How to Successfully Enter the Federal Market
Watch this webinar to hear from Arianne Price, Lt Gen Clint Hinote (Retired), and Lt Col Chase Eiserman about what startups can do to successfully break into the federal market.
Matthew Reichman
Welcome to our discussion today. My name is Matt Reichman. I’m the Director of Tech Programs here at Dcode. A little bit of background. Before Dcode, I was a founding member of IBM’s space program. and before that, I spent about seven years doing, strategic government consulting at Air Force, NASA, and other agencies.
I’m looking forward to a great conversation with, our panelists here today, who just bring an incredible wealth of experience from both the government and VC perspective.
So, let’s get started with introductions.
First up, we have Arianne Price, who is a Principal of Portfolio Operations at Squadra Ventures. Arianne works with Squadra’s portfolio companies to design and execute their go-to-market strategy. grow their revenue, and increase their relevance through media and government relations. So, Arianne, thanks so much for joining us today.
We also have Clint Hinote. Clint is a retired Air Force three-star general and the first leader of Air Force Futures. Throughout his career, he served at the leading edge of change, developing novel tactics, revising data, battle plans, and reinventing organizations, leading complex alliances, and disrupting data doctrine. So welcome, Clint. Thanks for joining us.
And last but not least, we have Lt Col Chase Eiserman. Chase is the chief of industry development at AFWERX and co-founder and CEO of Rapid Acquisition Procurement and Industry Development at the United States Air Force, also known as RAPIDx. So welcome, Chase.
Arianne, I think, until somewhat recently, right? VC was not always synonymous with defense, at least in the public perception. So, I’d love to hear more from you about the role of venture in the federal space today and how things have been evolving?
Arianne Price
Yeah, absolutely. I feel like it’s gotten buzzy in the last six months, and Silicon Valley is suddenly very interested in what the DoD is spending money on those small firms that have been kicking around here for a while; glad they showed up, and also want to make sure, they know what they’re doing. And everyone’s aligned on doing this the right way.
I’ve been learning a lot lately about the way that the DoD funded and exceeded innovation for, the commercial sector, in the last, century. And I think that’s shifted today where it’s almost the role of private capital to help feed innovation into the DoD. And that’s something, we’re really proud to do. Seeding the development of new technologies in a way that is productive is a way that we can help.
I think the government is very comfortable purchasing services and buying software or hardware that is bespoke and custom. And as a VC, we sit with our company, and we say, okay, how do you align this federal use case and this commercial use case, which are often quite similar, and make sure you’re building one product that’s valuable across sectors, because that’s what’s going to build a business that eventually keeps growing skills, becomes profitable, self-sustaining. and then the other role that we as fodder play, we believe our advantage is rooted in our people and our understanding of the ecosystem.
Whether that’s the Pentagon, whether that’s Fortune 100 companies and how they buy cybersecurity tools. We tell our companies, we’ll never understand your product as well as you do, but you will never be in as many rooms as we are simply because of our preexisting relationships and our position here in the the greater DC area. So it’s our job to help them understand this incredibly complex ecosystem sell into it and develop a capture strategy.
Then finally, I think VC funds can really help, early-stage technology companies one way or the other to be truly dual-use. So sometimes we invest in, commercially viable software that has identified or we’ve helped identify a federal use case and help them sell into government. Sometimes we invest in defense-focused technology that in the process of product development, they realize, hey, we actually have a huge commercial use case, but we’ve never sold outside of the government. We help them do that.
So VC funds can be a little bit of a bridge between these two sectors that feel very different. But at the end of the day, it’s like identifying your champions, proving out your use case, and figuring out a way to strategically achieve the milestones you need to deliver value for your customers. And it doesn’t matter if the customer is Cisco or Bank of America or Mom and Pop shops and across the country or the United States Army.
Matthew
Absolutely, appreciate the insight there. As a follow-up question, as you’re being approached or approaching different tech companies that, want to work with Squadra, what are what are some of the factors you’re considering when evaluating their potential for, working in the federal market and being successful?
Arianne
Yeah, I think the two things that we think about, because the time horizon for selling, into the DoD or into the broader federal government is very long. Right? That’s the whole reason this is so hard. And so it’s not like an enterprise software product where, okay, if we spend this much on marketing and we get these ads, and we’re going to have this J curve start next year, right?
