Something that Contracting Officers (COs) live in fear of is awarding a contract to a business who does not have the resources to actually perform the contract. The Federal Acquisition Regulation (FAR) lays the responsibility for making a “responsibility” determination squarely on the CO:

“The award of a contract to a supplier based on lowest evaluated price alone can be false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional contractual or administrative costs. (FAR 9.103(c))

No purchase or award shall be made unless the contracting officer makes an affirmative determination of responsibility. In the absence of information clearly indicating that the prospective contractor is responsible, the contracting officer shall make a determination of non-responsibility. (FAR 9.103(b))”

Whether a prospective contractor is “responsible” or not is based on a number of factors, such as adequate financial resources, ability to meet the contract schedule, a record of satisfactory past performance, integrity and business ethics, and other demonstrated capabilities and resources required for successfully contract performance. These are questions that you as a company should consider before pursuing any government contract.

One of the best things you can do as a responsible contractor before you even submit your proposal is to target the “right size” of contract. If you are a small business with ten employees and an average annual gross revenue of less than $1 million, then pursuing a contract requiring ten times the number of employees just to perform the contract requires some serious evaluation. Look carefully at what the contract will require for you to perform it. How many people with what kind skill will you need? Where will you get them? Can you get them in time to start the contract on time? Will you need a bigger facility to perform the contract? Where and how will you get it? Check out our podcast, The Importance of Targeting Your Market, and our webinar, Target or Forget It!, for more details on picking the right size of opportunity to pursue.

Let’s say you’ve got a large business which will be a subcontractor for you.  Do you know how to manage a subcontractor successfully? Do you know the restrictions that the federal government places on how much you can subcontract out? The large business says “Don’t worry about it – we’ll help you!” But the prime contractor (you) are the one responsible for performance of everything under the contract, even the parts you subcontracted. Do you have experience managing subcontractors successfully? If your subcontractor doesn’t perform well, what will you do about it?

If you’ve considered all of these things and have a plan in place to handle the worst case scenarios successfully, then you have a good start on helping the CO to determine that you have the resources to successfully perform the contract. Here are a few other things the CO will consider in determining whether you have the resources to successfully manage and execute the contract when they award it to you.

• Adequate Finances. Do you have the money to pay all of the people who you will have working on this contract, along with all of your current expenses, for two to three months before the government pays your first invoice? Keep in mind that the government pays after performance, not before (with very few exceptions).
• Sufficient Manpower, Facilities, and Equipment. Do you have the number of people with the right skill sets to perform the work? Do you have sufficient space in your facility (when applicable), and the requisite equipment and tools available to perform the contract and deliver on time?
• Experience and Past Performance. Does your company have experience and a successful track record for managing contracts of similar size and scope; managing subcontractors and vendors (when applicable); and managing projects from start to completion? established relationships; network of vetted vendors

After the contract has been awarded to you is not the time to suddenly start trying to “figure out” who is going to do the work, what processes you need to use, or worse, how you are going to pay everybody until you finally start getting invoices paid by the government! (Remember, the government is not going to pay you first and let you perform later.) Thinking these things through before you even write your proposal will help you to prove to the CO that you have the resources to perform their contract successfully.

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