Bill Wiseacre, the ever-enthusiastic CEO of Uh-Oh Enterprises LLC, was always on the lookout for the next big opportunity. When he heard about a conference for small business owners that promised to boost revenues, he jumped at the chance to attend. Little did he know, this conference would lead him on a wild adventure into the world of government contracting.
The Inspiration
One of the keynote speakers, a seasoned entrepreneur in the software space, discussed how small businesses could unlock massive growth by providing services to the federal government. Inspired, Bill began researching what it would take to enter this new realm upon his return.
The Research and Initial Steps
Confident in Uh-Oh Enterprises’ ability to meet the quality requirements of any government contract, Bill was still unsure about the technical aspects involved. To gain insights, he contacted Paul, a business associate experienced in government contracts. Paul explained that while government contracts could be complex, Bill could get his feet wet by becoming a subcontractor to a larger company. This way, a more experienced prime contractor would handle the direct government interactions, leaving Bill to collaborate with the contracting business.
The Connection
Paul provided Bill with several names of companies in the government contracting space that might be interested in a subcontractor like Uh-Oh Enterprises. Eventually, Bill connected with a business preparing to bid on a sizable government contract, but their usual subcontractor was unavailable. The project was significant, and although Bill was confident in Uh-Oh Enterprises’ capabilities, he realized he would need to hire two additional employees to meet the project’s timeline.
The Agreement
Widgets Inc., the prime contractor, sent over a stack of documents for Bill to review. Among those documents was a Teaming Agreement, which stated that if Widgets Inc. secured the contract, Uh-Oh Enterprises would serve as a subcontractor. While the Teaming Agreement didn’t offer much in the way of specifics, Bill eagerly signed it and awaited news of the contract award.
The Contract Award
Soon after, Bill received an email from his contact at Widgets Inc. announcing they had been awarded the contract. Bill hurried to hire the necessary staff, including an administrative assistant, to ensure Uh-Oh Enterprises could fulfill its subcontracting role. After expanding his team, Bill received another email from Widgets Inc., this time containing a “Statement of Work.” To his dismay, the scope of work was much smaller than anticipated. Widgets Inc. decided to complete a substantial portion of the work themselves, significantly reducing Uh-Oh Enterprises’ portion of the project.
The Realization
Faced with the reality that the project’s profit would not cover the cost of the additional hires and missed opportunities with other clients, Bill realized the importance of thorough planning and contingencies in the unpredictable world of government contracting.
The Momentum Law Perspective
- Understanding Subcontractor Roles – Subcontracting can be a strategic entry point, but it’s essential to clarify roles and expectations thoroughly. In Bill’s case, while entering the government contracting world as a subcontractor was a wise move, he overlooked a crucial detail. Bill should have negotiated a minimum workshare allocation in the Teaming Agreement. This clause would ensure that Uh-Oh Enterprises received a guaranteed amount of work, justifying the new hires. By securing a minimum workshare, businesses can avoid the risk of overextending resources based on uncertain project scopes, thereby safeguarding their financial and operational stability.
- Resource Planning – Anticipate potential changes in project scope and ensure your business can adapt without significant financial strain. Bill’s enthusiasm for the government contract led him to rapidly expand his team, but he failed to coordinate the timing of receiving the Statement of Work with his staffing decisions. This misstep resulted in hiring additional staff before fully understanding the project’s requirements.
- Risk Management – Establish safeguards such as conditional hiring or flexible staffing solutions to mitigate the impact of unexpected changes in project requirements. Instead of hiring full-time employees immediately, Bill could have considered conditional hiring agreements where the employment offer is contingent on the final confirmation of the project’s scope. Additionally, using flexible staffing solutions such as temporary or contract workers could provide the necessary workforce without long-term commitments. These strategies would have allowed Bill to scale his team up or down based on the project’s actual demands, reducing the financial risk associated with unexpected changes.
What would you have done in Bill’s situation?
Blog Posts from Uh-Oh Enterprises are cautionary tales from Momentum Law Group. Bill Wiseacre and his family are fictional characters representing real life situations that keep entrepreneurs like Bill from reaching full potential. #donotbelikeBill
