 Welcome to Adventures in Small Business, a collaboration between the United States Small Business Administration Hawaii District Office and its resource partners, where we showcase Hawaii's entrepreneurs and small businesses. My name is Dennis Kwok, I'm the director of the Veterans Business Outreach Center, and today we have a good friend and a resource partner as well, John Green from the Hawaii Procurement and Technical Assistance Center. Welcome to the show, John. First off, thank you very much for having me on the show, I certainly appreciate the opportunity to be here. Yeah, you know, I always see John around in workshops and I always see him around town and I know the work you do is tremendously valuable for small business owners. But actually before we start talking about the Procurement and Technical Assistance Center, you being a veteran, can you talk a little bit about your military service, how it started, and how you ended up here in Hawaii? Certainly, and thank you for letting me share my story a little bit. First off, I was born and raised in Boston, and I went to school in Colorado and I joined the Navy while I was in Colorado. The Navy and their good fortune, I guess, they sent me here to Hawaii in 1994 and I served on a submarine out of Pearl Harbor, the USS Kamehameha, good Hawaiian submarine that I served on. I did four years of active duty, went back to school, finished my education, came back to Hawaii, joined the reserves in 1998, I've been in the reserves ever since, so I'm still in the reserves, still drilling reserves, been deployed a couple of times to the Middle East, always an interesting adventure over there. But in the entire time I've been serving in the military, it's always focused around logistics, supply, contracting, stuff like that, either here or overseas. So I guess it was kind of a smooth transition from your work you've done in the military to the work that you do now for PTAC? I'd say it's definitely been a smooth transition and I think it's allowed me to help businesses get a focus on the government's perspective. Right. Having worked from that side for a long time, I can kind of put into words what the government expects from their small businesses when they do contracting and procurement, stuff like that. Right. So for those of you that are joining that don't really understand what PTAC does, maybe you can talk a little bit about the mission of PTAC, Hawaii PTAC, as well as what kind of services you guys provide for the equipment. Absolutely. Thank you for letting me do that. I think the PTAC provides a really valuable service to the small businesses here in Hawaii, especially those who want to pursue government contracting, whether it's federal, state, or county contracting, we can provide some form of assistance. So the local PTAC is a member of the National APTAC organization, the Association of Procurement Technical Assistance Centers. And there's approximately 170 of these centers across the country, we being the one for the state of Hawaii. We have a counselor on Maui and we have another one in Hilo as well as myself here in Honolulu. So we're a non-profit, we're funded in part by the Office of Hawaiian Affairs and the Defense Logistics Agency, who also provides us a grant. The services we provide kind of vary depending upon the needs of the client that we're servicing. A new business who's just getting familiar with government contracting, we may help them with the registration process, getting their required documents, required certifications in, prior to actually competing for any kind of contracts that the government has. And that's more on the federal side, the state may not be as stringent as far as registration is concerned, although you do have to register with the state. So we sit in with the registration, if they want to certify themselves as like a woman owned small business or a serviceable veteran owned small business, we can assist with that process as well. We help them market themselves to the government as well as prime contractors if they're going to pursue subcontracts. We help them put together a proposal, always with the little caveat that we're not the expert in their field, they are. So we can review it for completeness, but never with the understanding that we're going to suggest what they should do to meet the government's requirements. And then we offer a bid match service to our clients who are competing for contracts. And what the bid match service does is it looks at all the opportunity sites on a daily basis, so be it the federal sites, the state sites, county sites, however the government is looking for vendors to provide some kind of service for them. So typically a small business can take hours looking at these sites hoping that there's something there for them and they may or may not find something. So this bid match program kind of takes that place. If something matches our clients, they'll get an email with it. So it's an automated system that looks at these sites every single day on their behalf. All the services we provide, including the bid match service, are free. And I think that's important to realize is that services we offer are free because there are other organizations out there that will charge the same type of services that we provide. So you said a lot, especially on the services. And it's actually great, but I think maybe with stepping back, I think maybe the viewers who don't know the knowledge of government contracting, maybe you can explain what government contracting is, what is that? Sure, so if you're the government, you have a requirement. You have something that you need, be it something that broke or something that you're installing or something that's new that's come along. So in order to get that need met, there's certain ways the government procures or buys what it is they need. They can do it on a credit card. They can do it on what's called a federal supply schedule. They