The Defense Contracting Opportunity (For Small Businesses) Podcast Transcript

                         [00:06] Richard C. Howard: Hey guys, Ricky here with the Dodcontract Academy podcast video. This is where we help small businesses sell products and services to the US military and other federal agencies. So if you're listening, for the first time, I spent years and years in the department of Defense in the air Force as an acquisitions officer, putting companies on contract for the government. That's what acquisitions is. It's a professional putting companies on contract for the government. And recently I was on a podcast where we really broke it down to basics, and I just wanted to come at you guys with the opportunity. Usually I'm talking about advanced strategies on how to influence requirements and to really close those contracts consistently.

                         Today I just want to talk about the opportunity. So there's really two opportunities, right? One is for small businesses and the other is for sales professionals, I guess you could say, or account executives or anybody looking for a career selling to the government, selling to the US. Military. So what those positions would look like are account executives in bigger companies or maybe even small businesses. Maybe you run their government contracting arm or branch of their business. That could be. Now I focus only on federal, but of course their state and local as well. I focus on federal and I like to focus on the military because your biggest opportunity is going to be with the military in most cases. So let's first break it down to what is the opportunity? Well, big picture, US government buys everything. Just about everything that you can think of. Specifically the US military is the biggest purchaser of small business products and services.

                         So we're not just talking about weapons and armor and bullets and all that. We are talking about everything from social media marketing to office supplies, accounting services, legal services, landscaping, construction, whatever it is you do. I guarantee I could find some contracting evidence that the government is probably buying. But before you get involved in government contracting, you want to see how much they're buying, see if it makes sense for you. Again, this isn't get rich quick. There's nothing quick about this, right? It takes some work, and it takes some work over time. So government contracting is the long game. But it also can be very profitable. It can increase your business value significantly. It's an additional revenue source to whoever you are selling to right now. If you add the government to that, that could be an additional source of revenue for your business. And if you're a sales professional, one of the highest paying jobs out there is being a public sector business developer, salesperson account executive, because there's very few people that actually understand this niche.

                         So if you listen to this podcast, you've got a good start at understanding what you need to do to actually sell to the government. Of course, if you're looking for additional skills, you can go to my website, Dodcontract.com for sales professionals. You can get certified, and we'll certify you, ensure you understand the information. You're going to build a business development plan. You're going to build a pipeline of opportunities. And then we give you a reference on your resume. We will put you a recommendation on LinkedIn after you satisfy our requirements, saying that you have passed the Defense Contracting Certification Program. And that's going to give you a leg up and trying to go out to some of those jobs. Let's talk about some of the things here that might be of interest to you, whether you're a small business or a sales professional. So, number one, the government has to buy from small businesses so they are mandated. 23% of all their spending has to be targeted at small business contracts, where small business is the prime now. Last year, 2021, and this number will probably go up because federal spending, there's a lag in the reporting. But understand, all federal spending, with the exception of some classified stuff, is public. And that separates public sector work from a lot of the other commercial or B to B areas that you may be involved with where if you want to find out what a company had charged on a contract or who they're selling to, that could involve quite a bit of work in the public sector. I can go in and see, and you can go in.

                         I'm going to show you how to do that. Here you can see who's buying what, what the government's buying. You can see every single contract in the public sector a company has. You can recreate it. There's a company just like yours. You could recreate step by step what you need to do to sell to the federal government, to sell to the Department of Defense, us. Military. All right, so $154.2 billion last year spent by the federal government, over half of that was spent by the Department of Defense. So DOD is spending more than the other agencies on small business contracts. And that makes sense because the military is about people, right? So supporting the people in the military, every base is a town or city. All the infrastructure, everything that goes into supporting that, they have to make purchases for. So when I opened up and started talking about some of the things that you might see the government buying, this is why there's a ton of stuff that they have to buy to keep the ball rolling. And it's not just weapons and aircraft and all the things that you normally think of.

                        Now, an additional $50 billion were spent on subcontracts with small businesses by the Department of Defense. So that's now we're talking about $133,000,000,000 being spent on small business contracts. But here's the kicker. Less than 1% of small businesses are selling to the government are selling to the Department of Defense. So when you think of there's over 33 million small businesses at the time of this recording in the United States. It's actually less than half of 1% of all those businesses are selling to the government or the Department of Defense. So what you have here is an opportunity if you're a small business, what you have here if you're a sales professional is an opportunity because the government increases their spending year over year on small business contracts. Yet 40% less small businesses are selling to the government now than there were ten years ago. Now what does that mean for you? Well you're probably asking yourself, hey, why is that? Why are small businesses not selling the government? Well it's hard to understand. It is not regular sales, right? So this is all regulated by the Federal Acquisitions regulations?