We’re looking at a 1 to 2-year time horizon, for true growth. And so the things we want to see at the early stage, which is where we invest, is a valid validated use case from users. So whether that’s actually operators on the battlefield, saying like, yes, if if I got this, I would be happy to use it or, cyber security professionals inside the Department of State saying like, yes, this tool would take something that I’m currently doing manually and make it possible for me to save hours a week to do more strategic, solve harder problems with that time.
We want to see that the company has identified the user, gotten their buy-in, and they’ve already developed champions, kind of regardless of how far along the actual technology is.
The second thing we look for is a demonstrated understanding of the complexity of the ecosystem. So, if we take a pitch, and start the diligence process with a startup, that’s main business model is going to be selling it to the government. We want to see proof that they know how to build that influence campaign, get into the hands of users, and also get paid for it.
So whether they have a strategy that’s built on, on dilutive funding, like SBIR is whether they, can map and say, here are the 2 stakeholders we need to get to in the next 12 months, and then they can show long-term over the next 5 to 10 years. Here’s how we get, on the path to a program of record, whether that’s, through partnerships with primes, through, direct sales, the government, whether they’re going to have a congressional strategy if they’ve identified champions there.
So, we’re not looking for growth tomorrow, but we’re looking for a team that has thought about how long it’s going to take and how they’re going to get there and really laid out a plan of attack that we believe in. We want to support, develop, strengthen, and activate.
Matthew
Just to make things a little bit more concrete, are there any examples or, like a case where you’ve seen either Squadra or venture capital play that crucial role in helping a startup kind of overcome that, Valley of Death or that barrier to entry and be successful in the federal space?
Arianne
I can talk specifically about one of our portfolio companies because I love to shout them out. Primordial Labs is an early-stage startup focused on manned-unmanned teaming. So using natural language programming to, train and then manage fleets of robots or drones. It’s using actual battlefield command to pilot, ISR drones.
We invested in October 2022. And there are introductions that we made inside a couple of innovative branches inside the military or even a couple of big Army that today, took a long time.
It took a year and a half. Those introductions have led to pilots, executed tests, performed serious milestones that are going to allow them to prove this is technology that operators on the field want.
We have the milestones of success. Our ability to make introductions early is what has helped primordial get into the hands of the operators who can validate. And can provide great product feedback like, oh, it’d be really cool if it did this, or, this is how I hold my attack, and I want to make sure that I don’t have to change that to use this new tool. So that’s one small example.
Matthew
Yeah, appreciate that example. And I will say, we’re big fans of Primordial here
To switch gears, Clint and Chase, I would love to hear from you both from the government perspective and from your perspective.
What are some of the key challenges and opportunities that you see for tech startups when, when navigating the federal contracting process? Especially, for fast-moving organizations.
Chase do you want to start off with this one? And then we’ll turn it over to Clint.
Chase Eiserman
Sure happy to follow up on these conversations already. It is always hard to start because there are so many different places we can go. I don’t want to get in the minutia of affairs. I can definitely. I’m sure you guys share my contact info with everybody on the line. I’m happy to have those one-off conversations. But for the broader government, as I’ve seen it over the last three years…
18 months of capital runway is key, whether you’re starting with severe or anything else. I mean, that’s fundamental just to get you through the time horizons for the contracting process to catch up.
Step 2 is to go to AFRICOM and check out all of our offerings. It’s really well described and laid out there. We also have, a weekly webinar series that we host that goes through the entire portfolio of what efforts have as offerings, that you can get into every Thursday.
And then lastly, very simply register and SAM.gov for, and get your NAICS code and everything you’re done and all that lined up so that you start getting those, tickers from the system on things that align with your capability that you can offer back to the government.
All that being said, under the civil portfolio, one thing to keep in mind, especially as a startup where you’re coming potentially from a traditional business. We’re along for the ride to see how things end up. And then we do cohort growth process through Phase I and Phase II to help you develop those, further down the road relationships for income and sales.
