Off-topic

This blog post is off-topic but my ego was stimulated by an article in today’s paper, Small businesses squeezed out of federal deals - association, Kathryn May, Ottawa Citizen, Feb. 27, 2009. In the 90’s I was a small business consultant and worked with a group of like-minded consultants pursuing contract opportunities, largely with federal government clients. As a group we experienced highs and lows but the competitive environment was more open to small businesses and contractors than it is today. We were able to win a reasonable share of contracts based upon the quality of our proposals, the experience/qualifications of our people, and the competitiveness of our consulting rates against those of larger corporate competitors.

Small business consultants pursuing government contract opportunities today are forced to contract their services to large contracting organizations in order to secure work. As second or third tier contractors their consulting rates are severely squeezed. The big guys, in turn, mark-up subcontractors labor rates and make a reasonable profit while carrying little or no risk. The subcontractors become virtual employees of the big firm, with none of the benefits of employment and at rates that fail to bridge gaps that inevitably occur between contract engagements.

Government clients feel that they benefit from doing business with a smaller group of large firms using standing offers and other supply arrangements. But in reality they are missing out on the benefits of dealing with small specialist groups and individuals who often possess unique skills and experience that never surfaces through the large corporation.

Current contracting regulations are very restrictive to government mangers and directors. As a result there are losers at both ends of the chain:

• Government customers lose out by not having access to the unique skills of individual people at competitive rates;
• Small business consultants are discouraged from pursuing opportunities with government clients. Instead, they become just a group of expendable bodies working at marginal rates for large contracting organizations that take all the profit with minimal risk.