Considerations of Doing Business with the DoD

Non-Government investors may respond to pitches in days or weeks with funding, but this speed is not common with the DoD.

For example, if your business strategy is to submit a proposal and be on contract in two months, you may not be able to hold your team together for six months or have the proposed personnel available when the Government is ready to start work eight months later. Unless you have unlimited cash flow, you will most likely put your team on a project that pays their salaries and your utilities instead of waiting to hear if you have—or have not—been selected for a contract award.

To plan your business development, you need to understand normal timelines within the DoD. The DoD is actively trying to whittle down their PALT – Procurement Acquisition Lead Time, which is the time just to get on contract and doesn’t include performance, delivery, or payment. The time from your decision to pursue a DoD contract to the time you receive full payment for your work can be longer than you’re used to with non-Government customers.

Timeline #1: Need to Solicitation | Timeline #2: Solicitation to Award | Timeline #3: Award to Payment

Timeline #1 – From Need to Solicitation

The first timeline to be aware of is from when you first hear of an upcoming acquisition to answer a particular “need” or requirement. You may learn of an opportunity through your network or as a Request for Information (RFI) published in SAM.gov, the official Government acquisition portal. The Government usually fills this period with market research and strategy plans for buying the solution to fill that need. Market research tells them “what’s out there” and helps the DoD decide if they should compete a requirement or go directly to one contractor, aka, sole source.

During this period, you can influence the Government’s acquisition strategy decisions by answering the RFI, meeting with DoD personnel, and asking questions to let them know you have a potential solution, what intellectual property concerns you have, whether an other transaction is your preferred type of contract, or that you already have a patent for exactly what the Government wants.

This timeline may be as short as a few weeks, but it’s more common to take three to six months. If six months have passed since the last notice in SAM.gov, they may publish another RFI or a more specific  “sources sought” announcement in case new sources have emerged. In some cases, the DoD recognizes the need, takes several months to publish an RFI, and then takes a year or more to develop the strategy and request a proposal.

Bottom line: Don’t expect to make payroll from a contract within three months of hearing about the opportunity. If you do, it will be uncommon, possibly the result of an urgent need related to a pandemic, natural disaster, or war-time situation. Working with the Government is not a get-rich-quick scheme.

Timeline #2: From Solicitation to Negotiation/Selection/Award

Regardless of how long it takes the DoD to do their market research and prepare the solicitation, once the request for proposal hits the streets, the Government expects you to drop everything and respond in a tight timeline. 

The solicitation may take several forms, such as a Request for Proposal, Request for White Papers, Request for Project Proposals, or Broad Agency Announcement (BAA). The normal minimum time for you to prepare and submit your proposal is 30 days, but if they are looking to expand opportunities to include more small businesses, the time may be 45 days.   Make sure you don’t miss the deadline or you could be excluded from competing. Occasionally a solicitation will be “open”—or ongoing—for an extended period, such as an open BAA that you can submit to at any point during a one-year period.

FAR Part 5.203 dictates the response times as follows:

(c) Except for the acquisition of commercial items (see 5.203(b)), agencies shall allow at least a 30-day response time for receipt of bids or proposals from the date of issuance of a solicitation, if the proposed contract action is expected to exceed the simplified acquisition threshold.

(d) Agencies shall allow at least a 30 day response time from the date of publication of a proper notice of intent to contract for architect-engineer services or before issuance of an order under a basic ordering agreement or similar arrangement if the proposed contract action is expected to exceed the simplified acquisition threshold.

(e) Agencies must allow at least a 45-day response time for receipt of bids or proposals from the date of publication of the notice required in 5.201 for proposed contract actions categorized as research and development if the proposed contract action is expected to exceed the simplified acquisition threshold.

In spite of this regulation and the possible difficulty in responding that quickly, the timeline can be significantly shorter for Other Transactions and other non-FAR-based agreements that don’t have to follow the FAR rules. The timeline can also be shortened for “letter contracts,” or undefinitized contract actions, which are executed under infrequently used emergency procedures before a contract price and other details can be negotiated.

If you don’t think that 30 or 45 days is a long enough time to complete your proposal, you can request an extension, which may or may not be granted, depending on the deadline that the Government is working to. If the due date falls in the middle of a holiday week that would cost you proposal-writing time out of your 30-45 days or you foresee being delayed due to weather, a pandemic, or a natural disaster, request an extension as early as possible. Sometimes a buying office can be persuaded to extend the due date if several interested parties express concern.

Once you’ve submitted your proposal and they begin the evaluation process, or source selection, you may not hear back from the Government for a while. Many technical evaluations are done in a few days or weeks, but others may take many months. Even if their solicitation says to expect an answer within X number of months, that is not a hard and fast time frame. For example, a BAA may estimate tentative selections—meaning they will let you know that they are interested in contracting with you and will start fact-finding and negotiations after that date—at four months but notify you at seven months, even if the decision was made at four months. Even solicitations calling themselves “rapid” may not meet their own projected timelines. A few reasons for slower-than-expected evaluations and postponed notifications are:

• A change in mission—for example, a real-world event such as a pandemic or an emerging threat may cause a need to divert funds to a different technology or mission so that the solicitation is no longer as important or even needed.
• Delay in or lack of enough funding, so that the Government doesn’t want to award any contracts until all funding is ready to be “obligated,” or put on the contract.
• The buying office decides to notify all selectees and non-selectees at the same time, and there is some hold-up in notifying one of the others.
• Lack of personnel/resources—for example, source selections are often an “other duty” in addition to the evaluator’s normal workload, and their normal workload may take precedence during the evaluation period for reasons unrelated to your proposal. Many DoD acquisition organizations have a staffing shortfall, and evaluations may be done in the evenings and weekends outside of normal work hours.

If the evaluation period is taking longer than projected, you can request status, but don’t call/email daily or even weekly for an update. If you call/email daily and so does everyone else, that time is time spent not completing the evaluation and related reviews.

Once you’re notified that you’ve been selected, you may still go through a fact-finding and negotiation process that can vary in depth of complexity and length of time. Many negotiations are handled by email or phone calls, with face-to-face negotiations reserved for large-dollar, high-visibility procurements. These can be quick or protracted.

Depending on the dollar value and other factors, once you’ve settled your negotiation, it may take two to four weeks to obtain any policy reviews, legal reviews, and other approvals; finish writing the contract or agreement; get signatures from both parties; and wrap up any other required paperwork before award is made.

Bottom line: Don’t expect to make payroll from a contract in three months of a request for proposal or even submission of a proposal. One exception that is especially for small businesses is AFWERX’s Special Topics in their SBIR Program, which combines pitch days and immediate evaluations and notifications. Awards may not be made the same day with funding for advance payment but follow within a couple of weeks.   To the external viewer, it seems that they are able to put together all of the contract planning and paperwork within a single day or two, but there’s actually a lot of behind-the-scenes work done ahead of time to afford the same-day decision-making.

Timeline #3: From Award to Payment

Once you’ve been awarded a contract or agreement, it’s possible but rare that you’ll receive funding immediately. Uncommonly, you may receive advance payments or payment through a special program, such as conducted by AFWERX. Otherwise, you’ll be paid according to how the contract or agreement is structured. That might include payment for each milestone, a percentage of your costs (a form of Government financing known as “progress payments” which amounts to about 2% profit reduction), or payment at the completion of all your deliveries, the latter of which could be three months or several years but might equate to a higher profit in the long run.

Bottomline:   The timing for payment will depend on what payment arrangements are written into a contract or agreement. It could be same day or it could be at the end of your period of performance. If you’re trying to make payroll, keep the payment timeline in mind.