Uncle Sam's Secret Sauce
Uncle Sam's Secret Sauce

Episode · 2 months ago

Government Contracting in Plain English with Christoph Mlinarchik

ABOUT THIS EPISODE

Newer business owners often run into trouble navigating the complex and often confusing world of government contracting, causing many businesses to miss out on great contracts or stuck in contracts that are potentially catastrophic to their business.

In this episode, we have Christoph Mlinarchik, the owner of Christoph, LLC. Christoph is an attorney, professional instructor, consultant, frequent public speaker, nationally recognized subject matter expert, and author of more than 50 publications on government contracts and subcontracts, including the three bestselling books in The Government Contracts in Plain English Series. Christoph is also an experienced expert witness who has provided expert opinions and reports, research concerning damages, key findings, and case strategy for complex contracts litigation.

Needless to say, Christoph knows how to navigate working with the government, and he joins the show to share his secret sauce for success.

In this episode we discuss:

  • Why Christoph launched his firm
  • How Christoph steers his clients toward the best deals and away from the worst deals
  • Some of the hidden details that trap companies in bad deals
  • The key to successfully navigating contracts 

Uncle Sam’s Secret Sauce is hosted by Rafael Marrero, Founder and CEO of Rafael Marrero & Company, which helps small companies do business with the world’s biggest customer: the U.S. Federal Government.

You're listening to Uncle Sam's Secret Sauce, a Raphael Morrero and Company podcast. This is a show for US small business owners and decision makers looking to grow their business. You're about to hear a conversation with successful entrepreneurs in the fields of construction, janitorial, cybersecurity, and more. Here you'll learn how to sell to the government and what this secret ingredients are for effective marketing for small businesses. Let's get into the show. Christofmanar Chick, Welcome to Uncle Sam's Secret Sauce. Thank you so much. I'm very glad to be your Raphael. You know I've been uh dying to get you on the show because I read about you on LinkedIn and I saw you the author of several books. By the way, thank you so much for the signed copies of the book. We're definitely going to put them to good use. Oh you're You're most welcome. And for those of you out there, I regularly give out free books to uh LinkedIn followers and commentors, so check me out and I might be mailing you one as well. Fantastic So. Christoph Menarchek is a top consultant and author of three best selling books. In the government contracts in plain English series, Christoph, you have a unique combination of experience. You've worn many different hats and worked in so many different government contracting positions on the federal side and also industry. Please tell me about your professional career. So I got started in government contracts through something called the Presidential Management Fellowship Program. This was after I finished law school. I was accepted into that competitive program, and you can work at any federal agency in just about any federal position. So I saw a contract specialist positions and I thought, yeah, I like contract law. And I saw a contract specialist position with the Air Force Space Command and I thought, wow, that sounds cool. And it was out there in Colorado Springs, Colorado. So I packed up and I moved to Colorado. So I was a contract specialist, that's the contracting officer for Air...

Force Space Command. And since I was an attorney, they actually let me do a special rotation because I was in that fellowship program. So I also got to be a JAG acquisitions attorney. Now I was never in the military. This was as a civilian where I was in the JAG Legal Office doing government contracts law for the Air Force and so in my federal career as a federal contracting officer, I moved on to the Pentagon, where I bought all kinds of different things for Pentagon and Secretary Defense clients. And then I moved on to the Office of Naval Research where they do a lot of research and development. But I always knew that I wanted to move into the private sector. I wanted to be a small business owner. So I left federal service and I joined a defense contractor as their director of Government Contracts, and they also build me out as an on site contractor. So I was the senior policy advisor for the Pentagon, including the Pentagon Office of Small Business Programs for the entire Department of Defense. And that was a really interesting position because not only did I get to advise the presidential appointee in charge of small business for all of the Department of Defense, I actually got to write the FAR and the DEFAR, so the Federal Acquisition Regulation. I got personal input in changing those clauses and revising that language as regards to small business policy. But of course, like I said, my passion was always small business and entrepreneurship. So I eventually landed where I am now which is I'm self employed. I'm the owner of kristof LLC dot com and that's where I provide consulting, expert witness services and training in government contracts. So to round that all up, Rafael, I've warned quite a few different hats, right, contracting officer,...

