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Agenda

Best Practices in Subcontracting: Lessons Learned from $1 Billion of Contract Performance as both a Prime Contractor and Subcontractor Presented by: Carlos Garcia Owner / CEO KIRA, Incorporated Date: June 17, 2014. Agenda. Introduction Teaming as a small b usiness

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Agenda

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  1. Best Practices in Subcontracting: Lessons Learned from $1 Billion of Contract Performance as both a Prime Contractor and SubcontractorPresented by: Carlos Garcia Owner / CEO KIRA, IncorporatedDate: June 17, 2014

  2. Agenda • Introduction • Teaming as a small business • Case Studies and Lessons Learned • Teaming as a large business • Important Questions to Ask Before Teaming • Predictions

  3. Introduction • What does the world of subcontracting look like? • Yesterday, Today and Tomorrow • What are the different ways to partner on a contract? • Large and Small Business Subcontracting Differences

  4. Teaming as a Small Business

  5. Let’s begin with two case studies

  6. Case Study: KIRA and CH2M HILL • Partnership began when KIRA was a small business • Won Philadelphia US Army Corps of Engineers MATOC (small business set-aside) • KIRA was a subcontractor to CH2M HILL on Post-Katrina repair work at Keesler Air Force Base in Mississippi • Won USAF Academy BOS contract • Full and open joint venture with KIRA as 40% owner • KIRA provided 3 of the 5 past performance references • Contract value of $200 million • Carlos Garcia serves on the Board of Directors

  7. Case Study: KIRA and CH2M Hill (Cont.) • KIRA and CH2M HILL have entered into a teaming partnership to bid additional contracts with $700 million in KIRA value • First bid to be submitted later this year • KIRA will provide 3 of the 5 past performance references • Total value of this relationship, including future teaming, totals over $1 billion

  8. Case Study: KIRA and CSC Corp. • Won Army BOS contract at Fort Carson • KIRA is prime and CSC is the principal subcontractor • Value of $300 million • Won Keesler Air Force Base BOS • CSC is prime and KIRA is the principal subcontractor • Full and open contract • Won Navy BOS contract at AUTEC • CSC added KIRA to their team as their largest subcontractor even though there was no small business subcontracting required

  9. Case Study: KIRA and CSC Corp. (Cont.) • We are currently exploring additional full and open contracts to partner on • Total value of the relationship is over $400 million

  10. Lessons Learned • Focus on a small number of large Prime contractors • This helped us win three major contracts with three different companies • We also continue to have strong relationships and continue to bid with these companies today

  11. Lessons Learned(Cont.) • Start by building strong relationships with large business partner companies • Strengthen these relationships through many trips to their headquarters • Develop relationships with multiple executives • Understand their internal goals and objectives

  12. Teaming as a Large Business

  13. The Challenge • Most contracts large businesses would like to bid are now Small Business Set-Asides • 90% of our bids, going forward, will be as a subcontractor to a small business • Large businesses must partner with small business in order to survive • Ten of our direct competitors have been acquired by larger companies

  14. Have a Strategy • Determine the right solicitations to bid • Contracts must be large enough for your business to get a reasonable share • The work that you perform must be in your sweet spot • Choose to only bid contracts where you can validate your estimate before you submit • Only bid contracts that you believe will be awarded, not cancelled

  15. Important Questions to Ask a Potential Partner before Teaming

  16. Determine the right small business partner • Does the small business have a specific contract vehicle/subsidiary eligible to bid? • Is the small business willing to invest the appropriate amount of money in the bid effort? • Does the small business possess the appropriate team of BD employees and consultants to win? • Is the small business and its leadership willing to make this bid a priority and limit the number of other bids they submit? • Is the small business prepared to price the proposal, including G & A and fee, competitively?

  17. Questions (Cont.) • Is this bid a priority to the small business? • Has every possible naysayer signed off on the bid? • Are the internal politics stable at the small business? • Is the CEO secure at the small business? • Does the small business have the resources to both bid and execute the contract? • Does the small business have a history of lawsuits?

  18. Questions (Cont.) • Can the small business provide the names of large businesses that they have successful multiple contract relationships with on non-sole source contracts? Does the small business have past performance similar in size and scope to the opportunity under consideration? • Will the small business past performance contract performance align with the past performance submittal requirement on the opportunity under consideration?

  19. Questions (Cont.) • Can you obtain third party verification that the past performance of the small business was acceptable? • Can you obtain third party verification of the financial condition of the small business and its owners? • Will the small business agree to an equitable teaming agreement? • Will the small business agree to an equitable subcontract agreement?

  20. Why should you go to such lengths before teaming? • These agreements involve hundreds of millions of dollars • These agreements will last for at least five years • One bad contract wipes out the profit of 20 good contracts • Most teaming agreements don’t actually win contracts • Most companies will not team twice

  21. Predictions

  22. Predictions • ANCs that are not best-in-class in a specific industry will eventually fail • ANCs that do not lower their costs and prices to the levels of large businesses will eventually fail • ANCs that fail to focus on a limited number of industries, and exit the ones they are not best-in-class in, will eventually fail • Prices in the most industries are falling • Make plans to lower your prices by 10% on upcoming bids

  23. Predictions (Cont.) • Most large businesses (other than my company) will no longer be willing to team with ANCs for certain work • Large businesses are being rolled up into bigger companies. Those companies have little interest in $5 million/year subcontracts • There are fewer and fewer large businesses with current past performance on contracts less than three years old

  24. Predictions (Cont.) • There will be fewer full and open opportunities for large business in many industries, such as facilities maintenance • Build your company according to these new realities. We will be one of very few large businesses structured, specifically, to be a best-in-class principal subcontractor in facilities maintenance

  25. Contact Information Carlos Garcia (303) 619-2275 cgarcia@kira.com Kim Thorpe (720) 590-9704 kthorpe@kira.com Booth No. 16

  26. Questions?

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