One thing that struck me as curious when I started working for a defense contractor was how other companies could be competitors on some proposals and partner (prime or sub) contractors on others. I’ll try to explain why this happens and why it’s a normal part of the business.
Wait, Weren’t We Competing With Them Last Week?
In my observations of the government contracting business–both in defense and space–the primary criteria for determining how a company positions itself in a given procurement are the company’s primary strengths/subject matter expertise and the nature of the contract up for competition (“being competed” in the unlovely language of the business).
Let’s say your company’s specialty is logistics: providing maintenance, packaging/kitting, spares, training, and other activities necessary to keep a military or space hardware system operational once it’s been built.
If the government releases a request for proposal (RFP) for logistical services for Rocket X, your company would likely bid as a prime contractor or, depending on the size of the customer’s needs (and your company’s size), you might instead bid as a partner on another company’s prime-contractor bid if the job is too big for either of you to tackle on your own.
On the other hand, if the RFP is to build the rocket and logistics is one part of that contract, your company might appear as a subcontractor under a company with expertise in building rockets. On other contracts, your company might be competing with that company’s logistics division where your leadership feels you have an advantage.
Sometimes, the type of contract affects how and when your company will pursue a given opportunity. The RFP might call for a firm, fixed-price bid while your company only works on cost-plus contracts. In a case like that, it might be easier to bid as a subcontractor and let the prime contractor figure out how to make the overall team bid meet the government’s needs.
Other variables affect these decisions. A lot of it has to do with corporate relationships and the business development team’s knowledge of the other companies in the industry:
- Are they reliable?
- Have they worked with the other company in the course of doing another job?
- Do you want to partner with X Company now because you plan to bid on another opportunity in the future and want to see if they’re a good fit as a partner?
- Is the company better off partnering with a competitor using logic inherited from The Godfather?
Stranger things have happened.
Why This Should Matter to You
Aside from some mild vertigo as you shift from competitor to collaborator, why should you care about how your company partners with its peers in your given industry?
Sometimes, you need to remind your management that you are not allowed to participate in a particular project. For example, I once had a situation where my employer was bidding on a task that would put the company in a position to evaluate another division of my employer’s organization as well as other companies on a related piece of work. This was a situation that called for something called a “Chinese wall,” where one part of an organization could not bid on a task to sit in judgment on the work another part of the organization. Or, if they did, the personnel would have to be kept from talking to each other to avoid sharing competition-sensitive information. In the end, my employer decided to bid on the other piece of work rather than bid on the evaluator task because there was more money involved.
Overall, this back-and-forth movement in the contracting world affects you because it could cause you to encounter an organizational conflict of interest (OCI). This is especially true if you find yourself working for one organization and gain access to their activities on a particular task, then are asked to work on a proposal for another, related opportunity. If the information in your possession is competition sensitive (i.e., related directly to the new opportunity), you need to recuse yourself because you know too much about the competition. I had to do this a few months ago, so it’s a challenge, even for the independent contractor.
The contracting business can be confusing, but it’s better that you know these dynamics now!