Tips to Win U.S. Government Contracts: Small Business Style
Spend Matters welcomes this guest post from Public Spend Forum, a sister site of ours.
If you’re a small business and you’re prepared to put in the work, contracting with the government can be lucrative.
Before you try to land that deal, let’s look at tips to win U.S. government contracts — things like assessing your eligibility, doing your research, getting your credentials, evaluating your set-aside status and finding the contracts to bid on.
So, You Want to Contract with the U.S. Government?
It may seem daunting at first, but small business owners are just as capable of bidding on, and winning, a contract with the U.S. government as larger firms.
According to the Small Business Association, your company qualifies as a small business based on either number of employees or annual receipt totals. These numbers vary according to industry or sector, so be sure to check and see if your business does indeed meet the criteria.
Once you know your business is eligible, there are some very specific steps to take and forms and codes to acquire, but if your small business has the patience, a government contract is possible. The government already spends $440 billion per year on small business contracts, so it is worth the time and effort to successfully land one.
First Steps Toward a Contract
Gary Glynn is a market analyst at Nielsen who specializes in observing trends within procurement, specifically for small businesses. He states that most of the small business owners he spoke with are hesitant to go through the application process to procure a contract with the government.
“They just don’t think they have the expertise to navigate the ins and outs, when in fact, they are quite capable of doing it,” Glynn said.
He went on to say that it is a good idea to make a checklist and a timeline that will help them stay organized and on top of what is required of them.
Glynn recommended small business owners need to determine what they can offer to the government before they start to bid on contracts. These are broadly categorized into:
- Research/technical expertise
Goods encompass anything from computers, to cars to chemicals. If an agency has a need for it, there is a contract out there. There will definitely be specifications, however, and if your product does not meet those exactly, your application will not be considered.
Services can range from waste disposal, to catering and even lawn care. If your small business can offer a service to a government agency, your specialization would fall under this heading.
The government creates contracts for technical expertise. While this can be considered a service, it is highly specialized and usually requires the contractor to keep up to date and complete ongoing training in their methods.
Finally, GovShop is a helpful tool for suppliers to be found by government buyers. This platform offers free resources to firms with profiles, including event invitations and a place in a growing network of procurement professionals. In an ever more competitive marketplace, the networking potential of a site like this can be invaluable to the procurement firm looking for that next contract. In addition, GovShop is working on releasing resources specifically focused on helping small business procurement firms land government contracts.
Do Your Research
If you are unsure if your good or service would even be needed by the government, it might be worthwhile to consult your network of contacts or suppliers to see if they know of another business that already has a contract with a government agency. Another way to get additional information would be to find a freelance market analyst who can help you get information on your specific industry and what advantages/disadvantages there are to bidding on a government contract.
Glynn believes that talking to colleagues and reaching out to your network of contacts can give you valuable insights on how to start the process.
“Speaking with another small business owner who has already gone through the application can be very helpful to first-time participants,” he said. “They can save you time and might be able to warn you about any problems that they encountered, so hopefully you don’t encounter the same ones.”
To be considered for a contract, a small business must first apply for and obtain these:
- NAICS code — This is the North American Industry Classification System. Depending on what your business offers, there may be a couple of codes.
- DUNS number — A Dun & Bradstreet number is unique for each vendor and corresponds to the physical location of the business.
- SAM website — Register with the System for Award Management website to be included in a list of all the vendors the government does business with.
- FEIN — Federal Employer Identification Number is necessary for filing taxes.
- SIC — Standard Industrial Classification Code is used by government agencies to classify industry areas.
- PSC — Product and Service Codes are used to describe products, services and research supplied by vendors.
- FSC — Federal Supply Class Codes are used to group products together for easier management.
These codes and numbers help to classify not only what good or service you can provide, but what industry that should be grouped under. It is important to get these codes for your business and to register on the required websites. Without doing so, your business will not be eligible to bid on a contract.
Know Your Specifications
Once your business has all the appropriate numbers, see if it can also qualify for specific classifications, or set-aside codes, designated and protected by the government. Each year, out of the 23% of all contracts designated for small businesses, the government also carves out a certain percentage of its spending to be used only at businesses that meet the following requirements:
- Women-owned small business — In order for a business to qualify under this category, it must be 51% owned and operated on a daily basis by a woman.
- Minority-owned small business — Minority groups recognized under this category are Asian, Black, Hispanic and Native American. If your business is 51% owned and operated by someone falling under one of these ethnicities, you may qualify for this set-aside code.
- HUBZone small businesses — Defined as Historically Under-utilized Business Zone, this refers to businesses that have their primary physical office located in a designated HUBZone, and 35% of the firm’s total workforce resides in a HUBZone.
- Service-disabled veteran-owned small businesses — These are businesses at least 51% owned and operated by a veteran who suffered a disability while in military service.
If your small business meets the conditions of the above categories, there is an even higher chance of landing the contract you are bidding on. To be considered under one of these categories, your business will need to file the appropriate paperwork and receive acknowledgement that your business qualifies under one of these codes.
Where to Look for and Bid on Contracts
Technology has changed the way all businesses bid on contracts, and this is especially good news for smaller businesses that do not have the resources that larger ones might. All open contracts are available to view on www.FBO.gov, and there you can review all the possible contracts your business qualifies for. It is an easy-to-use website that allows you to search by agency, type of contract, location, NAICS and set-aside codes.
When submitting a bid, make sure to follow the specific instructions offered in the solicitation, and allow ample time to be considered.
Glynn said he sees a number of potential small business contractors fail each year to win a contract, simply because they did not follow directions.
“It may seem redundant, or even facile, but it is extremely important to follow the specific instructions set forth in the specification. If you miss a step or forget a piece of information, your bid, and therefore your whole chance at a contract, is put in jeopardy,” he said.
He further instructs small business applicants to, “read it carefully and make sure you have followed the instructions, then have someone else read it through to make sure you didn’t miss anything.”
Legal Help or Procurement Specialist
If any of this seems daunting to a busy small business owner, it might be worth consulting the help of an attorney or a procurement specialist. There are contract attorneys who specialize in navigating the world of government contracts, and this could save you some valuable time. However, depending on your industry or situation, this might not be the most cost-effective option.
A procurement specialist who is also experienced in viewing and obtaining contracts with the government could offer their assistance on a freelance basis. This might be a good alternative if your business offers several goods or services and is interested in pursuing multiple contracts.
A small business trying to navigate global contracts might seem overwhelming, but the Small Business Association enacted a rule in 2017 that will allow overseas contracts to be measured toward SBA goals. This is great news for small business owners who are looking for even more ways to expand the reach of their product or service. Opening up your good or service to the world market can help you reach even more customers and help your business grow even faster.
Hard Work Can Pay Off
Although it might be time consuming on the front end, it will be a great feeling when you find out you’ve been awarded a contract for your particular good or service.
While not for everyone, procuring a contract with the government can be very beneficial to a small business. There are specific goods and services it needs that can be successfully met by these smaller-size businesses, and are often more cost-effective for the government. Taking the time to become qualified and accredited to bid on government contracts can take your business to new heights and open it up to new markets.