How to Thrive in the B2G Model for Defence Tech: A Practical Roadmap
Selling to government changes what the company has to be, not only what it says. A commercial software business needs a product, a sales function and a support function. A government supplier needs those plus capture, bid qualification, proposal production, contract administration, an accounting system that survives audit, and someone accountable for security and export classification.
Companies underestimate this and then attribute the resulting failures to procurement being slow. What follows is the operating model rather than the sales process. How the buying decision works is covered in the piece on defence procurement.
Capture is the function that decides win rates
The distinction that separates suppliers who win from suppliers who bid.
Capture happens before a tender is published. Understanding a requirement while it is still forming, meeting the people shaping it, testing whether the emerging evaluation criteria favour your approach, and deciding whether the competition is worth entering.
Proposal is writing the document once the notice appears.
A company that first learns of a requirement when the notice publishes has generally already lost, because the specification reflects conversations that happened over the preceding months and it will favour whoever had them. This is not corruption. Buyers consult the market when writing requirements, and the suppliers present in those consultations produce specifications that fit what they do.
Capture is the function most small suppliers lack entirely, and adding it changes outcomes more than any improvement to proposal writing.
The bid decision
A bid consumes weeks of senior time that has an alternative use, so the decision deserves written criteria rather than enthusiasm.
Read the qualification criteria before the title. They determine eligibility, and a company that cannot meet them is not competing, whatever the technical fit.
Check where the thresholds sit. A requirement for named individuals with particular credentials, as opposed to company-level capability, is a different test and frequently a harder one.
Compare the deliverable to the certifications demanded. Where a modest consulting or software deliverable requires implementation-level vendor certifications, the criteria were probably written around a specific supplier.
Establish whether anyone spoke to the buyer before publication. If not you, then somebody.
Do the arithmetic. Cost of preparing a bid, multiplied by the number of bids needed for one win, against the gross margin of the contract. Many small suppliers find that at their current win rate, bidding is unprofitable whether or not they win. The answer is to bid less and prepare more, not to bid harder.
A disciplined no costs a day. An undisciplined yes costs a month.
Pricing models and who carries the risk
Firm fixed price. The supplier carries overrun risk. Suitable for well-understood work, unforgiving of optimistic estimating, and simpler administratively.
Cost reimbursement. The buyer carries overrun risk, and in exchange the supplier must substantiate costs to audit standard. That requires an accounting system capable of allocating direct and indirect costs defensibly, which is a genuine capability rather than a formality.
A small company without that system should be careful about cost-type work, because the administrative burden can consume the margin it was meant to protect.
Either way, price the cost of contract administration itself: reporting, milestone documentation, audit response and the meetings. It is real, recurring, and routinely left out of the bid model.
Teaming
Most first defence contracts come as a subcontract, and that is a reasonable route. It supplies revenue, a reference and integration experience without requiring the full administrative apparatus.
Three terms in a teaming agreement decide whether it is a good one.
Exclusivity. An agreement preventing you from working with a competing prime, on a bid that may not win, can remove you from the market for a year.
Customer access. Whether you have any direct relationship with the end user, or whether everything passes through the prime. Complete dependence means the prime can decide your future.
Payment terms. A prime paid in ninety days who pays you in a hundred and twenty has transferred their working capital problem to the smallest company in the chain.
Read it with the attention given to the main contract, because its economic effect is comparable.
Frameworks
A framework agreement qualifies suppliers once, then awards individual contracts through short call-off competitions among those already admitted.
The qualification effort is substantial and it is spent once. Afterwards, each opportunity requires a fraction of the work a full competition demands, and the competitor set is limited to those already on it.
For a small supplier, a place on the right framework is frequently worth more than any single contract award, and it is the objective that should shape the first two years of effort.
The compliance function a small company actually needs
Less than a department, more than an intention.
One named person with real authority, owning export classification, clearance status, contract obligations and the quality system, supported by external specialists where qualified advice is required.
The failure mode is diffusion. Everyone assumes somebody checked the export position of a component, or whether the clearance covers the person doing the work, and nobody did. A single owner with a checklist outperforms a general commitment to compliance by a wide margin.
Which standards apply follows the customer rather than the sector. Quality management to ISO 9001 is commonly required. Information security certification is increasingly requested. Sector-specific requirements vary by country and programme, and the sensible move is to establish the specific requirement before investing in a certification that may not be the one asked for.
Where European opportunities are published
Above threshold, notices appear in Tenders Electronic Daily, which aggregates across the union.
Below threshold, on national portals, and this is where most opportunities suitable for a small supplier actually sit.
Qualification is commonly standardised through the European Single Procurement Document, and e-Certis maps which national certificate satisfies a given requirement in each member state, which matters when bidding outside your own country.
Defence procurement follows its own directive and a proportion is handled nationally outside open competition.
Most guidance on this subject is written around the American system. For a European supplier the portals, thresholds and documents are different, and the American vocabulary is a poor guide.
Concentration risk
A supplier deriving most of its revenue from one public buyer is exposed to a budget cycle it cannot influence. That affects valuation, borrowing capacity and negotiating position, and it is usually presented to investors as strength.
Manage it by pricing it. Build a commercial revenue line that does not depend on the same budget. Pursue a second national customer while the first is comfortable rather than after it is not. And describe the concentration honestly in fundraising, because a diligence process will find it and the discovery is worse than the disclosure.
A realistic first two years
- Choose two or three buying organisations whose mission genuinely fits, and learn how each one buys.
- Start clearance and certification early, since both gate eligibility and neither can be accelerated later.
- Build the bid decision discipline before the first bid, not after the fifth.
- Take a subcontract for the first reference, on terms you have actually read.
- Target a framework rather than a single contract.
- Establish the accounting and administration that a contract will require, and price it into the bid.
- Maintain commercial revenue through the whole period.
Warning signs
- Bidding on everything. No qualification discipline, and the win rate will show it.
- Learning about requirements from published notices only. No capture function.
- No named owner for export control or clearance.
- Bid pricing that omits contract administration.
- Financing the payment gap from equity.
- Treating one large public contract as proof of a business rather than as concentration risk that has not yet materialised.
The point
The B2G model is not a sales channel. It is a set of internal capabilities: capture before publication, a real bid decision, pricing that reflects who carries risk, teaming terms read properly, and one person accountable for the compliance that determines eligibility.
Companies that build those find government revenue stable and worth having. Companies that treat it as commercial selling with more paperwork spend two years bidding and conclude the market is closed.