...policy advisor, on site contract or, government contracting officer, government attorney. I've been on the industry side, advising the CEOs and now I'm a professional advisor and I help out a lot of small and medium sized businesses in the government contracting space. I've also written the books that you mentioned, and I teach for a living and I serve as an expert witness and litigation. So that's something a lot of my client's value. It's my ability to see it from many different sides, including the government and industry perspective. I was going to tell you you need to stop slacking and get to work. Seems like that's got a lot going on right there. So tell us, Christoph, why tell us why you launch your firm? What is your passion? Well, look, we're talking on Uncle Sam's Secret Sauce podcast, right It's it's there in the name. We're talking about the biggest client in the history of the world, Uncle Sam. They spend about a trillion dollars per year in this industry when you count it all up, from primes to ubs to direct government spending on contracts and grants. The market's huge and small businesses. They are the engine of American economic growth. And I'm passionate about entrepreneurship, and I like to empower other small businesses that they can succeed and thrive in this government contracting industry. Ever since I was very young boy, I always dreamed of owning my own business. I kept that in my heart and God willing here I am living the dream. So I'm a small business owner that helps me connect with other entrepreneurs and other CEOs and other small business owners. And I want to let other people live that dream and have that same blessing. So I help you with their government contracts issues so that you can get that out of the way and get back to the real heart of whatever it is that you're selling, whatever your professional services are, whatever your products are. I want you to get back to that core of your offering and take the anxiety and the problems of govern them and contracting off of your plate. Let...

...me handle that. That's a smart play, by the way, and you're empowering the small business owner right to focus on their core business. You help them, you begin an extension of the company right of your clients. Yes, so what eries do you specialize in? What are your core competencies? So Christoph LLC provides three things, consulting, expert witness services, and training. Now with training, I do on site, I do live, I do webinars, and I also have on demand online courses and those are available at courses dot Christoph llc dot com. Now expert witness services, I hope you never have to hire me for that, because that's really only if you're in the middle of litigation. Lawsuits. We want to avoid that. But when that happens, people hire me to be an expert, to render an expert opinion, to issue an expert report in the middle of that government contracts litigation. But the core of my offerings would be the consulting. So I advise a wide range of small and medium sized businesses on all aspects of government contracts. That would be contracts, negotiation, proposal advice, changes, modification, compliance issues, how to deal with the contracting officer. Because Hey, I used to be one. A lot of it is also how to deal with your prime contractor if you're getting started as a subcontractor. But basically, my clients like to engage me for expert advice, maybe a second opinion, and maybe just to be a sounding board for their CEO or their sales team on making sure are we doing this right? Could we be doing it better? And is there something we're missing? Is someone giving us bad information or bad advice? Because Raphael, believe it or not, there are some cutthroats in this industry, so you gotta watch out. Sometimes you'll be getting bad advice, maybe from your competitimate as we like to call your teammate that may become your competitor in the future. That's just the nature of the prime contractors subcontractor relationships that we see so often in government contracts. So Christoff, when...

...you're actually looking at a at a bid or a contract negotiation, you mean you can actually negotiate terms and conditions with a contracting office. You can negotiate with the government. I will say, it's a lot easier and you have a lot more flexibility if you're negotiating with the prime contractor as a subcontractor, but you can negotiate with the government. The key to that is your credibility and your understanding of the rules. Now, I pride myself on knowing the rules and teaching you the rules, so the better equipped you are to understand the landscape. It's basically like this. If you master the rules, you can master the game. Now, if you're going to approach a contracting officer with a proposed change to a contract, or even a proposed change to the request for proposals, you better have your ducks in a row. That's where knowledge, training, and expertise comes into play. Now, if you're a subcontract tractor and you're dealing with the prime contractor, I would say, not only is it negotiable when you're ironing out and negotiating that subcontract, not only is it negotiable, I would say it must be negotiable. My clients do not take the first deal. I help my client's redline and improve and tailor that subcontract offering. Because you have to protect your interest to make sure that you get the best possible deal. And if you don't pipe up and say anything, and if you don't have an expert on your side to point out the things that are not actually in your favor that you really do need to change. You'll be going in there blind and eventually you're going to get hurt. That's exactly the type of thing that I steer clients away from and help them get better business deals in the future. What you're saying makes absolutely total sense, right, because most contractors, when they get into government contracting, they start off as subcontractors. And when you're a subcontractor, you are literally...

