small business insights: strategic teaming in a competitive federal market

March 2014

Strategic Teaming in a Competitive Federal Market

©2014 Deltek, Inc. All Rights Reserved

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2

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Table of Contents

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Introduction

Purpose of This Report

Key Findings

Teaming for Growth

• Spectrum of Teaming Relationships

• Strategic Teaming and its Benefits

Environmental Drivers for Teaming

Critical Success Factors of Strategic Teaming

Government Perspective

Conclusions and Recommendations

Introduction

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©2014 Deltek, Inc. All Rights Reserved 5

Purpose of This Report

This report will help federal IT contractors:

Understand the spectrum of teaming relationships and the factors

affecting the current teaming environment in the federal market.

Identify internal and external applications of strategic teaming and

how these may benefit an organization.

Understand the critical success factors for utilizing strategic teaming

as a growth facilitator.

Gain understanding of the federal government’s perspective on

strategic teaming and their priorities and concerns.

Consider factors to successful teaming to increase Small Business

utilization.


Key Findings

Of the various types of partner relationships available to contractors

opportunity-based and strategic teaming arrangements provide some

of the most wide-ranging benefits in today’s federal marketplace.

Strategic teaming is an internal business tool that integrates long-term

thinking into opportunistic activities as well as an external relationship

tool where two complementary services providers proactively seek

opportunities of mutual benefit.

Critical success factors for strategic teaming includes top-to-bottom

buy-in across the firm; strategic thinking that is implemented at the sales

process level; a formal process for evaluating partners that uses

institutional knowledge; corporate self-reflection to evaluate your value

to potential partners; and pre- and post-engagement analysis to

determine fit and effectiveness.

Federal spending trends like increased use of GWACs, MACs and

Schedules, and tightening contractor addressable budgets make strategic

teaming more crucial in the current market environment.

Teaming for Growth

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Spectrum of Teaming Relationships

8

Merger/

Acquisition

Strategic

Sourcing Alliance Channel

Joint Ventures

& Consortia

Low Partner

Commitment

High Partner

Commitment

Ad hoc,

Opportunity-

based An arrangement

between two or

more companies

to perform on a

specific contract.

Strategic

Teaming A long-term

partnership

developed to

pursue multiple

opportunities.

Benefits of opportunity-based and strategic teaming include:

Trust- and relationship-building, along with management and administration streamlining of long-

term contractual arrangements without the formality of lengthy legal agreements.

Better flexibility than joint ventures and consortia.

A lower-cost, -visibility, and -risk alternative to M&A.

Alignment with the government’s view of teaming as a means for accessing the “best of the best.”

Opportunity-based and strategic

teaming arrangements provide

wide-ranging benefits to the

majority of contractors in

today’s federal marketplace.


Strategic Teaming is…

A long-term partnership developed to pursue multiple

opportunities

An internal business tool

The integration of long-

term thinking into

opportunistic activities

…for actively mapping

strong partners to

market opportunities to

leverage past mutual

success

An external relationship tool

A non-contractual

agreement between two

complementary services

providers

…for proactively

seeking opportunities of

mutual benefit



10

An internal business tool

The integration of long-term thinking into opportunistic activities

…for actively mapping strong partners to market opportunities to leverage past mutual success

A top-100 services firm formed a

strategic subcontractor team

Centralizing collection and

dissemination of subcontractor

data

Established plans to spread

success stories from good partners

out to capture teams



11

A mid-tier SI uses a few, carefully-

chosen strategic subcontractors

Team pro-actively looks for

opportunities based on best

partners’ differentiators – not only

the other way around

Shared pipeline allows partners to

take part in the process

An external relationship tool

A non-contractual agreement between two complementary services providers

…for proactively seeking opportunities of mutual benefit


Know the Difference

12

….a contractual channel strategy for the better

management of the supply chain

….an alliance partnership between a services

company and commodity provider

….an exclusivity agreement for services or products

…. a “tell all and show all,” high-risk partner

relationship

….a commitment that lasts beyond the recognized

mutual benefit of both parties

Strategic Teaming is not ...

Environmental Drivers for Teaming

13


FY 2014 Contractor Addressable Budget by Segment Points to Tighter Competition

Declining contract

spending makes

it more crucial to

be on the right

contracts to be

competitive in this

market.


Greater Use of GWACs, MACs and Schedules Favors Broad Capabilities

MAC, GWAC, and Schedule use account for

60%+ of contracts, requiring primes to plan for

broad scopes rather than for narrowly-defined

specifications. This drives teaming demands.

