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More Evidence That Companies Cling to Size Status At Their Own Risk

Written on July 17, 2019

The government buys a lot of services and products from small businesses. In fact, they spent a record amount of dollars with small firms in Fiscal Year ’18.  Still, 75% of the government’s prime contract dollars go to “other than small” companies. Although the money is there, many formerly small firms, or people that claim to be part of a small business, cling to the small business label as some guarantee of federal market success. As we’ve said before, this is a risky business, indeed.  A former Virginia state legislator is going to prison for two and a half years, and paying more than a half-million dollars in fines, because he misrepresented himself as a small business owner to obtain federal business. According to prosecutors, Ronald Villanueva participated in a nine-year conspiracy with two companies to get Small Business Administration minority set-aside contracts by misrepresenting ownership and management of the companies. Many other companies and individuals have faced fines and/or suspension and debarment because they equated small business status as a must for doing business. The majority of federal buyers will buy from you if your solutions match their mission needs. This explains the 30-50% of inter-agency contract dollars that regularly flow to small businesses. It’s also vital to remember that federal business is very much relationship-driven. If you have misrepresented your company’s size, you hurt that relationship and, your opportunities for business with others who see that your firm could not be trusted.  It is important to focus on your core competencies and let the size status issue take care of itself.

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