When we offer our opportunities to you, that’s not the golden ticket. You’re not on the horizon and moving forward into long-term annual revenue. Revenue and return with the Air Force specifically, what we’d like to say is we start the pantry, and then it’s up to everybody else to come shop, and we’re making the shopping capability a lot more robust, through technical systems that we’re, rolling out for everybody across the federal space to use, to get after that.
But those are really the keys, from my perspective, after doing this for three years, that 18 months of capital runway registration. And, SAM, do your due diligence, and research through our website, ask all the right questions, and then understand that when you are in, we have the opportunity to get selected for Phase I, Phase II, or direct to Phase II and those, higher echelons this track over time.
All of that is funding for your technology and for your business development. Those two things have to happen simultaneously. We haven’t been able to capture the imagination of the Air Force to come to us with their wildest ideas yet, but we’re getting there slowly over time with the data systems that we’re building. So hopefully, that sets a good foundation for what efforts can offer and what the expectation back from the Air Force is to these startups in terms of business development work over time while you’re working with us.
Matthew
Thanks, Chase. Clint, do you have any, other feedback there or thoughts?
Clint
Yeah. Matthew. First of all, thanks, for allowing me to be part of this discussion. It’s, it’s an incredibly important topic, and I can’t tell you how many people I’ve talked to about this subject, and, I want to keep doing that.
There has never been a better time for a small company to break into the defense ecosystem. Now, that doesn’t mean it’s easy, and it certainly doesn’t mean that the majority of these companies are going to succeed. But I will tell you that what happened with, Ash Carter and the implementation of the Defense Innovation Unit, followed by, organizations like AFWERX and the other services all having something similar.
It’s a leveling, not a level playing field, versus the prime integrators. But it is a leveling that is happening across the space. And so there is opportunity. And not only is there an opportunity, but there are a lot of problems, there. And I think that DoD has plenty of challenging and interesting problems that are well-suited for dual-use technologies. And so while I sometimes hear that and sometimes think people believe that there’s no R&D going on in, in DoD. Well, I can tell you that there is and, a lot of that the vast majority of that is in kind of the classified realm, and it’s all military-only technologies.
I don’t expect a startup out there to go in to counter infrared technologies. That’s a really big deal when it comes to the possibility of facing a Chinese adversary. But I don’t think the, average startup to go there. Well, I because there’s not a huge dual-use market in the commercial sector, but where there is this idea of dual use, that is where there’s tremendous opportunity. I don’t believe DoD is investing heavily in dual-use technologies. And there’s a reason for that. And, and this is where I think companies of all scales are investing in these technologies for all good reasons. And this is where there can be a real synergy between government and commercial.
When you have that, and you’re addressing a problem, a felt need, or an opportunity. Now, I will later on hopefully have the opportunity to talk about the difference between problems and pain points in government and opportunities in government. But if I don’t, the the big thing I’ll say is always frame your value propositions in terms of solving a problem or addressing a pain point. It’s really hard to get the government to recognize a new opportunity. So, there are those cases where there’s dual-use technology that is addressing a real pain point or real problem within DoD, where it when that is true, there is a real potential for success.
Matthew
Clint. I think you talked a lot about the R&D going on in DoD. And I think some startups and tech companies may not feel like the government is for them even though their use case has potential. So I’d love to hear from you, and then from Chase, if you can provide any insight into the types of innovations in tech that the Air Force is currently seeking from the private sector.
Clint
Yeah, I’ll start off, and then, maybe Chase can, come back clean up there. The first thing I’ll say is that everything you learned about market positioning applies, but it applies in a somewhat different way, and it feels different.
Instead of having the normal tools for identifying your market, you’re going to have a product or service, you’re going to have a customer, somebody that, that that has this problem or a pain point, and they need to have the ability to buy your product or service. And those are the basics. And then the idea of positioning can be, really important. But instead of using marketing tools like focus groups and surveys, you’re not going to use those tools to position your product within DoD. You are going to use your relationships and understand what the true problems are within government. This is where AFWERX says, and the other software WERX, and the other groups out there have the potential of connecting you to the problem owners.
