Contrary to popular belief, the government contracting industry offers excellent opportunities for growth to small businesses, not only to giant corporations. With the current administration pushing to create an equal playing field for all companies, especially small and disadvantaged businesses, now may be the perfect time to enter the industry.
However, it is important to note that becoming a government contractor is a serious undertaking. To stake your claim in this hundred-billion-dollar industry, you have to start learning the ropes as early as you can. Here are the things you should know if you want to begin navigating through the government contracting industry’s complicated system.
What is a government contractor?
A government contractor is a company, for-profit or non-profit, that offers its goods and services to government agencies.
The most common way for a government contractor to start working for the government is by winning a federal contract bidding. In most cases, the government contractor will submit a proposal bid to the contracting officer who published the solicitation bid. Several factors can affect the winning chance of the federal contractor to seal in the deal—from offering the lowest cost of the proposal to having a proven track record for executing projects related to the bid.
Is government contracting worth it?
Being a government contractor offers tremendous benefits to businesses, particularly to small businesses, such as:
1.) Earn significant profits
It is undeniable that government contracting is a lucrative business venture. Each year, the federal budget earmarked for government contracts increases. In 2019, the United States government awarded $599 billion worth of contracts. A year after that, the federal government has achieved a record-breaking $682 billion government contract.
Additionally, this trend is predicted to rise even higher, as said by Senior Vice President for Information Solutions of Deltek, Kevin Plexico. According to Plexico’s industry forecast, it is to be expected that the budget for federal contracts will increase higher given how the recent legislation passed in favor of developing infrastructures to kickstart the economy once more.
On top of that, things will also be looking up for small businesses. As cited in Deltek Clarity Government Contracting Industry Study, it was observed that small businesses achieved greater success in acquiring federal contracts in 2021. With this favorable forecast on the horizon, now is the perfect time to enter the industry.
2.) Get government contracting assistance for small businesses
The Small Business Administration (SBA) is America’s official organization that promotes and protects the rights of every small business owner. With the federal government, SBA maintains the 8(a) Development Program. This 9-year business development program is designed to assist disadvantaged small businesses looking into carving a name for themselves in the government contracting industry. Small businesses that belong in certain underserved socio-economic classes, such as women-owned and service-disabled veteran-owned businesses, are given special considerations in the federal marketplace.
Qualified disadvantaged small businesses are granted preferential consideration in awarding specific federal contracts. Through the program, these small business owners are also given the opportunity to connect with industry professionals and seek mentors that can be highly beneficial in their business growth.
3.) Enjoy long contract periods
Winning government contracts is hard work. Before you are considered for a federal contract, you have to dedicate considerable time and resources. However, this endeavor will be worth it in the end. Aside from the opportunity to earn big, federal contracts last for a long time. On average, a federal contract can last from a year to three years. And if the federal agency is delighted with your service, then they can extend your contract even longer.
4.) Never miss a payday
The federal government strictly adheres to the agreed payment scheme and schedule stated in the federal contract. So even if you operate on a contractual basis with the government, your compensation will be wired to you within the specified timeframe. Depending on the agreed-upon terms, the payment period usually falls within 30-60 days.
1.) It will take a long time to prepare and learn the industry
It is usual for small business owners to feel discouraged to enter the industry, given how tough and complicated it is. Aside from worrying about the documents you will need to become a qualified government contractor, you also have to think about how you will manage your business at the same time.
The road to becoming a full-fledged government contractor is arduous and complex. Since the resources used to fund the federal contracts came from the public’s taxes, the federal government has put stringent processes in place to ensure just and fair transactions between the agency and the contractor. But, don’t fret! This article will help you navigate through these procedures.
2.) Lack of stability
Government contracts are not permanent. Although a contract with the government lasts for quite a long time, there is no guarantee that a next contract will follow that. In this highly-competitive industry, it comes as no surprise that you will be competing with countless other small businesses for a government contract, so you have to be on your toes always.
3.) Slow to show profits
Government contracting is not a one-night miracle. You have to dedicate your time and effort before things come to fruition.
On average, you will need roughly two years to plan your business strategy and arrange your requirements—excluding the time you will need to scout for opportunities, prepare for a bid, and wait for the federal agency’s response.
4.) Unexpected government agency budget cuts
There will be unexpected factors that can lead to abrupt federal budget cuts for government contracts, such as the global health pandemic, COVID-19. These kinds of unforeseeable circumstances can make you lose your footing. So just like any other business venture, make sure to prepare a backup plan ahead of time.
How do I become a government contractor?
To properly filter and select which businesses are qualified to become a government contractor, the government has implemented a series of stringent procedures for anyone who wishes to become one.
1.) Analyze the strengths and weaknesses of your business
As a small business owner, you must have done your SWOT analysis of your enterprise during your planning stages. If you decide to become a government contractor, you have to continue this practice. The insights you will gain from this will be instrumental in your business plan and will help you find a better position in the federal marketplace.
2.) Perform a federal market research
To succeed in a highly competitive industry such as this, you have to keep tabs on every event and trend happening within the government contracting field. Stay tuned with the latest news about the industry by subscribing to our newsletter and monitoring the government’s spending trends at USASpending.gov.
3.) Get familiar with the federal rules and regulations
As an industry riddled with complicated rules and systems, you must master the laws and regulations that govern it. You should familiarize yourself with the Federal Acquisition Regulation or FAR, for starters.