Source: FPDS, Deltek


Importance of Teaming in the Federal Market

Source: FPDS, Deltek

Estimate of Small Business

Subcontracting Goal for

Large Primes

Large primes pursuing government-established

subcontracting goals may present teaming

opportunities for small business. Subcontracting

is at least as big as the market to compete for

work directly with the government.


Impact of Market Changes on Company Prime Contract Revenue Growth

Note: Excludes companies that did not generate at least $1M annually in prime contract revenue between 2008-2012

Source: USASpending.gov and Deltek

Teaming may

bring chances

for Small

Businesses to

prime more.


18



19

Top-to-Bottom

Buy-in

Playing the

Matchmaker

Strategic Thinking +

Sales Process =

Long-term Wins

Self-Reflection

Pre- and Post-

Game

Analysis

Companies that

succeed in

developing,

maintaining, and

leveraging strategic

teaming

relationships share

several common

characteristics.


Critical Success Factors Top to Bottom Buy-In

Top leaders

set the

teaming

agenda, but

ultimately it

ripples

throughout to

drive what’s

best for the

customer.

Taking a strategic approach to

teaming requires involvement from

all levels of the organization.

Management builds rapport

with partner counterparts and

encourages peer relationship-

building at all levels of the

company.

Top-to-

Bottom Buy-

in


Critical Success Factors Strategic Thinking + Sales Process = Long-term Wins

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Strategic

Thinking +

Sales Process

The sales funnel is

kept filled, but the

sales force is

incentivized to think

strategically

Sales metrics are

constantly reviewed

Long-term customer

assessments are

ongoing throughout

the sales cycle and

implementation


Critical Success Factors Playing the Matchmaker

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Playing the

Matchmaker

Use the Data

Use a formal process for evaluating partners

Do extensive due diligence

Create clear and user-friendly processes for receiving and collecting data

Integrate the Strategy

Go narrow and deep in partnerships Consider partners’ unique capabilities can be used further down the pipeline Evaluate the potential for technology sharing, joint solution development, etc. for opportunities far down the pipeline Match the partner contract structure to the customer contract structure

Keep an Open Mind


Critical Success Factors Self-Reflection

23

Self-

Reflection

How well did you articulate your value proposition to your partner and yourself? Not only helps in the development of team

“message” that will be consistently communicated to your customers, but…

There may be a strong partner who does something great that your organization does well.

Why would a company want to partner with you?

What do you bring to the table that your

competitors can’t?


Critical Success Factors Pre- and Post-Game Analysis

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Pre- and

Post-Game

Analysis

Perform honest and detailed post-mortem

evaluations:

How well did the relationship work?

How well did we meet the needs of the

customer?

Are any strategy changes are warranted?

Decide before work begins

how you will measure

success, e.g. ROI,

customer satisfaction, etc.

Determine a shared set of expectations with partners before the real work begins


How Strategic Teaming Mitigates Risk

Partner’s Finances

Developing joint pipeline targets, sharing risk, and

providing business planning assistance.

Management/Governance

Providing the opportunity to fine-tune the governance model over time while building up a past performance history.

Financial Performance

Requiring long range planning that could

eliminate issues affecting performance, and therefore financial

gain.

Partner Mgmt Change

Developing relationships at all levels of the

organization.

Changes in Company Strategy Ensuring that strategic

relationships are part of the discussion when a

company is considering changing tactic.

Culture clash Presenting opportunities to

adjust to cultural differences.


Consider Company Culture

26

Diversity can make partnerships unique, IF there’s unity and adaptability!

Would we feel

good about

being a prime or

a sub to this

partner?

Would we feel

good about

sending our

people to work

for them?

Are they

talking more

than listening?

Are they

touting too

many “core”

competencies?

Are they

unfocused, e.g.,

and willing to

do something

for everyone?

Are they

generally

difficult during

negotiations?

What is their

staff retention?

Do people like

working for

them?

Organizational cultures strongly impact strategic teaming. They can solidify a newly

formed team or impede how well the team performs together. Consider the following

and other factors to determine if a culture clash is imminent.

Government Perspective on Strategic Teaming

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Evaluating Teams: Will They Help or Hurt?

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Government decision makers evaluating contract proposals

operate in a complex environment.

Rapidly changing missions and technologies translate into project

requirements that are increasingly complicated and difficult to define or

measure.

