The Insider’s Guide: Derek James’ Journey to Government Contract Wealth

Competing for government contracts through bidding is a rigorous endeavor, demanding meticulous preparation and flawless implementation for achieving success.

Derek James, the Founder of GovKidMethod, has not only mastered the intricacies of procurement but has also carved a path to prosperity in an arena where many falter.

He has more than 10 years active experience in the federal marketplace. His remarkable feat of securing 32 government contracts valued at over $15 million through the Legal Middleman Approach.

Initiating Government Contracting: Derek’s Entry

“I started working for a small business government contractor,” Derek recalls with a hint of humor. “I always kind of famously site the first year working for them; I didn’t even know what my job was. I just, you know, the punch line was when I would go tell my friends I do something with the government, and then I always kind of got the chuckle.”

His journey began with uncertainty, but it was his willingness to learn and adapt that set him on a path of discovery. Winning his first contract proved to be a turning point, opening his eyes to the complexities of bidding and relationship-building within the government contracting sphere.

“After winning my first contract and learning more about bidding and relationships, it’s this whole other industry and this whole other world,” Derek reflects. “But surprisingly, there are a lot of people in it once you kind of get to know and get into the scene.”

Indeed, the world of government contracting can seem daunting to outsiders, shrouded in bureaucracy and jargon. Derek acknowledges that many individuals, like himself in the beginning, lack awareness of this sector’s significance and opportunities.

“A lot of people don’t know anything about it, and that was me when I first kind of got started,” Derek admits. “And that was back in like 2014, so graduating, coming off a few jobs, and then kind of finding my way, and accidentally stumbling into the space. Wow, I mean, that’s a great place to kind of tumble and accidentally get into.”

The Legal Middleman Method: Government Contracting with Expertise and Integrity

The Legal Middleman Method, conceptualized by Derek James, represents a paradigm shift in contract procurement strategies. At its core, this methodology seeks to optimize the process of acquiring contracts while ensuring strict adherence to legal and ethical principles.

Unraveling the Illegal Pass-through Scheme

The Illegal Pass-through Scheme is a deceptive practice that undermines the principles of fair competition and socioeconomic empowerment within the contracting community.

Derek sheds light on this unethical tactic, drawing attention to its prevalence and the detrimental impact it has on small businesses and the contracting ecosystem as a whole.

It’s a term that has gained notoriety within the government contracting community, thanks to insightful legal analyses by experts like Stephen Prince, a retired lawyer renowned for his expertise in the field.

The illegal pass-through scheme involves the manipulation of contract awards designated for specific socioeconomic categories, such as ADA, woman-owned, or Hub Zone businesses.

These set-aside contracts are intended to promote diversity and economic opportunity within the contracting space by ensuring that a portion of the work is performed by qualified small businesses.

However, nefarious actors exploit loopholes in the system by securing contracts under false pretenses and then subcontracting the work to larger companies or ineligible entities. This circumvents the regulatory requirements designed to protect small businesses and undermines the spirit of socioeconomic inclusion.

Legal pass-through is where you secure a contract, particularly for a particular socioeconomic set-aside. But what the illegal pass-through scheme does is it diverts the contract to entities that do not meet the eligibility criteria, thereby diverting funds away from the intended beneficiaries.

The consequences of illegal pass-through schemes extend beyond financial implications, tarnishing the reputation of the contracting community and eroding public trust in government procurement processes. Derek stresses the necessity of joint vigilance and preemptive steps to counter such deceptive activities.

“In terms of these regulations and small businesses, sometimes it’s ignorance, other times it’s arrogance, but it does happen a lot and we’re trying to kind of support the space to elevating to a better overall state,” he said.

Embracing the Umbrella Strategy

Derek James also advocates for an innovative approach known as the umbrella strategy, which offers a multifaceted approach to securing contracts and fostering long-term relationships with clients.

Derek explains why he believes in the umbrella strategy by comparing it to how things are typically done in business. He highlights the importance of not limiting oneself to narrow bidding opportunities or waiting for sporadic contract cycles. Instead, he proposes a broader approach wherein similar or related services are grouped together under one umbrella.

“The umbrella strategy which means you group similar or related services, such as janitorial, professional, administrative, and grounds maintenance,” Derek explains. 

“If you can group something to have capabilities that could spend a whole hour explaining this, it’s like if you’re only doing one thing, how much are you supporting the mission, now you don’t want to do a million things, but if you can support the mission in several different ways, then there’s several different opportunities for you to work with a customer, which means there’s several different types of bids you can go after, which means you’ll be bidding year round,” he stated.

