Strategy for Entering a New Government Market
Due to the immense scale and diverse scope of the federal Government, one person cannot possibly be an ‘expert’ on all things in the federal market, or even a specific federal market such as the Department of Defense (DoD). The DoD, like all federal departments and agencies, is made up of many smaller spending areas which are geographically separated and have unique functional missions such as communications, aircraft, maintenance, etc. Even though all DoD organizations follow common regulations for acquisition, such as the Defense Federal Acquisition Regulation Supplement, each branch of the DoD has their own language, mission, equipment, commands, and way of doing business. Even within each service it is functionally diverse; spending authority and contracting activity operate in a surprisingly decentralized manner. The Army, for example, has 12 functionally organized Program Executive Offices (PEO) responsible for acquisitions of a specific type. Each of the PEOs have many subordinate organizations, all with spending authority. In addition, the Army has other larger, operational (non program of record organizations) commands with their own spending centers and contracting offices such as the Army Materiel Command and has contracting offices at installations throughout the world.
Most Government contracting companies start in a specific location, usually born out of the founder’s familiarity with the Government command or technology. As they grow it is good business practice for these companies to diversify their portfolios by increasing their presence in other spending areas. Contracts with different organizations and/or military services lowers the risk of a disruption in operations or revenue flow. Entering new markets, however, takes time, planning, and patience. Leadership must spend the intellectual energy early to develop a growth strategy to determine the best market(s) for growth and develop a strong market entry plan for identified markets.
Develop a Strategy and Market Entry Plan
The growth strategy is something most leaders conceptualize when companies are just starting. As a company matures, it can quickly find itself saturated in its current market, developing a new technology which can be used in other markets, or finding innovative ways to use current technology across the federal market. Whatever the reason, a strategic business plan is essential to ensure a methodical approach when it is time to expand beyond their current market. The plan must detail market area(s) for growth, reasons for growth, goals, timelines, and strategy for implementation. Company leaders will use this strategy to develop a market entry plan for the first new market – based on location or functional mission – identified in the plan.
The market entry plan is aligned with the strategic growth plan and is developed for a specific market. It lays out the strategy for entering a specific market and determines the best approach to enter the market. The plan should determine how the company will enter the new market – as a prime, sub, or purchasing an established small business in the market; how to translate their core capabilities or past performance in the new market; and how to leverage unique capabilities or innovative technology in the new market. Understanding this approach will provide a better picture how best to enter a market and increase chances for successful growth. One of the most effective strategies is to focus the approach on an opportunity coming out of the new market.
Companies need to research new markets to understand the organizational structure and mission of each subordinate organization in the market; the pillar contracts in the new market for possible leverage; how many contracts are awarded annually; and the products and services the Government buys in the new market. Most importantly, companies need to identify new opportunities coming out of the market which match their products, technology, capabilities, and past performance.
Using an opportunity as a means to enter a market will focus a company’s strategy and help companies understand how their capabilities meet market needs, increasing the probability of entry into the new market. The earlier an opportunity is identified, the better for the company. Responding to a Request for Information helps get a company’s name out in the new market and allows a company to possibly influence the acquisition strategy to its advantage. In addition, early identification allows more time to hold open discussions with the Government, which is an important aspect of market entry. After solicitation release correspondence is limited to formal, written communication with the contracting officer (FAR 15-201 (f)). Finally, the opportunity approach helps develop marketing messages and hone the purpose for client visits.
Don’t Go It Alone
Companies have many resources to leverage once they decide to enter a new market. The most important factor to remember is they do not have to do this alone. Depending on their entry strategy, knowledge of the market, and experience, companies should look at teaming with, or purchasing, established vendors in the market, hire consultants who know the market or, if they can afford overhead, hire a full-time business developer who has knowledge and connections in the market. Companies may actually look at a combination of consultants, teaming, and hiring a full-time employees, depending on budget and commitment. This strategy is most important when the new market is a different military service in DoD.
Government organizations also have resources to assist in new market penetration and should be on the top of the list in the campaign plan. PEO Simulations, Training, and Instrumentation (PEO STRI) in Orlando is a great example. Companies entering this market have three resources at their disposal. The first is the Small Business (SB) Advocate, the second is the Technical and Industry Liaison Office (TILO), and the third is the Assistant PEO for Customer Support. These three individuals can assist companies learn about the organization, the market, and technologies, and can even help get a company’s technology introduced to the managers and engineers. Companies need to assess the best use of all these resources and incorporate them into their new market entry plan.
Let us know how we can help you succeed in this or any other business effort!
-J. Michael Courtney