When that happens, there’s real power. And, the problem owners need your, solutions because there are so many problems, and there are so many problems that require things that don’t feel like incremental solutions, things that feel more like disruptive solutions. And it’s just hard for people within government to come up with those. So the the types of problems that are out there that have real potential behind them, certainly, they are problems that have been intractable until now. That would include a lot of things that you would readily recognize in the business world, things like efficiency and productivity. They include things that are much more foreign to most of us, which is this idea of how do you fight and what the big warfighting problems are out there.
To understand that, it’s going to be really important that you talk with people. And this is where the different entry points within the government, folks like Chase are going to be so important to you so that you understand how your product or service, can meet a need. I meet so many companies that are out there, and they have this notion that their product or service solves a need within the government. They’re almost always right, but they almost always don’t know exactly how to talk about that, with the warfighters, with the people who are acquiring these things. And this is where that translation exercise is so important, and in many ways, companies like Dcode are part of that translation ecosystem, and they help to connect the the problem owners with the possible solutions. And, certainly, Chase is part of that ecosystem as well. So I’ll turn it over and see what he has to say about it.
Chase
So, in terms of your specific question on what technologies the Air Force looking at…
From an efforts perspective, we’re not technologists or requirement owners. Our goal and job is to expand the cyber budget for, and the on behalf of the Department of the Air Force and get that to small businesses as quickly as humanly possible in terms of contracting activity timelines.
In that portfolio, we have specific topics in our budget that go towards Phase I, Phase II, and direct to Phase II. And under that construct, that’s what our client servicer, just described, its requirement owners problem.
Owners come to us, they advertise to us their problems and strategic needs, and then we evaluate those we pick out, depending on, the capacity of funds that we have one through ten, potentially. And then, we solicit those under either Phase I, Phase II, or direct to Phase II. And that’s coming out of that application and cohort. Now, you’re logically connected to a problem owner. So, the next steps are very clear at that point.
Counter to that is our open topic. And this is a solution of looking for a problem. This is the Air Force saying we want to invest in the best and brightest ideas out there, regardless of whether you have a proven use case today. There’s also the idea that we can fill the pantry with these unknown capabilities. The reason that’s significant is as a traditional contracting officer for the past 2 years, I’m only as good as the requirements given to me and the requirements only as good as the person writing it. Nine times out of ten, that won’t be a technologist either. That’s a sergeant on the flight line who has a wicked problem. They have no idea of the solution either, other than looking at Google when writing a Request for Information (RFP) or putting a proposal on the street.
If you’re not registered in SAM, you won’t see it. I can’t advertise anybody anywhere else by law. So if you’re not looking for it, I can’t find you, and vice versa. So, that’s how the ecosystem is set up. So AFWERX is a great opportunity to come that way. And then traditional acquisition requirements are built and things like that. If you’re not looking at it, we can’t find you.
You may already have the solution. But there’s just no way for us to get there. So, what Clint mentioned, understanding our process is key and, demystifying our language and processes. A lot of what I do daily so that we can get after these new and novel technologies that will meet needs today as soon as we need it.
Matthew
Thanks, Chase. Yeah, that’s super important. And Clint, what is the difference between a pain point in government and an opportunity in government? We’d love to get your perspective. And then, potentially, Arianne as well on that topic.
Clint
Sure. I’ll just readdress it here briefly, and it may be worthy of spending a little bit of time demystifying the idea of requirements. But generally, what we’re talking about with requirements is, is it is a formal statement of a need.
So if you need the ability to shoot down another airplane, you need a particular air missile to be able to do that. And so you put all sorts of different technical requirements into this formal statement, and it becomes something that the acquisition community has to address.
When you are looking for problems to solve, the best way of getting, or maybe the quickest way of getting to a program, a program being the actual thing that is supposed to solve the requirement, if you are, and it’s formal, and it’s stood up by the acquisition community, and it means that you’re going to spend money to solve this problem means you’re probably going to buy something, either a product or service.
What what I think is really important for people to understand is if you have the requirement on the books, the formal requirement, you have a much easier opportunity to, sell, because they’re actively looking. So instead of having to convince a problem owner to write a formal requirement, you can just put in the request for a proposal and begin to put your solution into the space.