...at the mercy of many prime contractors, and sometimes they play hardball. They'll lean on you as much as they can, and even with a small business subcontracting plan, if they can get away with not having you as a sub and doing the work direct, they will do it. Because I've seen that. Absolutely, you can be expendable. And it's like what they say about poker. If you look around the table and you don't know who the sucker is in that game, guess what it might be you. So having an expert on your side, having an advisor, it is absolutely critical. I tell people, listen, that's fine. If you're not gonna hire me, great, but you need to go hire somebody else. You do need an expert on your side for your government contracts negotiation, and it's all the more important as a subcontractor or as a small business, as an entrepreneur when you're just starting out. Part of my elevator pitch for my specialty to the small and medium sized businesses is as follows. Look Boeing, Lockeyed, Booze, Alan Hamilton's, these big names, they have plenty of experts on their side. They all make half a million dollars a year. Well, you can't afford a single one of those and pay them half a million dollars a year. That's why you hire me on an hourly or monthly basis, and I help you out when you need it, and when you don't need any help, I'm not charging you. That's how you get the benefit of the big guns without paying that gigantic salary. So that you can then compete with those larger players like Booze, Allen, Lockeyed, raytheon. You're going to need to have that kind of expert opinion. You're gonna need that credibility otherwise you're gonna get smoked. I'm gonna state it plainly. I've seen a lot of companies out there that don't have the back office support, don't have the contracting support. They signed bad deals, and they signed bad deals because they don't know any better, and they don't know any better because nobody told them and they didn't have anybody on their team to issue spot and to notice where there were problems. I've seen all kinds of contracts where they signed things where the payment terms, for example, are terrible, and maybe they don't get paid...

...for sixty nine days, or maybe the payment even worse. This is something my clients never do. Maybe the payment terms are pay when paid, as in, we don't have to pay you until the government pays us. Look, I'm on the record, It's in my online training courses. It's in all three of my books. Do not sign those contracts when it says pay when paid. Don't have a contingency like that. If you deliver, you get paid. Don't make your payment contingent upon the problems of some third party like the government. Because Raphael got a little secret for you. Yes, sometimes the government is late, so you don't want that to jeopardize your payment. All good points, by the way, And now I like to talk about your books. Right, you have three best selling books in a very interesting series. They're called the Government Contracts in Plain English series, and you also offer online courses. Why did you write these books? And what is your teaching philosophy? Blosophy is cut to the chase. You can probably tell from this interview. I like to speak in plain English. I'm not gonna pull any punches. My clients appreciate that. I consider that to be why they're paying me. They want to get raw, unfiltered advice. They want to know what's actually going on in the real world, and I'm here to tell it to them. I'm not going to give you the academic answer only, I'm going to tell you how to apply that in real life. Now, why did I write those books? Will they all end in Plain English? For a reason? I read a lot of these government contracts books early in my career, and look, I'm an attorney, don't hold that against me, but I could understand a lot of these books. Even though they were thicker than the King James version of the Bible, and they were all written in legal ease. They were written for the audience of an attorney, and I thought, wait a minute, wait, just a minute, who's going to read this? What benefit can they derive from this other than a bunch of government contracts attorneys in the field. I thought, wait a minute, what about the proposal professional, what about the sales director, what about the CEO, what about the budding entrepreneur, what about everybody? Else Where...

...is the practical, plain English version of this complicated world of government contracts? And boom? I always had that in the back of my mind. I always was looking, I was searching. I said, where is this book? And finally, hey, I wrote it myself. So I took my plain English style and I wrote Government Contracts in Plain English. That's the first book that covers the broadest aspects of how to win government contracts, how to perform government contracts, and all of the key concepts. And then I wrote the second book that's Federal Acquisition Regulation in Plain English, and that deepmystifies the far that's the primary regulation we had deal with in gov con. And that book has over seven hundred frequently asked questions answered in plain English. And then the third book that's Government Contracts Negotiations Simplified. And once again I'm providing you what you need to know in plain English, pract tical, real world device about negotiations, about What does this clause in my contract mean? What does this heading mean? How should I approach this as a sub? How should I approach this as a prime? How does the government look at this? The interesting part of the third book is that I have a chapter devoted to the perspective of all these positions solo, entrepreneur, prime, sub, government. Everybody's perspective is covered in a unique chapter where we can understand the other point of view so that you can have a better business deal. And so with the online courses, those are at courses dot Kristoph l l C. I basically took my plain English style and my focus on practical skills, and I converted that into concise online courses. I want to open up the door for anybody and everybody to learn as quickly as possible. So instead of going on a week long trip to Las Vegas and learning for what thirty hours straight, or instead of taking your staff away for six hours or a full day...

