If you want to grow your business further, look no farther than the United States government!
In the fiscal year 2020, the federal government has achieved a record-high $682 billion worth of awarded government contracts. The COVID-19 pandemic recovery efforts gave rise to more government contract opportunities. According to Deltek’s Senior Vice President Kevin Plexico in his industry forecast, things will continue to look up for the government contracting industry.
As one of the biggest spenders, the United States government is also one of the biggest clients businesses can have. Although aspiring government contractors are deterred from venturing further into the industry because of the stringent applications and requirements, you don’t have to lose hope. Instead, you can try to nail down the fundamentals first with these five frequently asked questions about government contracting!
1. What is a U.S. government contractor?
The United States government contractor is a non-profit or for-profit company or entity that enters into a contractual agreement with the government for products and services.
A government contractor can become a dedicated contractor for a federal agency, handle multiple projects from different government agencies simultaneously, or enter into a Schedule Contract under the General Services Administration. Explore which path aligns with your strengths and business goals, and most importantly, decide which sector you will position yourself in. The fastest-growing sectors right now are healthcare, defense, construction, and I.T.
Defining the U.S. subcontractor
A US subcontractor is another type of contractor working in the government contracting industry. However, instead of directly entering into a contract with the federal government, they work under a prime government contractor. If you are unsure whether you want to enter the contracting industry fully, you can test the waters with subcontracting. Here is a guide on how to become a subcontractor.
2. How do you get into government contracting?
The stringent application process to qualify as a government contractor deters many from venturing into this industry. But that does not mean that you should also give up your shot in making it in the government contracting industry. Here are some of the things you have to prepare before you enter the industry:
Go local or national
If you choose to become a federal contractor, you can take up whatever project you are qualified for. You can focus your efforts on seeking projects closer to home by asking your local government or trying it big with federal government projects.
If you choose to become a local government contractor, you should familiarize yourself with your state’s different requirements and application processes. Here is a valuable resource from USA.gov to learn more about it. On the other hand, if you choose to become a federal government contractor, you can know more about it as you go along with this article.
Conduct a market research
Entering the government contracting industry is a huge change. So before you decide whether you want to commit yourself to this endeavor, you should research your market first. Take a look at your prospective federal agencies, your competitors, and the overall contracting landscape to see whether your target market needs whatever you are selling. You can visit USASpending.gov to see the federal industry spending trends.
Identify your Unique Selling Points (USPs)
The federal contracting industry is a highly competitive environment. To gain an edge over your competitors, study the data you have gathered from your market research, evaluate your business strengths, then try to see how you can position yourself in the market.
Run a background check on your employees
It is essential for federal agencies, especially with the Department of Defense, that your business, including your employees, maintains a spotless criminal record. You can include in your hiring procedure steps to ensure that your employees don’t have any ongoing or pending criminal prosecution. Otherwise, your contracting firm may not pass the federal agency’s security clearances.
3. How do you get a government contract?
As a government contractor, you have to proactively seek contract opportunities in the appropriate channels, such as the System for Award Management website SAM.gov. This free-to-use government website is your one-stop-shop for your government contracting needs. Federal agencies use this platform to publish opportunities and scout potential contractors for their projects.
However, before you jump into these contracting opportunities, you have to ensure first that your business has been registered and recognized as a full-fledged government contractor. This might be the most confusing part of your journey, so here is a beginner’s guide to help you nail down the basics. Here is an overview of what are the most important requirements you have to fulfill to become a government contractor:
Request for your DUNS Number
The Data Universal Numbering System or D-U-N-S Number is your unique 9-digit identifier code. Your DUNS Number is required for you to qualify for government contracts, grants, and loans since this is one of the ways the federal government evaluates your financial capability. Apply for your DUNS Number for free and receive it within 1-3 business days.
Identify your NAICS Code
You don’t have to send an application to know your NAICS Code. Visit this website site and then see which NAICS Codes from the list are the most appropriate for your products and services.
Confirm your business size
If your enterprise qualifies as a small business, The Small Business Administration (SBA), the official government organization for small businesses, offers a wide range of services and assistance to small entrepreneurs, particularly those who belong in certain socio-economic categories.
Register at SAM
You can only start bidding for government contracts once you have accomplished your SAM registration. This government service is free of charge and can be done conveniently online. Learn more about SAM on the following question.
4. What is SAM in government contracting?
The System for Award Management (SAM) is a government portal that enables businesses to register as government contractors, explore contract opportunities, access publicly available awarded contracts, and more!
Registering your business at SAM
You can sign up for a SAM account here by preparing the following requirements:
- Legal business name, physical address, entity type, and general entity information.
- DUNS Number
- Taxpayer Identification Number (TIN) and taxpayer name
- If your business is located within the U.S., provide your Contractor and Government Entity (CAGE) code. Otherwise, you can obtain your CAGE code after your SAM registration. If your business resides outside the U.S. or in one of its territories, you must get your NCAGE code first.
- Banking and financial information to set up Electronic Funds Transfer (EFT)
5. What is required to bid on government contracts?
After fulfilling the strict application process to become a government contractor, you must prepare your contract proposal. Here is a guide for proposal writing to help you get started.