can do it on a full-blown contract. So it varies depending upon the dollar amount that the government's looking for. Typically smaller amounts are done on a credit card. Larger amounts are done on contracts. So contracts are a little bit more complicated than credit card purchases. So in order to understand it, there's a lot of federal acquisition regulations that go into it, and they govern government contracting. So and that's where a lot of businesses can be kind of confused a little bit by the just the volume of regulations that are involved with that. So we kind of help them understand what the applicable regulations mean. So contracting is just one way the government kind of meets their own requirements. Okay. What their needs are. Yeah, and the government, I mean the United States government anyways, is the biggest purchaser of small business goods and services. Absolutely, absolutely. And the biggest purchaser within the government is the Department of Defense, which has a huge presence here on Oahu and in our islands. Yeah, it does. So who is eligible for this government contracting? Typically, any business can be eligible for government contracting, because the government procures anything from janitorial services to space exploration. So anything in between there. So you could think of it as you may not think that you do something that the government is going to require, but you never know. The government can procure, like I said, from janitorial services to aircraft carriers, to fighter jets, to security for services. So it depends on the business. Okay. The only requirement is that they actually register to do work for the government. When you say register, register with the federal government or work, okay. So the federal government has a process in place. First, you have to obtain what's called the DUNS number. And then you actually register with the federal government and another system called the system for work management. Right. Again, another process that we can provide assistance with. So you navigate, you help them navigate the water. It doesn't take a lot of one-on-one time with the client. It can, depending upon how comfortable they are doing it themselves. We have a lot of clients that are a little bit more comfortable on a computer and navigating it themselves. And then we have those clients who feel more comfortable coming into our office and having us provide that one-on-one assistance with them. Okay. And we're more than welcome, more than happy to do that for themselves. Sure. So, you know, you've been doing this for how long, being the program manager? I've been the program manager for six years. Okay, for six years. And in your experience, have you seen certain kinds of industries do better than other industries in terms of a procurement or federal contracting? You're always going to find those industries that are always going to have their requirements. So the construction-related concerns. So you see a lot of construction. You do see a lot of IT. But it kind of falls back to what I said earlier. You never know what the government's going to look for and how successful you're going to be at doing it. The success of a business depends upon their own initiative, how they market themselves to the government, how they market themselves to other businesses. So it's important to understand that when it comes to government contracting, you have what's called a prime contractor who's actually winning the award and then subcontracting where you actually work for that prime contractor. So being successful in whatever industry you're in kind of depends on yourself. So I do get a lot of nascent companies or companies that are just starting up. And they ask, you know, is government contracting right for me? So I always have to kind of take a step back and say, you know, it really depends on the scope of work that you provide. But also your work experience and your work history. So would you advise a startup company or a company that's new to going to government contracting? For a new company or a company that's maybe less than a year old and maybe has limited resources because they are so new, I would probably recommend subcontracting as the way to start. You have to understand that when you put a lot of time and effort to submitting a proposal to the government, you know, say, the only thing worse than not winning a contract that you put that effort into is winning a contract and then not being able to perform on it. So you win a contract, you can't perform. The chances of winning another contract are pretty much slim to none, right? So for those new companies that may not have the financial resources, the human capital resources, bonding resources, if that's required, then it may be better to go subcontracting. So you have a piece of a larger contract and, you know, your liability is not quite as great. Could you kind of expand on the liability part for a subcontract as opposed to a prime contract? Sure. So when we deal with prime and subcontracting, the prime contractor is going to have liability for the entire contract. So they're going to be responsible to the government to make sure the work gets performed. Now, a subcontractor is liable to the prime contractor for a portion of that work. If we're looking at a construction-related type contract. Now, a large company who comes in and wins that contract is responsible for building the entire building and everything that's inside that building. Now, you're a smaller contract, contractor, and you have a subcontract of that larger contract. Say you're doing the electrical work of that building. You're responsible for that electrical work and you're responsible to that prime contractor. Now, your liability lies with the performance of work for that piece of that contract, whereas the prime contractor is liable for everything, including your work. So you want to make sure you do it well, regardless of whether you're