...or two days, I have can I have consolidated these lessons into one hour, one and a half hour short courses where you get a very quick lesson from me. It's video format. You got a quiz at the end of it to test your knowledge. And the best part is in case you forget anything, each course gives you a downloadable one page submary and pdf. You get to keep that forever, so you get to always have those useful tips, tricks and concepts that I've encountered for advising clients over the years, and they're all for you now. Fantastic. Tell us about some of the recent successes of your four year consulting clients. Sure, so, I have government contracts clients in a wide variety of industries medical, healthcare, I T professional services, construction, intelligence, defense, go down the list, but some of the ones that stand out. I helped a healthcare company that actually was a small business and then kind of consolidated and merged with a number of other small and medium sized businesses, and by the time they grew in that fashion, they were no longer small, and they were also dipping their toes into the new world of government contracts where they had a previous focus on the private sector healthcare industry. So I helped them build out their entire government contracts division. I helped them hire their business development and sales professionals, and I helped them create their back office business operations and their contracting procedures, and I nurtured them all along the way from growing from a small business to a large a large business, from growing from a business that only has fixed price contracts to one that has cost reimbursement contracts, which we both know are much more complicated. So I kind of helped them from that key critical path of moving from small to large and getting those more complicated government contracts. Another big success story, I've had a longstanding woman owned small business and a firm that when I started out as their consultant, they had about ten employees, and now they...

...have just exploded. They have eight figure revenue, they're branching out into several different lines of professional services, and they're becoming a huge player in the market. And I've been with them from the start. Finally, one of the most recent successes is if you ever get terminated for default and government contracting, that's bad news. That is the corporate death sentence. Well, I actually advised this client and got the government to convert that termination for default into a termination for convenience, effectively saving the life of that business. We change something which is a huge problem and basically a death sentence into something that is a pain free, penalty free walk away into the sunset situation. So I was very happy about that, and of course the client was thrilled. That is that, that's great news. And and for I mean, we're all afraid of it, should be afraid of getting terminated for for cause. Right, you basically joined the no no list that do not a list as a contractor. After that, that's right, it's it's if you ever hear any of these words termination for cause, termination for default, if you hear the words cure notice, if you hear the words deficiency, if you hear the words show cause notice, anything like this, this is a red flag. It means you pull the fire alarm, call the CEO, bringing your government contracts expert, because all these words that I just mentioned, these are red flag notices that you are about to be terminated for default, something you absolutely cannot afford to do in government contracting. So I found something interesting that you mentioned in all three of your books. In the Government Contracts in Plain English series, you said something to the effect of, no, the far does not apply to government contractors. Not that really caught my eye my attention. Right, that's kind of shocking. Is there some new ones to that. Can you explain that? Please? I hope there is, because it sounds strange, doesn't it. Does? You tell this to people and at first they...

...look at you like you just derived from planet Mars. But allow me to explain. So the FAR, the Federal Acquisition Regulation, it's the primary set of regulations that we use in government contracting. So you say, Christoph, wait a minute, what do you mean it doesn't apply to government contractors? What are you talking about? I have far clauses in my prime contract and I say, yes, that's correct. But is the entire FAR in your prime contract? Probably not? How could it be? That wouldn't make any sense. So let's get back to that thought later. Let me just paint the picture for you. The Federal Acquisition Regulation itself. It is instructions to the contracting officer. It is a set of instructions to the government contracting officer and their team on how to do government contracting. And the FAR also contains all of the cookie cutter standardized far clauses that you will see in your tract. They're all assembled in FAR Part fifty two, number fifty two of the FARS, where you see all these clauses. Now, if you research the FAR like I have, you will see that it says right in there it states its applicability. The FAR states that it applies to all acquisitions conducted by federal acquisition professionals in the Federal Acquisition team. So, by its own words, by its own words, the FAR it self says that it applies to the government employees that are conducting acquisitions. Now, why does this matter? Here's why. If you believe the myth, if you believe in this totally incorrect idea that the entire far applies to me as a contractor, you will be led astray. I see it happen all the time with clients before they hire me. Here's how it works. Somebody gives you a FAR citation, and you're a business owner, you're in government contracts, so you follow it.