4.) Maximize every learning opportunity available
It is a common fact how confusing the government contracting industry gets. Luckily, learning resources and coaching centers are readily available to budding government contractors. For example, you can consult your nearest Procurement Technical Assistance Centers (PTACs). PTACs can assist you by evaluating the readiness of your business to enter the field, the requirements you will need to apply as a qualified government contractor, and even connect you with known industry professionals who can provide you with their valuable insights. They can also tell you whether you are eligible for any socio-economic assistance programs that can equip you to play in this highly-competitive field.
Not only that, you can start by reading up guides and articles online, such as this one!
5.) Acquire your DUNS Number
Once you have laid down your foundations, you should proceed to the next step: fulfilling all your technical requirements to become a government contractor. And you can start by requesting your DUNS Number at the Dun & Bradstreet website. This government service is easy and completely free of charge. To get your DUNS Number, you simply need to fulfill their quick requisition form then wait for at least 1-3 business days before your DUNS Number is sent to you via email.
6.) Identify your NAICS Codes
NAICS Codes are a set of numbers that helps the government classify businesses for statistical purposes and identify the industry your products and services belong in.
To get your NAICS Code, you only need to visit this official website, then select which of the codes in their list best describes your business. If you offer different goods and services, you can have one or more NAICS Codes.
7.) Register at SAM.gov
This is one of the essential steps in your government contractor application process. Your SAM registration qualifies you to bid and win government contracts, allowing government agencies to scout your business for contract opportunities.
- Your 9-digit DUNS number
- Your federal tax ID or Employer Identification Number (EIN)
- Your CAGE code or NATO code, whichever is applicable.
- Your financial and banking information to set up your Electronic Funds Transfer (EFT)
8.) Promote your business to federal agencies
The best way to promote your small business in the federal marketplace is by building up your reputation and making your presence known to relevant federal agencies.
Complete your SBA Profile
Having a complete SBA profile helps boost your chances of being scouted by government buyers since they can have a glimpse into your businesses instantly, so add a brief explainer that will describe your business and your expertise. However, this is a step commonly overlooked by other government contractors. As soon as you complete your registration at SAM.gov, you should start fulfilling your SBA profile.
Build a website
Thanks to technology, making your business known has never been this easy. You should put who your business is, your history, your portfolio of relevant experience, testimonials, and other relevant information about your business on your website.
Establish your network
Networking is a vital practice in the industry. By establishing a connection with industry movers and key decision-makers, you get to stay abreast of the latest industry trends, gain access to referrals, meet a mentor, and more!
Networking can be downright intimidating, especially if you just entered the industry—but all it takes is practice and grabbing every networking chance you see.
Where can I find government contract opportunities?
Contracting opportunities can come from anywhere, but most contract opportunities are published at SAM.gov. Most federal agencies publish different notices on this platform, such as pre-solicitation, solicitation, award, and sole source notices.
To lookup for a contract opportunity to bid to, simply head over here and type in the relevant keywords in the search box there.
What contracts are the easiest to win?
It is undeniable how challenging it is to win a government contract, especially if you are a small business owner who is still new to the industry. Fortunately, certain government contracts called set-asides level the playing field for small businesses.
Set-aside contracts are government contracts that are reserved exclusively for small businesses. Government contracts whose value ranges from $3500 to $150,000 are automatically considered set-asides.
How can I write a government contract bid?
A compelling and well-written government contract bid is instrumental in winning federal contracts. Government buyers use this document to assess the skills and capabilities of your business and whether or not you have what it takes to execute the project.
For starters, you can ask for insights from someone experienced within your network and even lookup templates on the internet. However, you should avoid sticking to the template complete, or otherwise, you will risk your proposal looking generic. So before you start penning down your bid, here are the things that you need to remember:
1.) Review the RFP document thoroughly
The bidding process begins with the publication of the Request For Proposal (RFP). The RFP is the federal document that contains all the necessary details about the government contract. And that is why it is imperative to read and digest everything stated there carefully—particularly sections B, C, L, and M. The information you will gather here will guide you through the process of writing the proposal. Neglecting to do so may cause you to miss specifications that may hurt your chances of winning the deal.
2.) Identify the project goals
To identify the project goals and objectives, you should look at Section C or the Description / Specifications / Statement of Work section of the RFP. Fully understanding the needs and expectations of the federal agency will help you come up with a strategy on how you can fulfill the government contract by maximizing your business’s capabilities.
3.) State how do you plan to execute the project
When writing a contract bid, you should remember that you are also competing with other businesses like you. So, when coming up with your solution that will address your client’s needs, make sure that your solution is efficient, cost-effective, and above all levers on your strengths.
4.) Have a trained eye review your proposal
The federal agency will be nitpicking every contract proposal. They will evaluate whether the government contractor adhered to the instructions stated in the RFP and if the contractor’s proposed solution works for them. So to ensure that your proposal will have an increased fighting chance against other bids, have someone at your proposal or hire someone experienced to share their insights with you. The last thing you want is to be eliminated from the pool based on technicalities and overlooked mistakes.
5.) Wait for a response
Since the federal agency has to sift through countless contract bids, it will take some time to hear a response from them. On average, they will take about 30-120 days to evaluate your proposal. So during that period, make sure that your contact channels are open and you are prepared to answer any clarifications from them.
To learn more about writing a government contract bid in detail, you can continue reading in-depth in this guide.