Losing a Contract Sucks: Lessons Learned from a $25 Million Setback

In today’s video, we dive deep into a critical experience involving one of my portfolio companies that unfortunately lost a $25 million federal contract. However, there’s a silver lining: within just six months, we turned that setback around and secured a $1.5 million project with the National Park Service. Let’s explore how we got there, the issues we faced, the problems that arose, and the solutions we implemented. This is a learning opportunity for anyone looking to build better relationships, grow their business pipeline, and avoid the common pitfalls in government contracting.

The Initial Challenge: Losing the Big Contract

Initially, the loss of the $25 million contract was disheartening. Despite having the expertise and capabilities, we were unprepared for the complexities of federal contracts. The high stakes involved in working with such a significant amount of money can be overwhelming, especially when you lack experience in navigating the bureaucratic maze of federal agencies.

The primary issue was a lack of familiarity with the specific requirements of the contracting offices. While our team excelled in onsite project execution, the administrative duties—especially adhering to submission deadlines and paperwork—suffered. This disconnect cost us dearly. The team focused so much on impressing the field staff that the paper-pushing side—the contract administration—was neglected.

Building a Strategic Roadmap: Finding New Opportunities

After losing the essential contract, we regrouped and decided to focus on refining our approach to federal contracting. The first step was conducting rigorous market research. We explored the landscape of federal buyers in our area, filtering out the non-Department of Defense agencies. It quickly became apparent that the Department of the Interior, specifically the National Park Service, was a promising lead.

By establishing a detailed “federal roadmap,” we identified the key agencies to target. We reached out to district offices, introducing ourselves and highlighting our willingness to engage with smaller projects. Our pitch was simple: although our company was valued at $10 million, we were ready to take on projects as low as $20,000 to gain essential past performance metrics.

The Outreach: Crafting a Go-To-Market Strategy

Once we pinpointed the National Park Service as our target, we developed a comprehensive go-to-market strategy. Our goal was to showcase our capabilities while addressing their specific pain points—namely their interest in small initiatives that often went overlooked by larger contractors.

In an unexpected twist, during a call to the National Park Service, we learned about a project that had already gone to bid twice with no takers. Seizing this opportunity, we expressed interest and were granted an extension to submit our proposal. This proactive approach not only facilitated a smoother entrance into the market but also positioned us as a willing partner ready to tackle smaller projects that larger firms typically shunned.

Winning the Project: Understanding the Importance of Communication

After submitting our bid, we secured the project. It was a significant milestone, and we were genuinely excited to embark on this journey. However, as we initiated work, it became evident that juggling multiple stakeholders was crucial. In the government sphere, you don’t only work with the project managers or field staff; you must maintain effective communication with the contracting office.

Sure enough, I learned that our project manager, let’s call him Jack, was heavily focused on the on-ground execution of the project. While this was commendable, Jack inadvertently began neglecting the bureaucratic side, particularly the necessary paperwork that had to be submitted to the contracting office. Having never engaged in federal work before, he was unaware of how critical timeliness in submissions truly is.

The Missteps: What Went Wrong

Everything appeared to be going well from the project execution standpoint—Jack was receiving positive feedback from the field staff, and the renovations rolled out smoothly. However, on the administrative side, missed submissions began to stack up.

Over time, as I checked in with Jack, I became more concerned. It turned out that he was operating under the assumption that “if the field staff are happy, that’s what matters.” That’s where the problems began.

The contracting office remained in the shadows, unaware of the evolving project conditions. Unbeknownst to Jack, failing to keep them informed could jeopardize future opportunities for the company. Ultimately, he agreed to some change orders and additional charges with the field staff without informing the contracting office—all of which went against proper protocol.

Facing the Consequences: Lessons from the Wrap-Up

At the completion of the project, I decided to check in with our contacts at the National Park Service. I wanted to learn about their impressions of our work and what we could improve upon moving forward. During the debrief, I discovered a cascade of issues stemming from Jack’s oversight.

Miss Williams, our primary contact, informed me that while our execution had been exceptional, a lack of communication with the contracting office had left them feeling blindsided. By not handling the paperwork properly, Jack inadvertently put the contract office in a precarious position with their superiors.

This misstep not only hindered our ability to secure further contracts; it painted our company in a negative light for the future. The lost trust and the risk of additional charges created a barrier that ultimately resulted in us losing out on a $2.5 million project that was in the pipeline.

The Takeaway: Balancing Relationships

Through this experience, it became clear that building strong relationships with both the field staff and the contracting office is vital for success in government contracting. Just because you have an excellent rapport with the people implementing the program doesn’t negate the importance of keeping the contracting office informed.

Both groups play crucial roles, but ultimately, the decision-makers in the contracting office have the final say on future opportunities. The paper trail you create matters, and timely submission of required documents is your lifeline in securing that next contract.

For those of you venturing into the world of federal contracts, remember to stay proactive in all communication aspects—don’t let success on the field overshadow the bureaucratic demands of the contracting side. Learn from my missteps, and ensure you’re nurturing every relationship, not just the ones that are illuminated on-site.

By doing so, you can grow your pipeline, enhance your business relationships, and make strides in your revenue goals effectively.