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Should You Bother with a Capabilities Statement?

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Spend enough time at matchmaking events, industry days, networking events and conferences in the #GovCon world, and one could amass quite a collection of Capabilities Statements.  If one were into collecting them.  Which I am:

The capabilities (or capability) statement is your business’s resume; as such, it needs to combine the technical skillset you’re offering with an attractive format that would cause a neutral third party to pick it up and glance at it.  There are plenty of resources (APTAC, HHS, SAP&DC) who will tell you what to put in it.  ISI Federal lays it out in a graphical format. FDIC has a whole slide deck.  I’d like to take you through a slightly different analysis:

“Who [or what] is it for?”

  1. Fitting in. I have seen more than one Small Business professional, representing government and prime contractors, ask for a capabilities statement right at the start of a conversation at a matchmaking event.  If you don’t have that, it looks like the dog ate your homework.  Not the first impression you were going for
  2. Benefits and Features. A quick glance at a well-constructed capabilities statement will give your reader an understanding of how your services or products will help them solve a problem in their organization. As such, it should highlight the results of your work, defining what you do with enough specificity to enable an informed buyer to be impressed.  If you can’t think of any way to impress or stand out, you probably shouldn’t be competing in the first place.
  3. Category box-checker. All the socio-economic and small business statuses and certification need to be there for easy reference. As well as your location, contact info, vendor (SAM / CAGE) numbers, NAICS codes, and any contract numbers that your customer may care about.  Sometimes capabilities statements are a component of market research – help your customers make the case of a set-aside (without repeatedly bashing them over the head with your status).
  4. Conversation re-starter. It’s on you to follow up to any great meeting to grow a relationship and turn a spark of interest into a true business lead. As such, a solid capabilities statement could be a good follow-up email attachment, for reference & recollection.  An electronic document, properly labeled and formatted, also makes it easier for your customer to store it and refer to it as necessary.

Is your one-pager ready for prime time?  Make sure you’re not guilty of any egregious “Don’ts“. Keep your customer paramount in your mind when you’re writing and designing: will she want to pick it up? Read it? share it?  Do you even know who your customer is? If not, do your homework first.

And if you would like some help, contact your local PTAP / PTAC. We’ve got our red pens at the ready.

 

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No, you can’t just “Apply” to the Mentor Protege Program

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The long-anticipated, much applauded, expanded SBA All Small Mentor Protege Program is here…not to be confused with the SBA 8(a) Mentor Protege Program … or the Department of Defense Mentor Protege Program*

So what?  What does it mean to your small business?   How do you take advantage of it?

The mechanics:  Mentor Protégé Program (MPP) is an agreement between typically a large business (mentor) and a smaller business (protégé) whereby the mentor provides:

  • Management and Technical Assistance
  • Financial Assistance
  • Contracting Assistance
  • Trade Education
  • Business Development Assistance
  • General and/or Administrative Assistance

(source: SBA)

to the protégé, essentially investing resources into the company’s growth and infrastructure.  It’s not a direct government-to-small-biz program: there’s no application that small businesses fill out to ‘get in’ – but there is a checklist.  It’s an agreement between two businesses that is regulated and approved by either the SBA (for civilian agencies) or the DOD.

A few reasons large businesses are incentivized to become mentors:

  1. Agencies will apply subcontracting “Credit” to mentors when under consideration for awards.  This can also help mitigate gaps in subcontracting requirements Mentors can get credit for their protege’s accomplishments because the implication is that the mentor’s help was instrumental in getting the company ready. For example, the protege’s wins as a prime at the same or different agency, the protege’s win as a subcontractor for other prime contracts at the same or different agencies – if the mentor protege agreement was instrumental in building capacity / ability of the protege company to win the additional work.
  2. Dept of Defense also administers reimbursement agreements (as well as credit agreements) but some DOD agencies will award dollars directly to the mentor to invest in the protégé.  The financial benefit is obvious to both – the mentor isn’t spending internal resources helping the protégé, but rather the DOD’s money.
  3. Ability to form Mentor Protege Joint Ventures that enable access to set-aside contracts without triggering affiliation rule. Win-win:
    1. Protege can pursue set-aside contracts that would’ve been otherwise out of reach of the protege due to capacity, past performance, clearances, or other requirements that they don’t have
    2. Mentor is able to participate in set-aside awards – and retain 60% of at least 50% of total contract amount.  Here’s the math: the “prime” contractor in a set-aside award has to do 50%+ of the work… the joint venture is the prime contractor.  The mentor company can do 60% of the work because it’s a mentor.
  4. Investment / Merger & Acquisition strategy (great explanation here with many more finance details, thanks Elvis Oxley!) – mentors can take up to a 40% stake in the protege company — and the ability to reap the benefits of that investment as they develop that protege’s capabilities.  In the event of a future M&A, that 40% stake of a much more substantial business makes for a decent profit margin.

There are risks and considerations, to be sure.  A meeting of the minds is essential – to ensure both parties set expectations and have a plan to meet them. Proteges are limited to 3 MPP agreements per program in their lifetime (that’s 3 SBA AllSmall and also 3 DOD); Mentors can only have 3 Mentor Protege Agreements per program concurrently. A MPP agreement is thus never formed by strangers – the companies have to have solid business reasons for entering into the arrangement; most often, there’s a prior relationship of subcontracting or other business relationships that forms the baseline of mutual interest and sets the ground for pursuing a more strategic joining of forces.

For small businesses seeking to become proteges, the essential question is: What do you bring to the table? What would be an incentive for another entity to invest their time, resources, and dollars into developing your company’s capabilities?  If you can answer those questions, you probably have a good idea of who to approach for mentorship.

 

*Changes coming to the DOD Mentor Protege Program – thank you Steven Koprince of SmallGovCon.com

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