Smart Answers July 28, 2009, 9:07AM EST

Managing Frustration When Seeking Stimulus Money

Government contracts are cumbersome, but small business owners would be wise to gear up for the learning curve involved in submitting winning bids

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When John DePaola heard President Obama talking about putting government stimulus money into weatherizing older, inefficient public buildings, he couldn't have been more thrilled. As the owner of a small company that sells and installs energy-saving windows in the Washington, D.C., region, he thought, the stimulus package could help save money, reduce carbon emissions, and keep his company going through the recession.

"It's a beautiful thing, to find buildings that need help and line up companies that employ people who can help and make sure there's no funny business," DePaola says.

But after months of meetings and networking, DePaola says he's just about at wit's end. "We don't know what to do in order to get these government contracts. We're ready, willing, and able to help, but nobody can tell us what to do. We've talked and talked and talked, but nobody ever has an action item," he says.

Meanwhile, DePaola has cut his 90-employee company, Long Fence and Home of Beltsville, Md., to the quick and may have to consider furloughs this summer. "We're hanging on as long as we can, but we're left with just our very best people and I can't cut any more," he says, frustration creeping into his voice.

Others Are Breaking Through

Not far away, in Burke, Va., the situation couldn't be more different. In fact, entrepreneur Martin Saenz is hiring. And he's expecting the federal stimulus, formally termed the 2009 American Recovery and Reinvestment Act (ARRA), to be "company-changing" for the five-employee business he owns with his wife, Ruth.

The company, Signs by Saenz, which produces signage, art, framing, and trade show exhibits, has already been awarded a $3 million, three-year prime contract to do way-finding signs for government buildings that will be refurbished with ARRA funding, Saenz says. He also has submitted bids on an additional $2 million in contracts and feels he has a good shot at winning some subcontracts for other stimulus-funded projects.

"We're currently hiring people who really need jobs, and we can partner with other local firms to ramp up for more work if we need to," Saenz says.

He started his signage company four years ago, focusing mainly on federal government contracting work, and joined a membership group to help him navigate the complex contracting process and build relationships with government agencies and procurement officers who make the buying decisions. "That has been the name of the game," Saenz says.

The Pipeline Has Its Advantages

It's not surprising that small businesses already in the government projects pipeline are having an easier time navigating the bidding process and are among the first to be awarded contracts for ARRA work, says Guy Timberlake, CEO of the American Small Business Coalition, the organization that Saenz joined. He explains it along the lines of "going with what you know."

"The stimulus bill was passed while government agencies were still spending their regularly appropriated budget for the fiscal year that ends on Sept. 30. In some cases, the stimulus money doubled what the agencies have to spend. So there's this whole big bucket of money and they're doing everything they can to spend it, but it's a challenge to create all these new contracts. It's easier to make modifications to existing contracts or use [vendors] already in the network," particularly when the pressure is on to push funding out the doors quickly to create jobs, Timberlake says.

As of mid-July, $187.4 billion in funds was made available for spending through the ARRA and $67.4 billion had actually been paid out, according to Recovery.gov, the government Web site that is tracking the stimulus spending.