Now, that being said, not every requirement becomes a program. Not every requirement gets, an acquisition. Also, many needs are out there that are not stated in formal requirements, so it’s pretty murky. But what I will tell you is if you go that route. You talk about solving a problem, that is a need, and that has a requirement that is going to be the path of lesser resistance. There will still be resistance, but lesser resistance than if you just say, hey, there’s this cool thing out there that, that you guys could use to do this.
The unfortunate part of it, which, by the way, could be 1% true, you could be 1% true in saying that. You’re gonna have to convince somebody that they actually have this opportunity so they can write the requirement, and then they can get it into program. Then, the acquisition folks can go for it.
Typically, those are the more disruptive ideas. I’m not saying that disruptive ideas are bad. I absolutely believe in disruptive ideas. But I would have a different influence campaign. I love the way that Arianne put that because it’s exactly right. Your marketing campaign is an influence campaign within the government, and I would have an entirely different set of recommendations for you if you had a truly disruptive technology that you wanted to try to sell to DoD. We could talk about kind of what that might look like in the future. But if you can, the path of least resistance is to try to meet the need that feels like either a small informal requirement or the big formal requirement.
Matthew
Great insight. Arianne, did you want to chime in there?
Arianne
Yes. I was laughing when, Clint, you were talking about, showing up, knocking on the door, this door and saying, hey, here’s this great tech because, that’s what most startups do, right?
That’s why this is so hard. So I think something we’ve seen that’s really successful for our companies who are kind of maybe in between either meeting an existing requirement or actually trying to create the requirement is first reading the requirements.
So our team read the whole NDAA and worked with each of our portfolio companies. We have a company called Throat Ridge. They do digital engineering for requirements management but also digital threads. So, if you’re putting software on a chip in a box, on a tank, those four engineering teams all work in different tools and they kind of like together. So, who’s talking about digital engineering and requirements management? They identified, 4 or 5 specific programs that had budget allocated. They didn’t set out to build that product for that specific, aircraft program, but it happens to align.
So, I think there’s a middle ground between building your product to meet existing requirements, and creating a completely new requirement. And for these kinds of amorphous, especially things that are like really buzzy buzzwords that have maybe come from Silicon Valley or the tech sector into the government, literally control F, like it’s all public. That’s the difference between selling to, private companies and selling.
In the government, everything is public. If you are shaping the requirements, if that is what you’re going after, some of our companies understand how long of a process that is, as I alluded to. The first step is, directive reporting language in the NDAA, which is saying, hey, Congress, call on the Pentagon to research this topic, and then the next year, maybe you can understand that that’s a 5 to 10-year process that you need to navigate with specialists in DC, both on the on the federal side, and on the executive side with the Department of Defense or whatever agency you’re trying to sell to, and also with the congressional authorizers who say what we’re going to spend money on and appropriators who put the money in the pot.
So just having a partner or a few trusted partners to help you understand that, I think, is really the only way to start to shape those requirements as they’re already being written to carve out a little tiny bit that might align with the product you’re already building.
Matthew
So, whoever wants to start is welcome, but what advice would you have for startups in terms of building strategic partnerships with government entities and venture capital firms simultaneously? And how can folks keep an eye on both the commercial and public sector at the same time and navigate both effectively? Does anyone want to start on this one?
Clint
Yeah. Matthew, that is an incredibly complex question. We see over and over that a particular dual-use technology will probably have significant value within the government as well as a decent, maybe even a really big market in the commercial sector. But neither is mature yet; neither the need within the government nor the market for the product in the commercial sector is fully mature.
Yet that’s an exciting place and a very difficult place to be. So what is happening in so many areas where that is true is that the government wants to see that private capital is interested and private capital wants to see that the government is interested, and the founders are in the middle and trying to communicate value to both sides.
You could go say, hey, I have this indication that private capital sees the potential commercial market and wants to jump in, now with series whatever, B, and you can, what I would tell you is those are very difficult translation conversations at the moment. I think there are folks within government that see the importance of some level of interest, more or less formally shown by the government. That’s in between, like, the introductory cyber and a full-up program contract. And, there are some things that can really fill that space. But those are very new to government agencies, and some are very hesitant to use those types of things. They could be as simple as a letter, an indicator, a speech, or an opportunity to talk publicly about a particular need that’s out there.