                         You don't really need to know too much about that right now except to know that the government can't just go out and buy a car the way that you do. The government can't just go out and hire somebody to do a job the way that you or I would like to hire landscapers in the backyard. There's a process for that. You have to understand the process. That's part of why we created this podcast. It's why we created the Academy because the information on how to do that is I would say first of all, I've never found one place where it all exists. You can go to a small business at SBA website, SBA.gov and there's some great information there but it doesn't give you everything that you need, not even close. Sam.gov is where you register your business to sell to the government, to the US military. And again you're getting piece mail, right? What aren't they telling you there? What is the hard piece to understand? You can listen to a lot of our podcast episodes and understand where you think, where I think you need to focus to actually win some of these contracts. Now that's just kind of an intro. So the government buys what you're selling.

                         I'm going to show you how to verify that there is an opportunity here if you're willing to put in the work and learn how to sell to the US military, to the US government. Now how do you decide if the government's buying what you're selling? How do you check that? Well what you want to do is you want to go to website USAspending.gov and then if you are watching this on a video, I'm actually going to share my screen with you right now and I am going to walk you through exactly what you need to do. So if you go to USAspending.gov. Now there's a lot of places here you can click around on. But what I'm going to tell you to do is go to the Award search and then there's a drop down menu. You can go to advanced search. I want you to click off to the left. There are a bunch of filters and I want you to look at the past three years because we don't really care what they bought 2008, because it's not 2008, but the last three years. We go back to 2019 fiscal year, then this is going to give us a good idea of what they have been spending money on. Now fiscal year for the government starts October 1, ends at the end of September. So fiscal year is different than the calendar year. Just to know that when you're going through this, the next thing I want you to do is on that menu under filters, I want you to go all the way down to something that says North American Industry Classification System or Naked NAICS.

                         Now the government basically has codes that classify different industries, okay? So this is a way of broadly searching for spending in different categories. Now I will tell you no matter what you're searching for here, there are going to be contracts that a contracting officer classified in a different way, maybe under different naked code that aren't going to pop up. I've seen the exact same thing sold or purchased by the government and it was classified under. If I look for five times, I probably see five different makes codes. So just to let you know that I'm looking at a construction one here, you might see that there was a construction job that was actually listed under manufacturing or something. So this is not a perfect system, but it's going to give you a great idea of the amount of money that's being spent if it's worth going in and taking a look at government sales. So for starters I'm going to click here on let's go to Finance and Insurance. Maybe you're in finance and insurance. And then there's going to be another drop down menu here. There's monetary authority, Central Bank securities. What are some other things here? Insurance Carriers. There's another drop down menu under Insurance Carriers. So hey, if you're insurance, if you're in insurance, let's take a look at it. There's direct title insurance other. Let's click on that, see what pops up. So we're basically just looking for a naked code that maybe classifies your small business. Like what would you potentially fit into? Now when I search, that what comes up.

                         There's not a lot here under this particular one and that's fine. And then I see that there are different table, there's a timeline, there are different categories. And just going through the categories I can see here. So under this particular one, the Department of Defense has led the charge in spending. It's not a lot of spending. It was 224 grand they spent over the past couple of years. But this very specific title. Insurance Carrier makes code. And if you're an insurance that probably makes sense to you. Let's look for something else. By the way, what that would tell me is there's not a tremendous amount of money being spent there. So is the opportunity here for title insurance guys, maybe for a couple if you just want an additional purchase or two each year. But we're not going to see those million dollar contracts right now. What about something like construction? Let's go click on construction. And actually we want to be a little bit more specific, right? So what if you're in residential building construction, so you build houses. So I just clicked on that. Let's go search for it. Okay. So much larger here. So again, the DOD is the leader of the spending, kind of like I alluded to at the beginning of the podcast.

                         Over the past three years, they spent $52,368,000,000 on contracts with companies for residential construction. And like I mentioned, every base is a little town or city. So there are houses on all these bases. And of course, I also want to mention residential construction. Something like this is going to cover a lot of different things. If I go to the drop down menu for that new single family houses, multifamily houses, residential remodelers, new housing for sale, builders. I mean, there's a lot of different things within that that we could get into. But one thing that I may want to see is how many small business awards trips? Two billions. A lot. So I'm guessing there's a lot of large business purchases here. I want to know how many small businesses won contracts. Right? So what's your competition look like? If you're a small business, where is the opportunity for you? So I'm going to go to recipient, type in the drop down menu, and I'm going to go, there's one called Business. There's another drop down business. I'm just going to click small business. So let's see if there's any information there.