a prime contractor or a subcontractor. And as a subcontractor, do you fall under the umbrella of that prime contractor in terms of, you know, bonding? You can. I mean, there are some prime contractors who will allow subcontractors to kind of piggyback on their bonding. It's always a good idea for any kind of construction-related concern to have their own level of bonding, because it just increases their opportunities that they can say, we have our own bonding up to a certain dollar amount. So it just gives that assurance to both the government and the prime contractor that you have the ability to perform, and if you don't, that there's some kind of insurance based upon it. So I get asked this question a lot too. Maybe you will have a better answer, but what is the difference between insurance and bonding? Bonding, and again, we're not... I don't want to get too far involved in insurance and bonding because when we get involved, we get that question a lot as well. So it's like, hey, how do I get bonding? Like, bonding may not be our cup of tea, because bonding, you're getting into financial information. We just know that there's a requirement for it that you have a level of bonding, which is basically insurance to perform work. And then you have to speak to one of the local vendors who provide that bonding, and what their requirements are for it. But all federal contracts do require some kind of bonding? Not all federal contracts require bonding. Typically, those contracts are around construction. Construction, yeah. All right, and in your experience, and I know you kind of touched upon this, but any industries that you really feel like, you know what, 2019, they're going to have a lot of opportunities for small businesses, just because. Yeah, I get that question a lot. It's like, hey, what's the government looking for? And typically when you know what the government's looking for, it's because it's a large dollar amount that they have planned in the past, so they have a forecast for it. Like, the Army Corps of Engineers will have a forecast for their upcoming construction, which they actually have online, and there's actually some set of sides just for small businesses, and these contracts can range up to millions of dollars just for small businesses. So you know these large construction-related agencies are going to have these large construction-related job opportunities coming up, and the beauty about it is, is that they publicize what it is that they have coming up. So even if you don't consider yourself a business, that's going to win that prime contract. You just know that it might come your way. You know that there may be an opportunity to be a subcontractor under that. And there's various ways to find out who's been awarded contracts in the past, who's interested in bidding on a contract, so that you as a smaller business can contact those larger businesses and say, hey, I'd be interested in subcontracting on this, on this. I guess that goes into the marketing bid, and we'll talk about that after our short break. So thanks. Yeah, thank you. All right. This is Think Tech Hawaii, raising public awareness. Dive Heart wants to help you escape the bonds of this world and defy gravity. Since 2001, Dive Heart has helped children, adults, and veterans of all abilities go where they have never gone before. Dive Heart has helped them transition to their new normal. Search diveheart.org and share our mission with others. And in the process, help people of all abilities imagine the possibilities in their lives. Hello. I'm Yukari Kunisue. I'm your host of New Japanese Language Show on Think Tech Hawaii. Konnichiwa, Hawaii. Broadcasting live every other Monday at 2 p.m. Please join us where we discuss important and useful information for the Japanese language community in Hawaii. The show will be all in Japanese. Hope you can join us every other Monday at 2 p.m. Welcome back to Adventures in Small Business. We have John Green, Program Manager for the Procurement Technical Assistance Center in Hawaii. Just continuing on what we were talking about, you know, you were saying that when you're looking for a contract or whether it's a prime or sub, you need to actually go out and market. And, you know, marketing is prevalent everywhere. But how does one market to the federal government? You have to know what the target audience is. Of course. If you're a construction-related concern, you don't necessarily want to be marketing yourself to the Naples supply systems. They don't do construction or defense information technology. They don't do construction or they do very limited construction, I should say. You want to know your audience. So if you're in that concern, you'd want to go to the Army Corps of Engineers, Naval Facilities Command Hawaii, Navy Facilities Command Pacific. You want to know what agency is buying what you sell, whether it's construction, whatever industry you're in. You want to know who's buying it. The other way you can do market research is actually to research the awarded contracts. If you want to, say, pursue subcontract. And you want to know what companies in the same industry as yourself have been winning these contracts. There's ways to look at publicly accessible information to say, oh, these companies, these local companies even, have been winning these contracts. And you want to market yourself to them. Even though you may be a competitor, you can still be viewed as a partner for further future opportunities that may come along. So anytime that you look at a subcontracting opportunity, what it does is it allows that prime contractor to expand their reach and maybe go after a bigger contract and know that there's smaller businesses that are going to help them perform on it. So you have to know how to market yourself to them. And there's ways to do that. There's what's called capability statements where you basically, it's like a resume for your business on a couple pieces