The Federal Government as a customer

Given that, in the recent economy, not too many people have had money
except the government, we've been concentrating a lot of effort on
them, especially the Department of Defense. I was wondering if anyone
else here has been doing much government work, on fixed-fee or
cost-plus contracts or whatever.

The way that cost-plus contracts work seems to incentivise the
business in odd ways. For instance, they seem willing to pay for
general R&D (and its associated overheads) in proportion to how much
of our specific contracts are Federal ones. So, if you don't develop
your commercial civilian side, then you get more of those costs paid
for you. And, they're happy to pay for a variety of things, but not
including your advertising or trade shows or whatever - specifically,
a range of things that are most strongly identified with developing
the commercial side of your company.

This all seems to go against the idea, most clear in the various small
business solicitations that various agencies issue, that the
government is really trying to encourage businesses to develop
dual-use stuff, growing their commercial side from products that the
government wants. Instead, they seem to be encourage you to avoid
developing commercial sales until you've finished your general R&D,
and then to dump the government as a customer because of all the
bureaucratic overhead that cost-plus contracts cause.

How do other people see it? We've only been doing government stuff for
a couple of years, and some of that has been subcontracted through
intermediary organisations, so we don't have a whole lot of experience
- at least, we only learned some big lessons relatively recently. I
guess some of the issues may be to do with the small business
administration and the actual government customers having somewhat
competing desires.

-- Mark