But there is significant power if the government shows some level of interest in the dual use technology, because, naturally, private capital can say that’s an indicator of a value. And, so the other thing I will say is, and I’ve seen this happen when you are the founder, you should not overplay the interest of the government to your potential VC. investors. Why? Because they have wide networks of relationships within DoD, within the larger government, and they will call people I get called by VCs all the time, asking me what’s the true value of this particular technology or service. And, I give them my honest opinion about that. And that’s, that’s part of my relationship building.
So you don’t want to overplay that, but you don’t want to underplay it. I mean, you do want to sell, and it’s important that you do that. and, and the last thing I’ll say is that the Office of Strategic Capital was made for this, meaning that it’s supposed to be a translator between the power of private capital to make ideas become reality and the really important needs and markets within the government, especially within the military sectors. And because of that, they’re a new and incredibly important office going forward to do some big things, especially in that translation space.
Arianne
Yeah. The only thing I’ll add, I think that point about the Office of Strategic Capital is, with my first one, really important and, a great signal from both sides that there’s real interest in collaborating. The founder of this startup doesn’t have to be the only go-between between the private capital markets and the DoD. As a VC, we want to see the same things that your government customer wants to see. They want to see a valid use case. We want to see an understanding of the market and the ecosystem. We want to see some discipline around business practices and product development that make us believe you’re a safe bet. Make the DoD believe you’re a safe bet. and so, I would just discourage any, especially dual-use technology or potential dual-use technology, from thinking about it as either or.
Broader interest in the investment community in the defense ecosystem, is great, but I think there are some risks. I think there are some tourist pieces, and it makes me a little nervous. But, I think the great thing is people are starting to understand that the United States government is the largest customer in the world. So, wouldn’t, an investor want to back a company that’s going to meet a need for that? Right. It’s never going away. And, it’s a reliable customer.
There are more and more demonstrated relationships around the innovation system that, give us a lot, of hope and confidence in investing in companies that have developed a product that solves problems.
Chase
So General Brown made his rounds in New York and out in Silicon Valley and kind of laid the the groundwork for what a division is trying to do with relationship-to-deal flow and trying to get a more deliberate process to get involved with what we’re doing. But in those conversations, it’s venture looking at us to say, what are you interested in? And we can only say so much by law and to protect ourselves and have fairness and competition moving forward and vice versa.
We want to know more from venture, but they want to protect their secrets and dataflows. So there’s a there’s a push and pull there that I don’t know that we’ve figured it out, but there is active work going on within efforts to figure that out. But one thing I wanted to offer, to the point about overselling your value to the military or, in our case, Air Force or how much you have potentially on the horizon when we get to contract signature. At that point, we no longer care about the company themselves. We care about the outcome. And that puts especially a new and emerging small technology company at a significant risk, because if you can’t complete the contract, it will be terminated. And that goes against the company for basically ever. So keep that in mind too.
We may be, a funded opportunity, but we’re fickle. That money could go away, and we’re aggressive. And if we don’t get the outcome we need, there’s not a give and take there. On the conversation of how we can help everything get right, depending on the importance, I’m sure Clint has more to offer based on the capability. But yeah, the number one thing for the government is the outcome. And it’s not the viability necessarily or care and feeding of the company. So keep that in mind to just don’t sign up for more than you can actually deliver, without considering that.
Matthew
Yeah, that’s a great point. We’re going to jump into audience questions. First up, we have a question, “is a SBIR Phase I considered enough evidence of demand to get investment interest?”
Arianne
I would say a SBIR Phase I is absolutely enough to get interest because investors are by nature interested. That’s our job, right? My firm takes about 500 pitches a year, so absolutely it’s going to get you in the door alone.
A SBIR Phase I is not enough to get you an investment. I don’t know the statistics, but the vast majority of SBIRs do not translate into longer-term recurring funding Or recurring contracts. And so if you don’t really invest in number one, demonstrating the capability that you committed to delivering on the contract, and also working with your program and with your champion to transition it into something bigger and more long term. Then it doesn’t matter once it’s over.
So if we were looking at a company in the midst of a SBIR Phase I, I would want to see, what’s the plan for getting it to Phase II? What’s the feedback you’re getting? How are you driving the relationship? Not just waiting for your, military partner on this. It’s not up to them to get it sold across into the broader DoD. It’s up to you.