of paper. You can always attach that to an email to a point of contact either with the government or with another prime contractor. And the beauty about the government is that these larger agencies, be it Naval Supply Systems, Army, Corps of Engineers, Naval Facilities Command, whoever, they actually have small business specialists on staff who advocate on behalf of small businesses to contracting officers. So if the government has a requirement and they think there's no small business that can perform on it, the small business specialists can step in and say, hey, you know what, I know there's local small businesses that can do this. Let's do some market research of our own. And then in your marketing as a business, you can reply to them and say, yes, I'm interested in bidding on this and I am capable of performing on it. So the government knows that you're there. Wow, that's great. And it's really the government's, they're proactive in actually seeking small businesses. They are. There is a certain process they follow when they're trying to fulfill a requirement. And one of those steps is that they will put out what's called a sources sought for a contract. And what they're doing is they're doing their own market research and they're due diligence to see what local, it doesn't even have to be local, what businesses are out there that are interested in bidding on this because it's a short synopsis of what they're looking for and they're looking for those businesses that can respond. So in that light, they're also looking for businesses that may be service able veteran owned small businesses, women owned small businesses, other certifications that the government has a, what's called a set aside for. And they try to reach certain goals. And if they can see that there's these type of businesses out there, they may be able to set it aside for that type of business. That's great. Because that was actually my next question was, can you talk a little bit about set aside? And we hear that, we heard that word in a government contract and we're talking about procurement for those viewers may be listening. What is a set aside? So in the real world of government contracting, when we're talking about hundreds of billions of dollars per year that the government spends, the government has a requirement to spend at least 23% of those contracting dollars on small businesses. And you know it's 23%, whatever. 23% of billions and billions of dollars is a lot of money. So of that 23%, there's 5% for what are called 8A businesses which are socio and economically disadvantaged small businesses. There's another 5% for women owned small businesses and economically disadvantaged women owned small businesses. There's 3% for service disabled veteran owned small businesses. And another 3% for what are called hub zone businesses historically underutilized business zones. So that adds up to 16%. So you get another 7% that's just total small business. So even if you don't have one of those certifications, you're still eligible to compete for small businesses. So when we talk about set asides, the government wants to see that they meet those goals. They actually get graded by the SBA on how well they've met these goals in past fiscal years. So they want to see that they're meeting these 5% for women owned small businesses and 3% for service disabled veteran owned small businesses etc. The government wants to know who's out there and they want to do that. And the beauty about it as well is if a, say you're talking about a large business and they went a large contract, the government's also going to have a requirement that there be a subcontracting plan in place and that prime contractor is going to also have to look for these type of businesses to be subcontractors. So if you can have one of these certifications, if you're eligible for it, I highly recommend getting it. You know, it's another prop, another opportunity that we can provide assistance with. So definitely worth your time. So the four set asides. Correct. Okay. And would you say one is better than the other? Would you say that? Yeah, it's hard. Obviously, two of them have 5% and two have 3%. Now there's nothing to say you can't have more than one. Right. Oh, so you can be multiple. You can have multiple. Absolutely. Right. So if you're a woman and a veteran, a service disabled veteran, you can obviously be a certified woman owned small business and a certified service disabled veteran owned small business. So you're just that more attractive to the government. Right. And then they can. Check out their boxes. Yes, exactly. So, yeah, it's to say that one is better than the other. Are there any kinds of, I mean, when you're dealing with government agencies or prime contact directors, are there one more in demand in the state of Hawaii? What I've heard anecdotally is that hub zone, regardless of where it is, is a little bit more challenging for the government to meet. Oh, wow. Okay. And one of the reasons that may be the reason here is that when you talk about hub zones, which are, again, historically underutilized business zones, the neighbor islands are hub zones, and you only have small pockets here on Oahu that are determined to be hub zones. But the vast majority of contracting opportunities are here on Oahu. Right. So you have hub zone businesses on the neighbor islands, but opportunities here on Oahu. Yeah. So we have to make that connection. Yeah. So I think it's more important for, I hate to say the word important, but maybe it's a higher preference for the government to look for those hub zone businesses to meet that 3% goal. Right. And even though it's only 3%, there is a difficulty meeting that percentage. Yeah. And those patches are probably in the North Shore? Yeah, typically more in rural areas. Yeah, rural areas. Surprisingly, there may be some areas here in relatively close to downtown Honolulu that are hub zone as well. But it's just getting