You go, wow, Well, the contracting officer sent me a far citation that says I have to do it. I guess that's just the end of it, right, it's the far, The far must apply to me. No, get that out of your head. Get that right out of your head. You have to look at your contract. The thing that applies to you as a contractor is not the FAR itself. The thing that applies to you as a contractor is your contract, and your contract will include certain subsets, certain individual clauses in the FAR. But if that citation is not found in your contract, you need to be like a polsterring. You need to have a standard repeated talking point where you say, could you please show me where it says in my contract that I need to do what you're asking me because I have to follow the terms of my contract. Just this little nuance, just this understanding that no, the FAR does not apply to a federal a contractor will save you months, years, and millions of dollars in problematic advice that people will send down the line to you. And final point that I alluded to earlier, it's actually impossible for the entire FAR to apply to you as a company or to apply to your contract. More specifically, why well, I used to be a contracting officer. I was the one inserting these FAR clauses into contracts. Here's how it works. It's impossible to put all of the FAR clauses into your contract because it would be incoherent. There's a bunch of different far clauses and they all apply to different mutually exclusive, contradictory situations. In other words, how could you have all the construction far clauses in your services or products contract? Doesn't make any sense. How could you have all the fixed price far clauses in your contract? That's not fixed price? So that's why you need to understand that fact. That's why I like to blow people's mind in surprise and with that inflammatory statement, because...

...the explanation is what's going to help you out. Follow the terms of your contract. No, when to push back, and don't just get blown over like a leaf anytime somebody gives you a far citation, refer back to your contracts expert, take a look at the contract, know your rights, and be willing to push back. Wow. So what advice do you have for government contractors? You've seen the good, the bad. What are the biggest challenges they face? Yes, so, Raphael, I have like a biased sample. Right. People hire me to solve problems. So I do see these mistakes. I see these problems. I come in afterwards I try to clean them up. Here's what I see. I see a lot of companies that do not understand flow down clauses. A flow down clauses When the prime contractor has these far clauses or others in their prime contract, they want a subcontract to you, they have to or they choose to include those same far clauses in your subcontract. This is where I see many mistakes. I see subcontractors accepting a lot of far flow down clauses that they do not need to accept, end that they should not accept, that are not in their best interests. I actually have an entire online course devoted to that. It's called how to Remove far clauses from your contract or subcontract. Take that one hour class and understand exactly how to get rid of those clauses and how to justify your position. Another thing I see a big mistake is making critical errors in the relationship in the communication with the contracting officer. Obviously, it's important to have a good relationship with the contracting officer, but what you need to understand is sometimes you can push back. Not everything they give to you is something you have to do. Not everything that they say to you or write to you is necessarily something in your best interest. You need to have the judgment...

...and the understanding to be able to cut through that fog and know what punches you should roll with and what punches you should block and Perry I already went over one of the biggest errors, which is getting tricked by a random for citation. So we went over that. Another big problem that you face in government contracting getting bullied, just getting bullied, Raphael you you mentioned it earlier. Some of these big prime contractors, they can push you into a deal that doesn't make any sense. You have to have the business judgment and you have to have the contracting expertise to push back or to be able to walk away, because I'm telling you that not every deal is a deal you need to take. Sometimes you need to be willing to walk away because you might sign on the dotted line at that subcontract and you might regret it. It might bankrupt you or cause you to lose a lot of money down the line. So it's absolutely critical to have a government contracts expert on your side, because if you don't understand your contract and you don't have an expert to give you an executive summary, it's not a matter of will I make a mistake in the future, Yes you will. It's going to happen. You want to make sure you've got a team around you, and I know that, Raphael. Your company is all about that building that strong team of people who are experts in many different fields so that your company can get to the next level. That is the mentality you need to have. You've got to expand your team. Part of that team in government contracts, it's got to include a government contracts expert. If it's not gonna be me, please hire somebody else. But you need that person or several on your team to succeed. I've seen the ones that fail. I've seen the ones that succeed. There is a common thread. The companies that succeed in government contracting. They have top quality expertise in their contracts department. That's what you need. Fantastic. Now, one of the things I'd like to learn from you is I love...

