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The Essentials: Securing a Share of Government Business

For more information that can help guide your business in researching and securing government contracts, v isit  OPEN for Government C
American Express OPEN
July 22, 2009

For more information that can help guide your business in researching and securing government contracts, visit OPEN for Government Contracts.

Who wouldn’t want a client that spends more than $400 billion each year?  This is the essential guide to ensuring your business secures its share.

The U.S. Government is the world’s largest purchaser of goods and services (Source: SBA). From airplanes to zippers, the bottom line is that if you sell it, there is every chance the government might buy it.

Government contracts are not just for the larger companies – federal agencies are required to target at least 23 percent of their spending for small businesses (Source: SBA). Beyond this overarching target, the government has a large number of programs which are designed to help small businesses get their fair share of contracts.

While there is much to gain, the federal procurement process can be time-consuming, and challenging for small businesses to navigate. All agency contracts must adhere to regulations detailed in the 1000-plus page Federal Acquisition Regulation (FAR) guidelines.

However, once the skill set is mastered, selling to the federal government can represent a fantastic opportunity for small businesses. Many of the concerns entrepreneurs have about government procurement – it is too complex, assistance in navigating the process is difficult to find, they can’t compete against large contractors – have all been conquered by those that have been successful.

The Power of Small

In a typical year, the government enters into over 10 million “actions” – the federal term for a contract (Source: SBA). Some 95 percent of these represent purchases under $100,000, which the government actively seeks to steer to smaller companies. In fact, federal rules require that agencies target small businesses for purchases between $3,000 and $100,000 (Source: FAR).

An Open Process

When you’re selling in the private sector, it is not always easy to know what your potential customers plan to buy. Federal agencies, however, are often required to publish their purchasing needs, meaning any business can go to a web site such as Federal Business Opportunities (
www.fedbizopps.gov
) to see what contracts are available. This openness provides a leg up to small companies.

Help Is Out There

Besides designating certain purchase amounts for small businesses, the government also funds outreach programs designed specifically to encourage and assist small businesses to participate in the bidding process. These resources, offered through agencies such as the U.S. Small Business Administration (
www.sba.gov
), can help answer questions, and facilitate and demystify the application procedure.

Uncle Sam Is a Powerful Customer

Having the U.S. Government as a customer can position your business for significant and steady growth. The government frequently buys in large volume and sometimes, more significantly, it does so over a long period of time. This may not translate into the business equivalent of a winning lottery ticket, but being awarded a government contract is momentous – it forms a solid foundation for growing your company. Moreover, selling to the government gives you a “stamp of approval” that will help you appeal to commercial vendors, too.

BECOMING A CERTIFIED CONTRACTOR

Any company can apply to conduct business with the federal government, but your small business status can be a distinct advantage in the contracting process. For example, certain small businesses may qualify for set-asides that can make qualifying easier. 

Start your certification and registration process with these basic steps:

1.     Prep for Success
 

Before you register to sell to the Federal Government, make sure you have all the requisite information organized. 

This includes:

  • A Data Universal Numbering System (DUNS ) number: The government identifies all contractors by a DUNS number, available for free from Dun & Bradstreet (www.dnb.com/US/duns_update/index.html).
  • A Federal Tax ID number (also known as an Employer Identification Number [EIN ] or Taxpayer Identification Number [TIN ]): Apply for one via the IRS using Form SS-
  • Your classification: You will be asked American Industry Classification) code and by SIC code. You can look up your six-digit NAICS codes a www.census.gov/epcd/www/naics.html, and your SIC code at www.osha.gov/oshstats/sicser.html (though the NAICS codes have effectively replaced the SIC codes, the government still requires the latter).


2.     Build an Eye-Catching SAM Profile

If you want to do business with the Federal Government, then you must enter your business in the System for Award Management (
www.sam.gov
) database. Agencies and prime contractors turn to this government-maintained database first when looking for potential vendors. When you enter your information in the SAM , it pays to fill out both the mandatory and optional fields. This way, you paint a detailed portrait of your company’s capabilities and qualifications. Because your SAM profile is one of the key marketing methods in selling to the government, think of it as an elevator pitch. Use it to succinctly explain what you offer and what makes you unique. Include the URL for your web site so that federal buyers can learn more about you. And as your capabilities increase, update your SAM profile accordingly.

3.     Use the SBA to Your Advantage

It can pay to be registered with the U.S Small Business Administration, which manages several programs designed to help specific groups secure federal contracts and subcontracts. 

These include:

  • Small Disadvantaged Business (SDB) and 8(a) Program: Designed to help small businesses with disadvantaged owners to compete. For the SDB program, the business must be at least 51 percent owned and controlled by one or more individuals who are socially and economically disadvantaged (Source: SBA). African Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans and Native Americans are presumed to meet this standard.
  • HUB Zone Program: This program is designed to stimulate and encourage economic development and create jobs in designated urban and rural communities through Federal contracting assistance.


4.     Claim What’s Rightfully Yours

Other identifications including background and gender can help certain types of businesses in the contracting process. 

These include:

  • Women-owned business: A company that is owned and controlled 51 percent by a woman or women. There is a government-wide goal to have women-owned businesses receive not less than 5 percent of the total value of all prime awards entered into each fiscal year.
  • Veteran-owned business: A business that is at least 51 percent owned by a veteran.
  • Service-disabled veteran-owned business: A business that is 51 percent owned by one or more service-disabled veterans, as confirmed by the Veterans Administration, can qualify for certain special procurement opportunities and set-asides (Source: SBA).


START SELLING TO THE GOVERNMENT

You’ve registered your business with the SAM and qualified for the appropriate certifications. Now, how do you start getting ready to sell to the government?

First, approach government contracting with the same strategies you would use in the commercial sector. The federal government is an enormous institution with hundreds of agencies with different needs and requirements. Devise a plan to learn the needs of the myriad agencies so you can correctly target your efforts. 

Use these guidelines to start your plan,
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