options and budget shortfalls our responsibility, maybe, just maybe there will be a slice of pie for all of us! We all have our own bouts of madness and we’ve been happy to shine a light on ours. Where do you find madness in GovCon and more importantly, what do you propose we do to find a solution?