Why Small Contracts Can Be Tough

Let’s start off with this — I have been blessed to work with wonderful small businesses.

That being said, small business contracts can be among the toughest contracts. I think this is due to four areas.

1) New, inexperienced contract specialists are often assigned small business contracts. I hear this on both the civilian and military sides.

2) Small businesses may not be familiar with federal contract law. This is especially true if the business has only dealt in commercial contracts under the Uniform Commercial Code where the rules are much different.

3) Every dollar makes a difference. Each dollar is likely more valuable for small businesses than large businesses since large businesses are more likely to have credit resources or cash reserves in bad fiscal times. Each dollar for a small business with little access to credit or small cash reserves means they usually have more trouble in bad times.

4) There are extensive, often confusing regulations and legal decisions dealing with small business. Look at FAR Part 19 and try to tell me you know it all. For newbies, this is tough.

Add these together and you have tough-as-nails pie for negotiations.

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I think this applies in many ways. I saw this with small non-profits – they fought harder over smaller buckets of money than larger non-profits or businesses.