The government contracting field is famously known for its giant industry players in different sectors like healthcare, defense, construction, and IT. With successful conglomerates dominating the field, it comes as no surprise that small businesses are getting more inspired than ever to try out their hand in government contracting.
As one of the biggest spenders in the country, the United States government remains one of the prime clients any small business can have the fortune to work with. But before you can start staking your claim for government contracts, here are the things you need to know first!
What is government contracting?
Federal government contracting is a process that lets the United States government procure goods and services from companies, whether for-profit or non-profit. Any company can start selling to the government as long as they undertake the strict and complicated application process of becoming a government contractor.
How do I become a government contractor?
The first hurdle you have to overcome should you become a federal contractor is its series of complicated requirements and application processes.
1. Familiarize yourself with the federal contracting rules and regulations
The federal government is bound by laws to ensure that the public funds are used for the right purpose. That is why the government mandates all federal contractors and vendors to strictly adhere to the contracting and acquisition policies to ensure transparency and fairness in every transaction. You can begin reviewing the guidelines stipulated in the Federal Acquisition Regulation (FAR) for starters.
2. Run regular security checks
Federal agencies, especially those who operate to safeguard national security, are very particular about this. Like most institutions, the federal government tends to avoid entering into contracts with businesses with criminal prosecution records.
To avoid any hitches when the federal agency conducts a security check, defense contractors usually run regular background checks with their employees and ensure that their business adheres to the federal laws.
3. Know your NAICS Code
The NAICS Code helps the contracting officer determine whether the goods and services your business offers fall under their current category of needs.
Fortunately, identifying your NAICS code is free and easy! Head over to this website and select which code best describes your business. It is also important to note that you can have one NAICS code, especially if your goods and products fall under different categories.
4. Request for your DUNS Number
Unlike your method of obtaining your NAICS Code, you have to submit a request at the Dun & Bradstreet website to get your unique 9-digit DUNS number. This is a free government service, and you can receive your number via your registered email within 1-3 business days.
To apply for your DUNS Number, you have to fill out the application form with these necessary details:
- The legal name of the company
- Your company’s physical address
- Your corporate contact information
- Name of the CEO or business owner
- The Legal structure or type of business
- Year your company was established
- Primary line of business
- Total number of employees (including both full and part-time staff)
5. Use Size Standards Tool
The federal government is going where small businesses can now compete for federal contracts at an equal footing with other giant companies. So, use this opportunity to maximize the benefits and assistance given to small enterprises.
One of the requirements to validate your eligibility for small business assistance programs is to confirm your business size using this Size Standards Tool by the SBA.
6. SAM Registration
The System for Award Management (SAM) houses every essential service you will need to become a full-fledged government contractor. Before you become eligible to bid for government contracts, you need first to register your business at SAM.
Here are the requirements you will need to register for a SAM account:
- DUNS Number
- Taxpayer Identification Number (TIN) and taxpayer name
- Contractor and Government Entity (CAGE) code. If you don’t have one yet, you can get your CAGE code after registering at SAM.
- Financial and banking information for your Electronic Funds Transfer (EFT)
7. Complete your SBA profile
Most government contractors overlook this vital step of the progress. Although completing your SBA profile is not mandatory, this can help you boost your chances of being seen by relevant contracting officers and gain more contract opportunities.
Contracting officers use the Dynamic Small Business Search (DSBS) tool to scout for the most suitable federal contractor for their project. Registered small business contractors appear in the search, so your SBA profile must contain a brief description that defines your company’s identity, especially your products and services.
Where can I find government contract opportunities?
Proactively looking for federal contract opportunities is the key to winning more government contracts, especially if you are a small business that is still new to the field. To help you get started, here are some of the online platforms that you can use to scout for government contract solicitations:
Federal agencies use the SAM.gov platform to publish all types of contract notices for federal contractors, including pre-solicitation, solicitation, award, and sole source notices.
Managed by the General Services Administration, the Multiple Award Schedules (MAS) are long-term government-wide contracts that provide local, state, and federal governments commercial goods at a volume discounted price. This type of government contract favors small businesses, especially those who just entered the industry, given its ease to win a deal compared with other government contracts.
Are there government assistance programs for small businesses?
Yes. Given how the current administration is focusing on leveling the playing field for small businesses, more government initiatives are geared toward assisting small-time entrepreneurs.
Following the federal government’s goal to award 5% of federal contracts to small businesses, this robust 9-year program assists disadvantaged businesses belonging to certain socio-economic classes.
Procurement Technical Assistance Centers (PTAC)
PTACs offer a wide array of services to businesses looking into entering the government contracting industry. These learning centers can help evaluate your business readiness for government contracting, guide you through the complicated registration process, and more.
What are the pros and cons of government contracting?
Becoming a government contractor takes a lot of dedication, grit, and skill to pull off. Take into consideration these contracting pros and cons as you weigh in your options:
Pros of government contracting
• Earn bigger profits compared to other business endeavors.
• Diverse contract opportunities due to federal agencies’ varying demands.
• Timely and assured compensation.
Cons of government contracting
- Steep learning curve due to complicated processes and systems in place.
- Unexpected federal agency budget cuts due to myriad factors.
- Lack of career stability due to a per-project agreement.
Explore the pros and cons of government contracting with this article.
What is government subcontracting?
Instead of forging the path directly to become a government contractor, you can test the waters first with subcontracting.
A subcontractor is an industry specialist. Prime government contractors hire subcontractors to use their specialized skill set to fulfill an area of a contract. For example, the prime contractor is tasked to construct a new government building. In this case, the prime contractor can hire subcontractors specializing in engineering, plumbing, electricals, and more to execute the project successfully.
Compared to prime government contractors who work directly for the government, a subcontractor instead reports to the excellent government contractor. The lack of a direct relationship between a federal agency means fewer requirements to fulfill should you desire to be a subcontractor.