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Before You Bid for Government Contracts: The Crucial Details You Need to Know

Bidding on government contracts can seem overwhelming, but asking yourself five critical questions can help you prepare.
Founder and Editor-in-Chief, Afford Anything LLC
March 17, 2015

The U.S. government may be known as the “world’s largest customer,” but selling to them is anything but simple. There are complex and detailed processes necessary for bidding on contracts, and rightly so. In fiscal year 2013, small businesses received 23 percent of government contracts, valued at around $83 billion. With that amount of funding at stake, straight-from-the-source advice for competing can be invaluable.

The American Express OPEN for Government Contracting: Success Series conference in Atlanta brought together entrepreneurs and speakers from government agencies to share first-hand stories, tips and advice to help small businesses pursue federal contracts.

During the session Where to Begin: Government Contracting 101, speakers from the Georgia Institute of Technology and the Small Business Administration shared a detailed synopsis of how small businesses could gain initial traction.

Ask Yourself Five Critical Questions

Ask yourself these five key questions before you begin, recommended Jennifer Tilden, supervisory business opportunity specialist at the Small Business Administration:

1. Does the government buy what I sell?

2. Where within the government is my product or service bought?

3. What does the government call my product or service?

4. When will the next purchase occur?

5. How can I access the purchasing history?

Let’s skip the third question for a moment, and turn our attention to the other four questions outlined above. To determine whether or not the government buys your product or service—and to view which agencies are the major purchasers—turn to these three websites:

FPDS.gov: This website shows the purchase history of federal agencies: Who issued the contracts? Which companies won the bids? What was the winning bid amount? Use this to answer questions one, two and five: Does the government buy your service, and if so, which agencies seek it and what’s their purchase history?

FBO.gov: Colloquially known as “Fed Biz Opps,” this website reflects the products and services that the government is actively seeking. (In official parlance, these are called “current procurement opportunities.”) Use this to answer question four: When will the next purchase occur?

Gtpac.org/isearch: This search engine, powered by the Georgia Tech Procurement Assistance Center, searches more than 1,200 government databases simultaneously. Chuck Schadl, senior counselor with the Georgia Tech Procurement Assistance Center, described it as “the Google of government contracting.” Use this as a supplement to the two websites above to discover procurement history, identify buyers and find current opportunities.

These websites might help you find the answers to questions one, two, four and five, but you'll have a hard time making progress if you're not searching for the right terminology. The third question is overlooked but crucial, said Tilden.

A small business, for example, may search for business opportunities by looking up the keywords “janitorial service” or “custodial service.” If the business owner doesn't find any listings under these keywords, they may erroneously conclude that there are no current opportunities, according to Schadl. In reality, however, that business is simply searching for the wrong keyword. These bid opportunities are often marked as “housekeeping services.”

Why bother using keywords or searching the internet at all?

The government buys so many goods and services that business owners can't simply print a list of every current bidding opportunity across all agencies and departments. That list would be too long. Instead, the best way to discover opportunities (as well as research the government's procurement history) is by searching the Web.

But online research isn't the only step, the presenters both said. Face-to-face meetings and in-person relationships can also yield an enormous benefit.

Expand Your Network Face to Face

Tilden and Schadl both emphasized that expanding your in-person network is also crucial to small business success. They recommended participating in government trade shows and expos and attending pre-bid conferences and bid openings. Allow yourself enough time to form relationships and sell to the government.

Don’t just network with government agencies, Schadl said. Create strong relationships with other private sector contractors who you can team with, particularly if your companies have complementary skills. Many small businesses gain a toehold into the field of government contracting as a subcontractor, working under a prime contractor.

In fact, prime contractors who are awarded contracts of $650,000 or more (or $1.5 million or more in the field of construction) are required to use subcontractors. Many turn to Sub Net, an SBA-operated website that prime contractors use to look for subcontractors. Registering with this site is an important first step, but nothing beats the power of face-to-face networking.

“Don’t stare at your phone during these conferences,” said Tilden. “Talk to your neighbors. You might be sitting next to the head of procurement at a major agency, or next to a potential joint venture partner or great prime contractor.”

Double-Check the Details

Companies have lost million-dollar contracts due to a late proposal, Tilden noted.

“Send your bids in early,” Tilden said. “Don’t assume you can send it at 3:59 pm if the deadline is 4 pm, because sometimes email goes down.”

Prior to submitting a bid, double-check your quote carefully. Even a small misstep can eliminate you from consideration.

“Misplacing a decimal point will kill your chances,” Tilden said.

Get Help When Registering

First-time government contractors need to register for the following company codes: an Employer ID Number (EIN) from the IRS, a nine-digit Data Universal Numbering System (DUNS) from Dun & Bradstreet, one or more registered North American Industry Classification System (NAICS) codes, a National Institute of Governmental Purchasings' (NIGP) code, and find the Federal Supply Classification or Product Service Code (FSC/PSC) that matches your offerings.

Is your head spinning yet? Don’t worry, there’s only one acronym you need to remember for help: PTAC, the Procurement Technical Assistance Centers. This nationwide network, established by Congress in 1985 to encourage small-business participation in government contracting, provides free counseling on how to identify and compete for government contracts. It can assist with everything from vendor registration and certifications to market research and bid submission information.

Be Prepared for the Next Step

Many businesses develop a laser-focus on winning contracts, to the exclusion of planning how to proceed once they’re awarded the contract. To achieve repeat success, develop a plan for how to take action after your company wins the contract.

Your plan will vary based on the contract specifications and timeline, but in general, you'll want to read the contract carefully to make sure you can stay in compliance, ask questions, and think about how you're going to manage cash flow prior to payment.

“The first day you get a federal contract is the best and worst day of your life,” Tilden said. “On one hand, you have a federal contract. On the other hand, oh my God, you have a federal contract.”

OPEN Forum: Government Contracting is a program designed to connect small-business owners to government contracting opportunities, which are an often-overlooked revenue stream. To learn more, visit openforum.com/governmentcontracting.

The information contained in this article is for generalized informational and educational purposes only and is not designed to substitute for, or replace, a professional opinion about any particular business or situation or judgment about the risks or appropriateness of any government contracting strategy or approach for any specific business or situation. THIS ARTICLE IS NOT A SUBSTITUTE FOR PROFESSIONAL GOVERNMENT CONTRACTING ADVICE. The views and opinions expressed in authored articles on OPEN Forum represent the opinion of their author and do not necessarily represent the views, opinions and/or judgments of American Express Company or any of its affiliates, subsidiaries or divisions (including, without limitation, American Express OPEN). American Express makes no representation as to, and is not responsible for, the accuracy, timeliness, completeness or reliability of any opinion, advice or statement made in this article.

Photo: Donna Permell

Founder and Editor-in-Chief, Afford Anything LLC