Goliaths recruit Davids

As the federal government releases more policies geared toward small businesses, large companies are stepping up their efforts to recruit them as partners.

Affiliated Computer Services Inc. (ACS) recently created a small-business advocacy office, while other firms participate in mentor/protege programs and conduct other forms of outreach.

MacArthur DeShazer, vice president of federal government relations at ACS, got the nod last November to create the company's advocacy office. ACS had worked with hundreds of small businesses on various projects but had no systematic process for keeping track of them or nurturing their growth. The two- person advocacy office began operations in May.

"All of the elements are in place," DeShazer said. "Now it's just a matter of building."

DeShazer, who retained his original title but added "vice president of small business advocacy" to his business cards, developed a database to track the companies' strengths, skills and past performance. ACS followed other companies such as Computer Sciences Corp. and EDS in making the move.

"It gives us a ready pool to go to. We can look up the core competencies of the businesses and decide who we want to bring in with us," he said. "We can be more consistent in our pursuit of various opportunities. With the database, we have a system of defining who we would like to use. We know what their past performance has been. We know just in general what they bring to the table overall."

Like other contractors, ACS has kept a close eye on changing government attitudes toward small businesses. A series of policy changes could elevate their importance. For instance, the Bush administration wants to limit contract bundling, require small businesses to annually recertify their eligibility for set-aside benefits and open a greater number of government jobs to private-sector competition.

"That was part of our motivation," DeShazer said, "but what I want to emphasize is that we often quote a statistic that [in] our last business year, we subcontracted 282 contracts and 82 percent of them went to small business. We have a very good record of utilizing small business."

Agencies prefer having an assortment of small companies working on a contract, said Pauline Froebel, deputy director of the Air Force's Global Air Traffic Operations, Mobility Command and Control System Program Office. Her office, which purchases air traffic management systems and related technology for the Defense Department and other agencies, benefits from working with small firms.

"They fill a void, a specialist's niche," she said. "Because of their entrepreneurship, they're often the innovative thinkers of ways to do things differently. You get corporate cultures, and people within the organization tend to adopt the corporate culture. The smaller businesses are not constrained by that. They think differently."

Large companies have a variety of motives for working with small firms, DeShazer said. As subcontractors, small firms offer innovation and help larger companies fulfill their goals for using small firms. In some cases, ACS subcontracts with small firms that serve as prime contractors on set-aside contracts.

Many small-business leaders complain that once they sign on as a subcontractor, the larger firm takes the credit and then sends little or no work to the smaller firm. ACS doesn't do that, DeShazer said.

"It's meaningful work," he said. "I know one of the criticisms out there in the community is that small businesses are not really given meaningful work, they're toolsheds. One thing I liked about what I was asked to do is that we do give meaningful work. ACS was a small business at one point. It has an appreciation of what small businesses go through."

Small firms should not expect to get business just because of their size, however. DeShazer said he regularly gets calls from small firms and adds their information to the ACS database. But many of those companies may never fill a need on a contract.

"I find it laughable when small businesses contact the big contractors and expect to get subcontracts just because of their business size," said Carrington Thompson, chief financial officer at Quality Systems Management Inc., a 20-person company in Annandale, Va. "The big contractors are interested in winning market share by winning big contracts and by expanding their client base. If a small business can bring something to the deal, the big contractors don't seem to mind giving you your share."

Other systems integrators have had small-business programs in place for varying lengths of time. At EDS, federal small-business liaison officer Dawn Thomas fills a role similar to DeShazer's. EDS also maintains a database of more than 1,000 companies, which has helped the company submit stronger proposals, she said.

"Any deal we go after as a prime, we build our team at the presolicitation phase," she said. "Our pricing is more accurate, and instead of the need to locate suitable businesses, we've got them at the front end."

Large companies are also involved in government mentor/protege programs intended to encourage big companies to support smaller ones and help them grow. CSC and EDS have won Nunn- Perry Awards from DOD for their outstanding mentor/protege teams.

Ruby Dargan, small-business manager at CSC, said she chooses only strong companies that CSC has worked with for at least a year as protege firms. "We put them in a position where they're strong enough to bid on their own," she said.

Too many small businesses don't know how much they don't know, said Murray Schooner, director of supplier diversity at Unisys Corp. It's the practical aspects of running a company that small businesses most often find elusive.

"What they really need is all the things they don't have in a small business," he said. "A mentor who can give them advice or help them submit a proposal. Someone who can give them space in a building. It might be legal advice. I'll give you all the advice you need, so long as you follow my advice."

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Focusing on the little guy

There have been a number of moves in recent months to ensure that small businesses can compete for federal contracts.

Among them:

* No bundling at the Defense Department. The Senate approved an amendment by Sen. Susan Collins (R-Maine) to the fiscal 2004 Defense authorization bill that would restrict DOD's ability to combine smaller contracts into a single larger one.

* Small business recertification. The Small Business Administration has published a proposed rule intended to ensure that small-business set-aside contracts go only to legitimate small businesses.

* The Office of Federal Procurement Policy stresses small businesses. OFPP has two working groups assessing the effectiveness of large companies' plans for hiring small firms and whether agencies are holding the large vendors accountable.