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I received a job offer from a research and development startup whose revenue stream comes from government contracting for defense and intelligence agencies. I am not familiar with business-to-government (B2G) business models. How important are the following factors in evaluating the strength of a B2G startup?

  • The number of contracts awarded and whether they have been renewed
  • Whether the company has prime contracts or does subcontracting through a larger company
  • Whether contracts are awarded on a sole-source or competitive basis
  • Compliance
  • Whether the company has facilities security clearance
  • Any other B2G-specific criteria that I should consider?

Specifically, I am interested in how much weight to assign these B2G-specific factors relative to more general business fundamentals that apply to B2C and B2B businesses.

I would appreciate the input of someone with experience in government contracting. Bear in mind that I am looking to assess the strength of the company from the perspective of a prospective employee, not of a potential investor.

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  • I am most interested in "strength" from the point of view of a prospective employee who is being compensated exclusively through a salary payment, not equity. So I am mostly interested in the company's continued ability to make payroll – RNG Mar 13 '20 at 22:20
  • Anyone care to explain the downvote? I am new to this SE site. I would happily edit to make the question more appropriate for this site. – RNG Mar 13 '20 at 22:24
  • Location is important here, first World there is some oversight and accountability if the projects fail or go over budget, Third World no attempt is made to succeed and no repercussions, it's all about distributing money and assets – Kilisi Mar 14 '20 at 0:41
  • I should clarify that the question applies to B2G companies located in the US doing business with the US government – RNG Mar 14 '20 at 1:48
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Your criteria are good. I would add a question: What would happen to the company and my job if they lost their largest contract? (Ask me how I know this is a good question when you have an hour or two to spare.)

Another: If they sell products, are they on a GSA schedule (government services administration == central purchasing)?

But we can't help you decide which criteria are most important in this situation. For example, if they do work requiring security clearances, the security of their facilities is obviously very important.

Your criteria are good enough that you should ask about them, with confidence, in an interview situation. Tell them you're new to their world and you're trying to figure out how secure your job will be at their startup.

Ask them, "what about the business keeps you awake at night"? Those answers often reveal the risks of the business. And the question shows you care about them and their business.

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The criteria wouldn't be significantly different from contracting with any singe entity. Every entity that a company contracts for will have its own set of requirements. At least with the government those requirements will all be written down.

Typically the strength of a company that has a singe customer is based on the strength and reliability of the single customer, ability to meet contracted goals, the relationships and likeliness of renewal, and barriers to entry for competitors. These will be different for different instances for the same government agency and certainly different between different government entities. I would analyze a business whose sole customer is the federal government the same way I would for any other contracting entity.

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  • With respect, landing and keeping govt contracts is quite different in its details than private-sector business. – O. Jones Mar 14 '20 at 13:09

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