Sometimes machining companies tell Graff-Pinkert they have long running, lucrative jobs supplying parts to the D.O.D., and it always has seemed a little mysterious to me. What are these parts they are supplying to the government? How does a company get to become a supplier to the D.O.D.?
Is supplying parts to the U.S. Government a good idea for a small-sized or medium-sized machining company?
I got some answers from today’s guest on the podcast, Mike Topolewski Jr. Mike is Vice President of Sales and Operations at Perigee Manufacturing Company in Detroit, Michigan.
Perigee is a three generation, screw machine and CNC shop with a specialty in fasteners. The D.O.D. has been a significant customer of theirs for decades.
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Noah Graff: What was the catalyst that got your company to start supplying to the Department of Defense?
Mike Topolewski: We have been making defense components almost for our full existence—55-plus years. We did indirect (work) prior to being certified as a defense contractor.
Becoming a direct defense contractor can be a very daunting path. It’s not straightforward, so to speak. There are multiple steps and multiple departments you have to go through to get certified. The one caveat is we’re a fastener precision turn component manufacturer. The way that we do business can be very different than a service provider to the Department of Defense.
Graff: How do you get certified to be a direct defense contractor?
Topolewski: It’s a multi-step process.
It was complicated. A lot of bureaucracy. I wouldn’t say it was necessarily difficult. It was a long process. There’s quite a bit of paperwork and background checking to confirm we are viable corporation?
The first steps are getting registered with federal government, getting issued a cage code, so to speak. I believe the acronym stands for Corporate and Government Entity.
Our code is 1X4X7. When you bid on contracts and you are awarded contracts, that is public record. It’s available to anybody to see which entity was awarded what.
Graff: What is a PTAC (Procurement Technical Assistant Center)? How can they aid people in doing work for the D.O.D.?
Topolewski: These are agencies that I believe are backed by the federal and or state government to assist contractors with existing contracts.
These contracts are very long. They’re not one or two pages. The government is so big, and there is tremendous bureaucracy. The PTACs can be a very helpful resource.
Graff: What is the bidding process like to get government contracts?
Topolewski: The bidding process for our industry is typically done on a bid board.
There are several procurement boards that the government uses to disseminate the solicitations. You need to have the credentials and the access to these portals. You go in there and you see what the government is looking for, and you review these solicitations, which can be longer than the contract sometimes.
Then you enter your bid via the portal.
We’re bidding on contracts that are typically for discrete number of parts with a specific delivery date requirement.
Graff: What is an example of a quantity that your company would bid on? Obviously, you’re screw machine people, so you’re making a lot of parts.
Topolewski: We are. But we have eight CNC machines which are running low volumes as well. Back during the war in Afghanistan or war in Iraq, there were times when we were making very small quantities and they were immediately sent out overseas to the troops.
Graff: Tell me about your bidding strategies for getting D.O.D. jobs.
Topolewski: Once you enter your bid you are notified via email or via the portal if you’re awarded the business. You’re also notified if you aren’t.
You can see previous contract history for that particular part. You have a general idea of the market value, maybe not the current value, especially through the pandemic and supply chain issues, but you have an idea if you’re going to be somewhat competitive.
There are too many things out there to bid on. You have to be selective. You have to know what your strengths are, what you’re competitive at, and go after that.
Graff: What are the greatest challenges to supplying parts to the D.O.D.?
Topolewski: Obviously, there are the obvious barriers to entry to doing defense work. Getting registered, going through the various steps. Many companies don’t have the patience or the wherewithal.
Graff: So you’re saying there’s less competition, which is an advantage.
Topolewski: Possibly yes. And for those reasons, but also the length of these contracts and the requirements that are forced upon the contractor. That contract has many clauses that may have costs associated with them to our company.
One obvious difference is packaging requirements. If you’re bidding on these contracts, they don’t just want them in a box and shipped to the depot. They have to be sometimes individually bagged.
And some of these bags are expensive, and they have RFID enabled labels and barcodes. Cybersecurity is another (issue). We are required to have certain cybersecurity measures in place in order to bid on these contracts.
Graff: What are your favorite and least favorite parts of supplying the D.O.D.?
Topolewski: We make a fair amount of parts that go into various vehicle platforms within the military. We
take pride in supporting and protecting the war fighter. These parts are critical to their safety.
Another positive is that federal government pays very well, and they pay on time. And if they don’t, you get interest.
Graff: That makes sense. They want to be able to rely on their suppliers.
Topolewski: The defense industrial base in this country is critical to the national security of this country, and they take that very seriously.
If these defense contractors go away and especially critical ones then we have a real issue. It’s important.