those businesses that even are there to register as a hub zone, if they are, because you do have to be registered as a hub zone business. And how does one go about registering? I mean, is it just, or even just being a set aside? I mean, do you say, hey, you know what? I'm a woman. I'm a small business. I just, I certify myself. Is that how it works? Sure. There actually are, when you do register to do work for the government in that system for management, you can self-certify. Otherwise known as SAM. Otherwise known as SAM.gov. You can self-certify as a serviceable veteran, a woman owned small business, a minority owned business. But from a contracting officer's perspective, I would like to see those businesses be certified by a third party, whether it be the SBA or the Department of Veterans Affairs that assures me that not only are they woman owned, but they're women controlled. Because when we talk about a woman owned small business or a serviceable veteran owned small business, we want to know that the woman and the serviceable veteran are actually owning and controlling that business. So it's always better when a third party certifies it because they will look at all the information that validates that business and control. Right. So talking about, Dean, you kind of touched upon the being a serviceable veteran owned small business. What are the, I mean, when you're talking about the third party, you're talking about the Veterans Affairs? Correct. The Department of Veterans Affairs can certify them through what's called the Center for Verification and Eligibility that they would go through and submit their application. Okay. And how long does that application take, generally? In a general term, if there's no issues with it, no questions, no problems with it, we're talking about maybe four to six months, depending upon the government's backlog and the resources that they have available to review all the applications that come in. Right. If there are questions or there needs to be clarifying information on the application, it can take longer. But again, we do provide assistance with the application process. So if it's something they want to sit down with us, we can discuss it with them and hopefully maybe expedite the process a little bit. Right. So the VA certifications is not just just being certified by the VA. You can use that certification for other contracts outside of the VA as well. You can now. Okay. It used to be that there was two certifications for a service-able veteran. There's one done by the SBA. Right. And one done by the Department of Veterans Affairs. Mm-hmm. They recently changed the regulations. So now the SBA is the governing regulation for both the Department of Veterans Affairs and the SBA. Okay. Of course. So prior to this change, which took effect, I believe, in October, if you were certified through the Department of Veterans Affairs that applied to just the Department of Veterans Affairs. Right. If you were certified through the SBA, it applied to every other agency within the government. Right. Now, because they're both falling under the same rules, any certification that you get through the Department of Veterans Affairs applies to any agency within the government. So it doesn't really make sense to do two of them. You can just do it. No, now you can just do one. One. Right. Okay. All right. That's great. And in your experience, what are the biggest pitfalls in companies when they go into contracting? The biggest pitfall I've seen is that businesses are so excited just for the opportunity to win a contract. Okay. And knowing that, they may actually underbid themselves. And the government understands that you're in business to make a profit. Businesses think that in order to be competitive, they have to eat into their own profit, or even in drastic cases, lose money because they want to get their foot in the door and then make contracting. And that does nobody any good. I mean, you want to make sure that you understand the requirements that the government has out there, and you bid it accordingly to what your prices are, or the other technical approaches to the solicitation. So if the government sees something comes in and it may not be as in the ballpark of other bids that come in, they could just throw it out. They could ask for clarification like, why is your bid so low? Maybe they didn't understand it, but I've seen it where they put in a proposal and the price is just too low. It's because they want to win. They want to get in, try to get in. So, but does the government agent, do government agencies generally choose the lowest bidder? On some contracts they will. There are what's called lowest price, technically acceptable, and then they have what's called best value. Okay. So price will always be a factor, but it may not be the only or most important factor. Typically, when you get into larger type contracts, there'll be other factors involved, be it your technical approach to solving the government's problem, the managerial approach, your past performance, how you've met these requirements in the past, and price. So it plays a role based upon the type of contract that you win. Okay. So typically small businesses will get what's called firm fixed price contracts. Okay. And firm fixed price contracts are basically where the government knows their requirements. It's not murky, everybody understands what the requirements are. So on a firm fixed price contract, the business submits their price, their cost. And the government says, are you at the lowest cost? You're meeting the requirements and you win the contract. Right. Yeah. Wow. Thank you. We could probably go on another hour talking about government contracts. We probably could. Yeah. But we're kind of out of time. Thank you, John, for coming today. No, thank you. Your afternoon with us. I appreciate it. This has been Adventures in Small Business. Thank you for joining us and hope to see you soon.