Derek puts a lot of emphasis on bidding throughout the year, rather than just focusing on specific times. He believes in staying connected with contracting officers consistently and being responsive to their requests. For him, every bid is an opportunity to indirectly promote his business and build strong relationships.

“You need to build your skill levels and respond to bids with the same contracting officer again and again, like it’s a great form of indirect marketing, you don’t just have to spam your cape statement, spam your website, actually show up and do the work and make the improvements that they’re showing you,” he said.

Furthermore, Derek acknowledges that the umbrella strategy requires a balance between diversification and focus. While it’s essential to explore various opportunities, he advises against spreading oneself too thin.

Instead, he advocates for finding a harmonious balance that allows for growth and adaptation based on evolving market dynamics.

Proposal Writing: 5 Essential Phases for Proposal Excellence

Derek breaks down his proposal approach into five distinct phases, each essential for crafting winning proposals.

In Phase One, Derek stresses the importance of thoroughly understanding the solicitation. He believes it’s essential to delve into all its nuances and intricacies.

“If you learn how to read the solicitation, you will find out exactly what to put into your proposal and not only that you could extract that key information put it into an outline and then it becomes more plug and shoves,” he said.

Moving forward to Phase Two, Derek emphasizes the pivotal role of building a robust outline. This phase, rooted in a thorough grasp of the solicitation, enables a systematic organization of proposal content, setting the stage for coherent and compelling submissions.

Phase Three delves into the critical aspect of pricing management. Derek stresses the importance of early engagement in pricing considerations to preempt potential hurdles and ensure alignment with overarching business objectives.

“You need to get pricing going sooner than later because sometimes there could be snags in pricing…we do not move forward without having all the information that we need because bad business is way worse than no business,” he said.

Transitioning into Phase Four, Derek underscores the assembly aspect of proposal writing. This stage involves weaving together various elements while maintaining a sharp focus on addressing evaluation factors and upholding compliance standards to enhance proposal viability.

“Whether you’re writing it or you’re working with a subcontractor or whatever if there’s a technical thing, or maybe it’s just resumes, or ready to a specific part of the statement of work, you need to make sure you’re doing that and that’s not paring back the statement of work,” Derek said.

Lastly, Phase Five hightlights the importance of a comprehensive review and meticulous preparation for submission. Whether through rigorous red team reviews or meticulous compliance matrices, this phase ensures that the proposal is refined to meet all requirements, thereby enhancing its competitiveness. Seeking feedback from the contracting officer further enriches the proposal’s quality and strengthens its positioning in the procurement process.

Focusing on the Present: The Significance of Responding to a Source Sought

The source sought serves as the inception point, akin to a teaser for an upcoming movie. It involves market research and initial interest-gauging, offering an opportunity for tailored responses to specific inquiries. However, it’s important to note that responses to source sought typically do not involve pricing or comprehensive proposals.

Moving to the pre-solicitation stage, Derek likens it to the release of movie trailers and posters, signaling the imminent arrival of the opportunity. Based on market research findings, contracting officers may outline their intentions regarding set-asides or other acquisition strategies.

Focusing on responding to solicitations and bidding is paramount, particularly for small businesses with limited resources and time constraints.

Derek advises against fixating solely on a lengthy 180-day pipeline, which may involve forecasting and anticipating opportunities far into the future. While such foresight isn’t inherently detrimental, he warns against neglecting immediate bidding opportunities in favor of distant prospects. Missing out on potential wins in the present quarter or month due to an exclusive focus on distant opportunities can hinder growth and success.

“Prioritize what you have in front of you first especially, because you need to start playing that numbers game, you got to start building those skills,” he said.

Simply having a strong network or being eligible for sole-source contracts isn’t enough – comprehensive offers with fair and reasonable pricing are prerequisites for success.

Besides, Derek cautions against prematurely pursuing additional certifications or accreditations, without first mastering the fundamentals of proposal writing and bidding. In his analogy, he urges small businesses to focus on the “meat and potatoes” before delving into advanced strategies or pursuits.

Financial Support: Strategies for Small Business Funding

When grappling with funding challenges, Derek James offers nuanced insights and a range of options tailored to individual circumstances.

One critical aspect is the evaluation of whether funding is truly required. In some cases, businesses may assume they need funding when, in reality, they can manage cash flow effectively by aligning payment terms with subcontractors or suppliers.

“The first thing I would scrutinize is make sure that you need funding because it could be one of those assumptions that can shoot us in the foot because in some instances you really do need funding,” he said.

By educating subcontractors about payment timelines and negotiating favorable terms with suppliers, businesses can avoid the need for external funding sources.