So I think one of the biggest mistakes startups make is thinking of SBIR as primarily as funding. We think about them as paid pilots, and you’re buying yourself time and access to prove out the value of your capability for the specific user or user group. Every dollar is worth more or less. Non-recurring funding. The dollar is not worth that much unless you can turn it into something longer-term, or use it to prove that this is valuable.
Selling into the DoD is just like a very complicated enterprise sale. You have your champions, you have your stakeholders, you have your signers, you have your blockers. You also have a lot of added complexity around the color and type of money, where it comes from, the timing, programs, etc…
So, I don’t have a template of what we’d want to see. But I want to know that you understand what you’re getting into. You understand, as we alluded to earlier, you’re not going to knock on the door and say, here’s some cool tech. Do you want to buy it for a bajillion dollars? You need to lay out how you’re going to start to build the influence campaign.
Especially if you’re in the place where you’re trying to shape future requirements. There are probably 2 people, many of whom most of whom are in Washington, who have input on shaping those requirements or even on purchasing decisions. So, like, have you identified three of them? And, how you might get to them or, even better, how you might use our networks to get introduced to them? If a company came in and said, the five people we need to get to have a meeting with this year to hit our milestones, customer validation, and business development are XYZ person. And I see on LinkedIn that I know three of them. We’ll make that intro before we even. And that’s because we want to see if you’re right. Right. That’s part of our diligence process.
So it’s not like we are going to test you on how the DoD buys things. It’s rather that you understand the complexity of the enterprise sale that you’re trying to orchestrate and understand how to plan out the marathon of trying to sell to this large customer.
It’s not going to happen in three months. It’s not going to happen in six months. And what we don’t want to see is people come in and say, oh, we’ll just get some SBIRs, and then it’ll be fine. They’re not easy to get, and it’s not how they work. So make sure you’ve done your research and understand the value of those relationships that you will need to use for your business development and marketing.
Clint
Matthew, I’ll add one thing there because I think it’s really important for understanding the DoD. I have never seen an organization that has power that is diffused throughout the organization, like DoD. And how that tends to manifest itself is that only a few people can say yes, and a lot of people can say no.
As you think about your influence campaign, the most important thing would be identifying the people who can say, yes. And, but I mean, if it’s just the chairman, the Joint Chiefs of Staff, or the Secretary of Defense, okay, that’s not all that helpful. But there is a reason why OSD got put under the Secretary of Defense, and that’s one of the reasons. But others can say yes. And identifying them can be a really powerful part of your influence campaign.
Identifying some of the people who can say no is also important. I will almost guarantee you you’ll never get to all of them. You’ll never understand the entire system of people who could do a soft veto on the thing you want to have happen. I couldn’t and I was in the government. I would run into things all the time and go, that person can say no?. And the answer is yes, they can. You have to figure out a way to get past that. And, having those allies within the government, the people that can say, yes, that you’re going to have allies within the government will help you navigate the soft vetoes, especially if they believe in your product or your service.
Matthew
Clint and Chase, do commanders at the local base level have any mechanism to give direct contract awards up to a certain amount of funding instead of going the SBIR route?
Chase
A real quick just to add to Clint’s point. So when we talk about the people that can say “no,” we’re talking about something going on an aircraft that’s a GS14 at a very low level. Who owns the technical order for that aircraft? They can say no, unequivocally, full stop. That’s it. No matter what the requirement owner is.
And I know that goes for folks where you’re putting something on the network and getting that authority to operate. That’s a full stop. No, with the approval authority on that.
So it’s not necessarily about your tech and the ability of it to solve a problem. It’s about the institution of it. And those nodes come from random places to Clint’s point that we don’t even think about a lot of the time. But to answer this question specifically, yes, in the FAR it’s called a justification and approval.
So sole source set aside for one of six reasons. Military need urgent, compelling single source. You’re the only company that can do this very specific thing. Those don’t have a dollar ceiling so that it could go to unlimited money.
Those are incredibly difficult to get through, especially at high dollar amounts. because those go to the Pentagon for final review and authority, that being said, there’s also set aside.