                         Now this is interesting. So when I click on small business and I click Search DOD, the Department of Defense drops and the Department of justice rises to the top for small business residential construction services. They spent $373,000,000 over the past couple of years. The Department of Homeland Security is in second place. One. And then the Department of Defense is 72 million. Right. So we can see there that. I mean, without even looking further, I know that. And of course this is construction, so it kind of makes sense. But we know that they are going to be spending less money on small businesses in the Department of Defense and more on the larger businesses. Of course, houses are expensive to kind of make sense. By the way, if you want to find out if you are considered a small business by the federal government, it's going to be by these NAICS codes. You go to Naics.com, find your NAICS code, and then you can go to small business website, SBA.gov, or just do a search for naked codes and small business size standards. And it's going to tell you typically what it's going to be is if you are under a certain amount of employees like 500 employees or a certain amount of gross annual revenue, like $15 million a year, you're probably going to be considered a small business.

                         Let's take a look at something else here, right? So what if you are in accounting? Some of the things that are popping up accounting tax preparation bookkeeping, payroll services, other accounting services, run a quick search for that and Department of Defense leading the charge. And so they spent $3.2 billion in accounting services over the past three years. Keep in mind, this is just the Department of Defense, right? This isn't even including the other agencies out there. So now how about as far as small businesses are concerned, right? So I want to know, hey, I'm a small business, I'm an accountant, maybe have an accounting firm. Is there anything out there for me? No, I know there is because I've had clients that have worked in this field. Now when we bring it down a little bit further now we see. Okay, so the Department of Defense spent $373.1 million on accounting services last year, followed by Health and Human Services, followed by the Department of State. And Department of State spent 141,000,000. So if you're an accountant, you may not have ever considered selling to the Department of Defense or the US military or, you know, any of those agencies. So point being, no matter what you're in, there's probably some opportunity here selling to the government.

                         I ran some searches before starting the podcast here, looking at things like graphic design. The Department of Defense spent $57 million over the past couple of years for things like photo printing, framing, developing a brand guide, a social media brand guide for the Department of Defense, printing name tags, the list goes on. So I encourage you all go to USAspending.gov, take a look, see if there's an opportunity there. Even I did an episode on real estate, I think two episodes ago, where the government spending money on real estate, or I should say awarding real estate agents with contracts for things like leasing office buildings. So you just got to go in. So once you see how they're spending, you go to USAspending.gov, and you kind of start looking at some of the contracts that are popping up under your search. And when you see that, you start getting an idea, hey, what are they actually making purchases for? So if you're a real estate agent and you sell residential houses that you're putting families in may not be the opportunity for you, but if you're in commercial real estate, there's probably an avenue selling to the government. What are some other areas that you probably aren't even thinking about? Right? And this is where it gets really interesting.

                         The Department of Defense, for instance, spent a little bit of money on things like yoga and mindfulness training. We see. I found delivery orders in there for individuals just teaching that teaching courses on that or maybe teaching at a based gym, leadership courses. They're big on leadership. The government is very big on training. In general, the Department of Defense, the US. Military, significantly, so you know if there is a skill set that you have and you're a teacher, you may think about looking for some of the training that you could provide. Photography. The government spends money on commercial photography, studio photography, janitorial. I mean, let's see, DOD spent $5.2 billion over the last three years for janitorial services. That's a lot of money. And something else that's interesting is you can start looking at areas, right? So if you have a janitorial business, you probably in your station or station. But if you live in California, you're probably not looking at providing janitorial services in Massachusetts, where you can look at just, hey, what did California and California, what was spent by the federal government for janitorial services, right? You're probably going to see a lot of US navy, maybe Army Corps of Engineers or army spending there. So take a look at it. It's really interesting, diving deep and seeing what the opportunity is that's available to you.

                         Now, I don't want to get into the how in this episode because I have spent significant amounts of time in prior episodes teaching how to find opportunities, how to register your business, how to influence requirements, how do you consistently win these contracts? Just know that there's an opportunity there that it does take work. You do have to learn the process. There are free resources for you. This podcast is free. Sam.gov is free. Spa.gov is free. But if you're looking for one place that you can go and learn everything that you need to start selling, if you want to take it a step further and get received coaching or certification, you can go to Dodcontract.com. And there we take our students through that entire process and help them with that.

                         We created that to be a lower price option, especially joining the academy. You get in demand training, you get one on one weekly coaching. It's really helpful. And then you also get to meet and talk to the other companies that are involved. And that's great for things like teaming arrangements. If you want to partner on a contract opportunity that's coming up, or if you're just looking for general best practices, what are the current trends? Because things are changing and spending every year so it's good to be plugged in. And you need to have relationships. You need to develop these relationships. It's really going to help you as you're moving through the federal sales process. So thanks again for listening to DOD Contract Academy, this week's episode. We have some great guests coming up over the next month, so stay tuned and we'll see you next time.

If you enjoyed this episode, you can also check out Financing Your Government Contract: Interview w/ Matt Stavish where Matt walked us through how his company finances businesses of all sizes that are selling to the federal government.

If you have any questions, feel free to reach out to us here and we will get back to you as soon as we can.