• Agile methods and modular development seek to address this.

Short supply of acquisition professionals means greater workloads,

increased risk, and demand for simplified acquisitions.

• Growth in LPTA is one ramification.

Agencies may ask particular questions that relate to teaming, but

companies need to be savvy enough to perceive what they are trying to

learn from those questions.


Agency Needs May Get Lost in Translation

29

Have you worked

together before?

Government Asks:

What

Government

Really Wants

to Know

Am I going to be the tactical

integrator of this team?

How do I know that I’ll be able to acquire the

knowledge that I’m buying from your team?

Agency Concerns

Teams with limited history

may create more work for

agencies in terms of

reporting and oversight.

They want to gain

knowledge from their

relationship with

suppliers. Transparency

among teaming partners

often leads to greater

knowledge sharing with

agency clients.


Lost in Translation, cont.

30

Do you know my

business?

Government Asks:

Do you know my problem

and what it means for me to

be successful?

What

Government

Really Wants

to Know

Agency Concerns

They want vendors to

value their public service

and support them in

being successful.

Competing or misaligned

incentives between

government and industry

will translate into conflict.

They need this team

choice to reflect positively

during procurement or

project reviews.


Agency Small Business Preference is a Strategic Teaming Opportunity

Government values diversity in the acquisition environment, making Small Business

utilization a priority. Medium and large firms that focus on small business teaming

are able to increase sales and diversity simultaneously.

Success Factors in Small Business Teaming

Drive the

directive for

strategic

teaming to be

integrated into

ALL relevant

areas of the

organization,

but with an

emphasis in

sales.

Proactively

support the drive

for raising the

profile of Small

Business

teaming to one

of strategic

importance.

Provide the

necessary

resources to

expand the

Small Business

program role

beyond

procurement

into more of a

business

development

role.

Match sales

representatives

with Small

Businesses that

can help them

to win new

awards, thereby

benefiting the

parent firm and

their Small

Business

partners.

Emphasize the

importance of

Small Business

utilization as a

strategic tool in

order to spread

its priority

throughout the

organization.

Conclusions and Recommendations

32


Conclusions

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Strategic teaming improves competitiveness by…

• Turning a strong relationship into a competitive advantage for both

partners

• Creating opportunity to add unique expertise and innovation

• Attracting customers looking for vendors with an established history

• Improving outcomes

Enhance scoring

Boost win probability

Increase closure rates

Implementing strategic teaming in a proactive, thoughtful

manner helps sustain market potential in a changing market

Strategic teaming is increasing in importance to small

businesses and to agencies looking to increase their use


Recommendations

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Think strategically while acting tactically by aligning

strategies and processes across the organization

Consider new processes for evaluating partners against your

strategic goals

Take culture into account without stifling diversity and

innovation

Look for ways to leverage ad hoc teaming into strategic

benefit for all involved

Remember that sales teams need the right incentives to

think and perform strategically

Use strategic teaming to test the compatibility and

capabilities of a company you are considering for acquisition


About Federal Industry Analysis (FIA)

Small Business Insights: Strategic Teaming in a Competitive Federal Market is published by Deltek’s Federal

Industry Analysis team. Its analysts harness Deltek’s wealth of data, interviews with government and industry decision

makers, and other strategic resources to provide a comprehensive view of the federal IT marketplace and the trends,

drivers, priorities, budgets and legislative issues influencing it. With a top‐down perspective on all of Deltek’s information

and analysis capabilities and resources, FIA is able to provide broad, long‐range strategic insight on the federal

contracting industry and its various sectors that focus on technology.

Deltek’s analysis focuses on market trends and drivers, policy/legislation impact, agency budgets and priorities, market

sizing, the competitor landscape and market forecasts. Our goal is to help your company achieve its peak potential by

preparing you for future market trends.

About GovWin

GovWin from Deltek is the essential source for information, teaming and software solutions to help organizations find,

manage and win government business. More than 2,800 companies, including small businesses, new entrants to the

public sector, and the largest government contractors, rely on GovWin for the latest and most comprehensive information

solutions, including market intelligence, consulting, sales management tools, teaming solutions, and educational and

networking events. Deltek is the leading global provider of enterprise software and information solutions for government

contractors and professional services firms. For decades, Deltek has delivered actionable insight that empowers our

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use Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and

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small business insights: strategic teaming in a competitive federal market

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report key findings

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