Trying to sell breakthrough technology into DHS? Read this first.
There’s no shortage of hype regarding opportunities for tech firms and their investors that want to sell to TSA, CBP, the Secret Service, or for that matter DoD.
But having watched many promising tech firms struggle, I wanted to share the following “hard truths” for early-stage technology companies trying to “break-in” to this market.
Finding Buyers for Your Technology Can Be Very Hard.
Yes, all the entities that comprise the US Federal government collectively spend more than anyone else on homeland security technology.
But this is misleading and largely irrelevant. Each major federal government agency is made up of dozens, even hundreds of sub-agencies and buying organizations. Each of these has their own budgets, requirements, culture, preferred partners, and influencers, gatekeepers, and decision-makers.
For example, within US Customs and Border Protection (CBP), which is just one component of the Department of Homeland Security, there are 19 entities with their own acquisition budgets and programs for technology. Compounding this problem: unlike the private sector, the buying decision almost never rests with one or two individuals. Instead, it is often divided among different teams or functions. There might be one group that determines if the technology is consistent with the agency’s mission or programmatic goals. There can be another group that evaluates whether your technology meets specific technical requirements; a third that evaluates the technology usability; a fourth that considers contractual, budget, and legal issues.
On top of these barriers, many key government personnel are reluctant to talk with, email or meet one on one with private sector companies that they do not already work with.
Why?
Because they don’t want to create the appearance of favoring a particular vendor AND / OR they are super busy and do not see it as critical to their job. Instead — and this is important for new technology companies to understand — many government executives prefer to use industry days, conferences, trade shows, and other “public” venues to initially meet with technology providers.
There Are Many Hidden Overhead Costs
Unlike the private sector, the US federal acquisition process is highly regulated. Federal buyers like to impose lots of requirements on technology vendors. These requirements create overhead costs (direct costs and opportunity costs) that many early-stage technology companies are not prepared for, such as:
- The cost of providing demonstration systems or systems for testing and evaluation.
- The cost of compliance with government reporting requirements.
- The cost of meeting increasing cybersecurity requirements (the nightmare FedRamp requirements being a well-known example)
- The cost of writing compliant proposals.
- The cost of attending conferences and trade shows versus relying on cheaper marketing and sales methods.
- The cost of having to form partnerships with existing government vendors.
You Can Easily Go Out of Business Waiting for Your First Contract
If you are selling a well-defined service or product that federal buyers already are purchasing, this concern may never apply to you.
But if you are trying to provide a new, innovative homeland security technology that represents a major change in the way DHS currently operates, beware the “valley of death”.
This is the time between when someone senior at DHS says they love your technology, and the time your business actually receives a contract to provide the technology to a DHS customer.
This time period can easily last two, three, four, or more years. A real-life example: US TSA began evaluating checkpoint CT technology in 2008-2009. It then decided to deploy multi-view x-ray at TSA checkpoints. Then, in 2015, faced with new security requirements, it decided to again consider checkpoint CT. But it was not until early 2019 that TSA awarded a contract to Smiths Detection for the first phase deployment of the technology at airports — and it is likely that TSA will not complete procurement of checkpoint CT for at least 2-3 years. If you happened to be a relatively small vendor with a checkpoint CT solution (see IDSS Corporation) this super long sales cycle can become very challenging.
