2018 News

Small Business, Big Benefits: How Small Businesses Fit into Bundled Contracts

Posted by Mike G. Luby on Nov 27, 2018 10:18:55 AM
Small-Biz-Consolidation-Graphic2The trend to consolidate or “bundle” large-scale Government contracts has become more prevalent in recent years as policymakers and Government offices strive to find new ways to sustain critical services at a lower cost rather than just cutting them. The perspective offered by Governments is that spending on fewer providers helps minimize costs, streamline efforts, and secure lower prices from suppliers—which translate into lower costs for taxpayers. This consolidation trend has received pushback, however, from groups representing the interest of small businesses such as the House Small Business Committee, because it arguably creates an unfair advantage in the bidding process when several unrelated goods or services are lumped together into a single contract. Despite the debate, the welfare and viability of small businesses should not be viewed as being at odds with more efficient business models and cost savings for taxpayers. In fact, the small business model facilitates the cost-saving and efficient outcomes that contract bundling endeavors to create in many ways that big business model cannot.
Matrixed Organizational Structures Provide Flexibility and Increase Individual Expertise

Because of the smaller staff size, small businesses are typically highly-matrixed organizations. Employees are utilized across projects, allowing skill sets to be shared more efficiently and reducing unnecessary redundancy in the organization. Functional managers can ensure technical oversight and overall direction while project managers can focus on applying those skills to their project’s specific requirements. A secondary benefit of the matrixed structure is individuals often work with colleagues in departments outside of their own and are exposed to others’ different expertise and different functions. When different people from diverse departments work together, it often helps solve problems more efficiently and breaks the monotony, giving more overall flexibility to the organization and empowering the individual. The matrixed organizational structure inherent to the small business model encapsulates the same ideas as contract consolidation efforts. By applying these same principles of reducing waste, maximizing efficiency, prioritizing reuse, and fostering innovation, small businesses offer the Government a trusted partner with extensive experience of what it takes to do more with less.

Small Business Culture Facilitates Early Technology Adoption to Align with IT Landscape

Small businesses must go above and beyond to differentiate themselves from the competition (especially when competing with more resource-rich large businesses) and often look to innovative solutions to gain efficiency. Because of this reality, small business organizations are continually looking to the horizon for the latest in technology trends and capabilities to provide state-of-the-art solutions to real-world problems. The reduced bureaucracy in the small business environment and executive-level involvement at the project level streamlines the process for identifying and adopting new technologies which offer significant benefits. The unburdened flexibility of small businesses allows for innovative solutions which translates to positive outcomes. Ellumen demonstrated this ability to be on the cutting edge of technology when our Vice President of Technology identified FHIR (Fast Healthcare Interoperability Resources) as an emerging industry trend that offered significant benefit. As one of the early adopters of the FHIR (Fast Healthcare Interoperability Resources) standard, Ellumen implemented FHIR services that were deployed quickly and tailored to VA/ DoD interoperability requirements, making interagency integration an attainable and cost-effective proposition. In addition to meeting immediate integration requirements, the adoption of FHIR paved the way for future integration efforts and reuse.

Employee Retention Provides Smaller, Highly Skilled and More Efficient Teams

Another advantage of the small business model is that employees tend to come and stay, which means smaller, more efficient project teams with less turnover. Many critical factors in employee retention such as employee engagement and the ability to support remote work are cornerstones to the small business model. A recent Gallup study found that employees that are “engaged and thriving” are 59% less likely to look for a new job within the year. The matrixed organizational structure of small businesses coupled with executive leadership engagement and willingness to embrace new technologies are all key to ensuring that employees are both engaged and thriving.

Furthermore, small businesses historically place a high level of importance on work/life balance measures which also drive retention. Simple steps such as allowing employees the ability to work remote at least part of the time can reduce turnover by 25% compared to organizations that don’t allow telework. Being consistent and having an organization that works well together promotes productivity, so length of service is an asset. Many large-scale Government contracts support systems that require extensive, specialized knowledge to support. Small businesses provide the perfect mechanism for delivering this specialized knowledge in a targeted, right-sized approach. Larger teams can often contribute to higher price tags without adding enough benefits to outweigh the cost. A bigger staff equals added overhead of management and resource requirements, which is passed onto the customer.

As the trend for bundled contracts continues, expect a counter-reaction to develop, as they do with most trends. Some public sector buyers may turn away from bundled services due to an inability of multi-service providers to deliver equal quality provided by more specialty contractors in the small business sector. Additionally, with efficiency and cost savings as the primary driver, savvy public sector buyers may look to small business to apply the same strategies that have worked in small business for years to the public sector to realize these benefits. Although changing climates and trends may make it more difficult for small businesses to find their way in via the federal procurement practices, the benefit that they offer will always be necessary, and it is integral to remember that in contracting bigger is not always better.

Topics: Innovation, Veterans Affairs, Department of Defense, Small Business

Mike G. Luby

Written by Mike G. Luby

Mike G. Luby is Ellumen's Federal Services Program Manager, offering clients and communities the benefits of his ten years of unique insights gained while tailoring federal health technology for achieving VA and DoD business goals. Mike is passionately dedicated to improving and streamlining health care for the nation’s Veterans and active duty military population. Read more about Mike’s career, or share your comments with him, on LinkedIn.