In instances where funding is indeed necessary, Derek outlines several common options. Traditional avenues such as bank loans or Small Business Administration (SBA) loans are viable routes for securing capital. Additionally, factoring—a process where a company sells its accounts receivable to a third party at a discount—is highlighted as a prevalent practice in the industry.

Derek refrains from prescribing a one-size-fits-all solution, recognizing that the choice of funding depends on individual circumstances and business needs. It is important to carefully considering the cost of capital and integrating it into pricing strategies.

Morover, Derek advises against overlooking less conventional options and potential pitfalls. He warns against situations where businesses inadvertently allocate all profits to certain expense categories, leaving insufficient margins in others. This imbalance can lead to financial strain, highlighting the necessity of balanced pricing and prudent financial management.

Also, make sure the pricing is balanced between the line items and balanced throughout the years and that’s what Dereck is referring to.

Key Takeaways on Winning Government Contracts

More remarkably, Derek distills years of experience and expertise into key insights that are indispensable for winning government contracts.

Building Experience: The Path to Patience Through Bidding

Derek James puts a lot of emphasis on the importance of persistence when facing challenges while pursuing government contracts. He dispels the notion that lack of success is solely due to inadequacy, asserting instead that winning takes time, effort, and continuous improvement.

According to Derek, setting realistic expectations is crucial for maintaining a positive mindset in the competitive landscape of government contracting.

By aiming to respond to at least 10 to 20 bids, individuals can establish milestones and benchmarks to track their progress. While these numbers serve as general guidelines, they provide valuable direction and mental support, helping individuals navigate the complexities of the contracting process.

Derek encourages reframing perceived losses as learning opportunities, shifting the focus from defeat to growth and development. By adopting this mindset, individuals can approach each bid with a sense of resilience and determination, knowing that every effort contributes to their journey of improvement.

Focus on The Deal, Not the Industry

In government contracting, the key is to assess bids based on their potential value and feasibility, rather than solely on the industry or sector they belong to.

Derek stresses the need for a specific approach to evaluating bidding opportunities. Contractors should consider factors such as geographic limitations, NAICS codes, and bid timelines to determine the best investment of their time and resources. He advocates for a structured decision-making process, where bids are evaluated against a set of criteria tailored to individual circumstances.

In Derek’s view, bid assessment is not about categorizing opportunities as inherently good or bad, but rather about subjective evaluation based on personal objectives and constraints. By understanding oneself and conducting a thorough analysis of each bid, contractors can make informed decisions about where to allocate their efforts.

“I can do this in 30 minutes, I can do this in 10 minutes, to determine if this worth investing any more of my time, that’s what excites me, that’s what I like to teach the students that I work with, having no experience particularly in specific thing, but they know that they can put together a winning team, they know that they can put together a winning proposal, and so they decided, we’re going to move forward with this one, it’s more about the deal than the industry,” said Derek.

The Vital Role of Requesting a Debrief

Derek puts significant emphasis on the importance of seeking debriefs, even after contract acquisition. Contrary to common belief, government contracting competitions often have fewer participants than imagined, with some attracting as few as one or two bids.

This reality highlights the value of leveraging every opportunity to learn and improve, regardless of the outcome.

“This is a very unique space where we can receive feedback on our proposals,” said Derek.

“Even if you’re just informed, “Hey, it wasn’t the lowest,” that at least informs you, “Hey, the proposal itself was great. I just have to take a look at pricing,” he added.

The process of soliciting and receiving feedback afterward can vary significantly depending on various factors, such as the size of the contract, the nature of the project, and the specific requirements outlined by the contracting agency.

In some cases, seeking feedback may involve a relatively informal process where contractors reach out to contracting officers or project managers to inquire about the strengths and weaknesses of their proposals. This type of feedback can provide valuable insights into areas for improvement and help contractors refine their approach for future opportunities.

“Whether it’s just feedback or if it’s something more formal than that, it seems to always be different in different magnitudes of contracts,” said Derek.

Why Assumptions Spell Trouble in the Workspace

Derek passionately highlights the detrimental impact of assumptions in the realm of government contracting. He noted that assuming the government only procures goods and services in a certain way can lead to missed opportunities for small businesses.

“Assumption is the killer in the space, it absolutely is the killer,” he said.

Many entrepreneurs write themselves off prematurely, believing they don’t stand a chance against established competitors or a perceived lack of opportunities.

Contrary to these assumptions, Derek asserts that the government contracting landscape offers ample room for success, especially for those who persist. He likens the journey to a marathon rather than a sprint, where each step forward, no matter how small, contributes to long-term progress.