How startups can get a foothold in federal contracting
Randal Wimmer became a multi-millionaire based off a contract proposal he wrote at his kitchen table and at a Northern Virginia Starbucks.
A Navy veteran, Wimmer started his own government contracting firm, McLean-based Analytic Strategies, in 2003. It took three-and-a-half years and a lucky business connection for the company to win its first subcontract — providing maritime data analysis for Unisys Corp. at $200,000 a year — until it struck its first home run: a $15 million prime contract for logistics work from the Defense Logistics Agency in 2010.
“That was the one that took us over the edge,” Wimmer says.
Virginia is home to four of the world’s five largest defense contractors — Raytheon Technologies Corp., Boeing Co., Northrop Grumman Corp. and General Dynamics Corp. — not to mention a slew of other government contractors offering services ranging from janitorial and security work to integrating artificial intelligence into health care management software to building the nation’s nuclear aircraft carriers. According to the Government Accountability Office, the federal government spent $637 billion on contracts in fiscal 2021, $386 billion of which was spent on defense services and products.
That’s a lot of money to compete for in a crowded field, and for a startup trying to earn a piece of the pie, there are ways in, though it takes work, say those who have been there before.
“It’s not as simple as you build something, and they will come,” says Jerry McGinn, executive director of the Greg and Camille Baroni Center for Government Contracting at George Mason University. “You have to understand the marketplace, understand potential customers, understand what kind of offerings you need that are attractive [and] where you fit in the marketplace.”
If that sounds like the same sort of checklist any startup should have, federal regulations, security clearances and contracting rules dictating prior performance — proving you’ve done work through obtaining previous contracts — add additional challenges for entrepreneurs seeking a foot in the government contracting door. Wimmer and McGinn refer to this as the “chicken-and-egg” approach.
“It’s like, ‘Well, how do I get … experience when I have no experience? If you’re not giving me a job, I don’t have any experience,’” Wimmer says.
That’s where connections can be crucial. Joining industry associations and developing relationships with business development employees at larger contractors can lead to critical subcontracts that can build a business and help earn those necessary past performance requirements, Wimmer and McGinn say.
Federal programs, including the Small Business Innovation Research and Small Business Technology Transfer programs, can also help put a company on the government’s radar.
As a startup in the early 2010s, McLean-based ID.me won more than $5 million in grants from a National Institute of Standards and Technology program focusing on developing online identity management that helped it launch its product and provided access to state and local government customers, says CEO Blake Hall. The company also received investments from Virginia Venture Partners and Blu Venture Investors, both of which helped the company navigate the federal contracting world.
“With limited resources, you have to focus,” Hall says. “As you build trust and deliver value, your footprint will naturally expand as customers ask you to take on more work.”
Another key to success is to find a niche by developing an innovative product or service. Sean Matson, co-founder and CEO of Virginia Beach-based Matbock LLC, says his military experience — he is a former Navy SEAL — helped his company figure out the process of getting a product to market and developing a supply chain. It also gave Matbock initial credibility and relatability to design and build the tactical gear it now sells. Matson says he watched platoon members modify newly issued gear that the government spent money on and thought “that seems weird,” so Matbock looked to fill the gap.
In August 2022, the company won its largest contract to date: $6.9 million from the Army to develop a prototype hybrid electric joint light tactical vehicle. “We relied on new materials, new ways to eliminate ‘one-trick ponies,’ and our own experiences,” Matson says.
Wimmer also points out that only 5% of companies in the United States pursue federal contracts. That eliminates much of the playing field. Earning a designation as a small, veteran, minority or woman-owned business or as one located in a historically underutilized business zone can also help a company stand out because the federal government requires that a certain amount of its money be awarded to those businesses annually. Further, Wimmer points out, the government tells its customers exactly what it is looking to buy via its acquisition and contracting process.
After winning more than $1 billion in contracts, Wimmer sold Analytic Strategies in 2016 and now runs the McLean-based Government Contracting Academy, which offers instructional courses for entrepreneurs trying to break into the industry.
As a government contractor, Wimmer’s initial successes took time and perseverance. He gained contracting experience while working corporate jobs and trying to launch Analytic Strategies. To grow the business after his first big win, Wimmer earned quality management certifications set by the International Organization for Standardization that documented and legitimized his corporate maturity. That’s a step he recommends to every business he now works with.
“This is the easiest and best industry you can ever pursue as a first-time entrepreneur,” Wimmer says.