In fact, the U.S. Federal Government is the world’s largest buyer of goods and services. It spends over $400 billion each year, according to the U.S. Government Accountability Office (GAO). It buys a wide range of products and services from small businesses. All levels of government – from federal agencies down to the smallest municipality – could provide the source of your next best customer.
However, doing business with the government involves negotiating several qualification hurdles and a complex bidding process, fraught with its own terminology and rules. Just ask Patricia Pliego Stout, President and CEO of the San Antonio, Texas-based Alamo Travel Group. Her company has nurtured relationships with local, state and federal agencies to create a thriving business with 14 branch offices doing business in seven states.
Stout was introduced to government contracting at a small business seminar. It required determination and a lot of help to succeed, but today, 85 percent of Alamo’s business comes from government sales. It took four years for Stout to land her first government contract, and another six before the Department of Defense signed on. “I never gave up. That’s not in my vocabulary,” she says. “But it’s wonderful when you win a contract. When we win a bid, it’s like Christmas in summertime.”
In preparing to sell to the government, Stout keeps these key principles in mind:
Maintain financial health
Alamo knew it had to be financially sound in order to to go for its first government bid. Government contracts generally require proven financial performance including steady cash flow and an excellent credit history. “Alamo had a strong track record of eight years in the travel industry before we began to market to government agencies,” Stout says. “Our business maturity helped us land contracts.”
Although many agencies will do business with an organization without formal government certification, getting certified – a process that can determine if your company has the resources to fulfill a specific contract – proves you meet the requirements of a particular subcategory. Specific certification may vary depending on what you sell and what kind of government agency is making the purchase. And while the process may be time consuming, certified businesses may get preferential treatment in the bidding process. “Much of our expansion can be attributed to Alamo Travel’s certification as a travel service provider for local, state and federal employees,” Stout says.
Congress mandates that 23 percent of all federal contracts be reserved for small businesses. In addition, a small business may qualify for preferential treatment as an 8(a) small disadvantaged business, HUBZone (for small businesses located in distressed areas) or disabled veteran-owned small business. Taking advantage of these “set-asides,” often listed in the contracting documentation, helped give Alamo a leg up. “Government set-aside contract opportunities for small businesses opened the first door for Alamo,” says Stout.
Look for help
It’s not easy navigating the labyrinthine world of federal contracts. Fortunately, there are people and agencies that can help you through the maze. Most federal agencies have Offices of Small and Disadvantaged Business Utilization (OSDBUs) that can help you find marketing opportunities within their agencies and answer questions about the bidding process. Stout took immediate advantage of this kind of assistance with her first bid, for the City of San Antonio. “The City team helped me find the bid, and guided me through the entire process,” she says. I couldn’t have done it without them.”
While government contracting may appear impersonal, Stout has found that building personal relationships can be critical to winning a bid. Businesses that network and cultivate relationships have an edge in learning more about bid opportunities, and the same networking techniques you’d use to cultivate new customers can apply to the government sector as well. Stout takes advantage of business-to-business and buyer-to-supplier networking opportunities such as business opportunity fairs, expos, vendor outreach sessions and agency procurement fairs. “I go to as many conferences and meetings as I can,” Stout says. While there, she hands out CDs with her company profile to procurement officers.
Learn more about contracting
If you’re interested in becoming a government contractor, you can get more information from these resources:
- U.S. Small Business Administration
As the federal government’s small business authority, the SBA is responsible for ensuring that smaller companies can take advantage of government contracting opportunities.
- Commerce Business Daily
This publication of the Commerce Department lists numerous government contracting opportunities.
- Central Contractor Registration
This database is the federal clearinghouse for vendors selling to the government.