So at a service level, there are set-asides that you can work with. If you’re in a disadvantaged category, that can also be there. I’ll tell you, though, that’s at the whim and discretion of the contracting officer working the requirement. So if they determine themselves that a market is saturated enough with competitive opportunities, they can determine to go competitive, period. When the wing commander thinks this is the best thing they’ve ever seen, they have warrant authority that is offered to that contracting officer. They make that decision. So, to answer the question, yes, there’s definitely opportunity to do that. It’s just a matter of getting the contracting officer on board to support that acquisition strategy.
Clint
I don’t have any more to add on that except for, it is an avenue, selling to the local, commander of the local base. It can be a frustrating process in and of itself. It might be easier to recruit those champions within the government because you probably, like, know them, maybe you, you have, kids who play on the same baseball team or something like that. And your relationships at the local level might be stronger, which might be a reason to go that route.
Matthew
Great answers. we have one more question, and then we’ll just wrap up here. This one’s for Chase as well.
“We have a solution for a problem scenario and an SDVOSB with SAM cage code and the ear of the USD (R&D). Is there a flow chart for AFWERX or another other concurrent agency that gives a path to be included in opportunities?”
Chase
The federal government is on SAM.gov, period. I mean, there is no other source, for opportunities out there and being advertised. Again, the service-disabled veteran-owned opportunity may have a set aside for you somewhere to get a direct order. The Air Force doesn’t have a flowchart or anything. We would do the same research you would do, go to SAM, search under NAICs code, and find opportunities that align. And then I can jump to the last one real quick. So, a great point from the audience.
Unequivocally, if you are issued a Phase I contract, a Phase II contract, or a direct to Phase II contract, you are afforded Phase III rights for a direct award in perpetuity, regardless of the number of contracts you’ve ever earned in that Phase III opportunity. Those Phase IIIs can use any color of money for any amount of dollars on that contract restricted to the five-year timeline. So that is an unequivocal, period. That is what it says in the SBIR policy directive. And you can go any time horizon. So, if we wanted to research something from 1982 that had value prop, today we can absolutely do a Phase III from then.
Matthew
Great insight. Clint, Arianne, final thoughts before we close out?
Clint
On that last question, Matthew, the first thing that I would discuss if I was doing consulting or working as an advisor with this company is I would want to know. Tell me in detail how your product or service solves a problem.
And we would talk about that for hours. I would constantly be listening for the the parts of that where there is novelty, where there’s just no one else doing this, or where there is the ability to scale, which is DoD Kryptonite right now.
Silicon Valley knows how to scale. It is their superpower. DoD is Kryptonite is scaling right now. And there’s just a lot of reasons for that. We could do a whole webinar on that. But I would be really interested in connecting the problem and the tech, and I would delve down deeply into that because, depending on how that conversation went, I think that there would be one or 2 or 3 lines of least resistance in that. And this is why having somebody who understands the space people like Dcode, and there are plenty of others out there, advisors, some of them specialize in things like government relations and especially in trying to get, certain language into law and things like that. But generally, that doesn’t shortchange that discussion between the problem and the solution you offer because you can almost always learn something valuable in that discussion, and others can too.
Matthew
Great point. Clint. Arianne. Any final thoughts?
Arianne
Yeah. I mean, I think a theme that I’ve heard throughout kind of the whole conversation I think it’s easy to lose track of when you’re trying to complete these tactical processes is the imporatnce of relationships.
I’ve been thinking a lot this year about this. The saying relationships are built in dots, not lines, right? And so how many times you have to interact with someone, follow through on what you say you’re going to do to build that credibility and the people you’re meeting today, you have no idea how they’re gonna be helpful to you and your business in the next one, three, five, ten years, whether they’re inside the government, inside of the system, and the broader defense and industrial base innovation web.
The tech has to work. You have to follow the rules, but people have to bet on you, especially inside the government. Program managers have to say, I want to take a chance on this. So that’s the thing. I’d encourage people to always remember and add everyone on LinkedIn.
Matthew
Absolutely. Can’t foot-stomp that one enough. All right, folks. Thank you so much for tuning into our Unlocking Success in Federal webinar.
Thank you so much to our panelists, Clint, Arianne, and Chase. Appreciate your time. Great insights.