...learning from our guests, right, That's why we have top notch individuals like you on the show. Uncle Sam. Secret sauce, Christolf, what is your secret sauce? I think my secret sauces high level expertise translated into plain English. We went over my background. You know, I've worn a lot of different hats. Attorney, contracting officer, policy adviser, expert, contract advisor of the pentagon, teacher, lawyer, author, public speaker, expert, witness, consultant. Well, there's a lot going on there, isn't there. Most people that have that level of expertise, unfortunately they cannot talk to the man in the street. I'm a little bit different. I can. I can talk to the man in the street. I can explain anything you want in plain English, and I can also talk to the c e o s, the sales directors, the chief financial officers, and the entrepreneurs. I think that's my secret sauce. I'm a busy man. I get to the point. I know you're busy, so we'll both get to the point. I'll tell you what you need to know. I will warn you about the bigger land mines so that you can get back to that key offering of your business. And as a fellow entrepreneur and as a fellow small business owner, I know the struggle. I'm with you. I'm on your side, so I'm here to get you back on track and then get out of the way so that you can go on and do what you do best. Who would your ideal client be In the federal market, small businesses and medium sized businesses are my ideal client, and they can be either prime contractors or subcontractors. The larger businesses they occasionally hire me, but like I said, they usually have an existing staff of government contracts experts, so they don't need to retain an outside consultant like me. The larger companies, they're going to usually hire me as an expert witness in some type of litigation. So my ideal clients are the small and medium companies. I have a lot of eight a I a lot of woman owned small businesses, a lot of hub zone...

...small businesses. I also for my teaching purposes, I teach the government, I teach the military, and I teach contractors. And with my online courses at courses dot Kristoph LLLC dot com, I also have the ideal client of not just a company, but an individual. I tailored my courses to be affordable so that a person can swipe their credit card and not have to use that huge corporate budget. That was one of the main driving forces behind how I designed those classes. I wanted it for an entrepreneur. I wanted it for somebody who's just starting their business. I wanted it for somebody who is working and a government contractor but has not been granted that training budget to go off to extremely expensive classes. So my ideal clients they're small and medium government contractors, their primes, their subs, and they're in any industry as long as that industry falls into the big one, Uncle Sam's trillion dollar a year industry of government contracts. Thank you so much for your sage words and sage advice. We'd like to have you back on the show. And if for those people out there that would like to consult with you or set up a consultation, how do they go about doing that? Well, thank you for having me on, Raphael. I'm really easy to find my websites kristof LLLC dot com. The online courses are courses dot kristof LLLC dot com. You can email me at christof at christoph LLLC dot com and check me out on LinkedIn. I regularly give out free signed books to LinkedIn commenters, and every few days I'm sending out free advice, free interesting analysis about government contracts topics. I also have a monthly newsletter. You can get that if you email me. But I would love to hear from you. Thank you guys for listening. I'd love to connect with you out there, and I'd love to help you out with your government contracts. And the best part is I'm going...

...to do it in plain English. Well, folks, there you have it. We've had christof men check from Christolf A lil Ce subject matter expert and contracting officer extraordinaire on Uncle Sam's Secret Sauce. Until next time, Thank you so much, Raphael. Based in Miami, Florida, Raphael Morrero in Company is a management consultancy founded in two thousand eight by Dr Raphael Morrero. The firm helps other veteran owned, minority women and small businesses break into the federal marketplace and do business with the world's richest and most powerful client, the US federal government. To learn more, visit Raphael Marrero dot com. You've been listening to Uncle Sam's Secret Sauce, a Rafael Morrero and Company podcast, keep connected with us by subscribing to the show in your favorite podcast player and giving us a ray that helps us to keep delivering the latest in business growth strategies and ultimately learn what Uncle Sam's secret ingredients are. Thanks for listening. Until next time.

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