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The process of becoming a government contractor
Tips for finding opportunities for your company
Questions to consider when evaluating a potential proposal
Government agencies — federal, state and regional — represent a tremendous market for small businesses. According to the Small Business Administration, annual spending by government agencies with small businesses reached $96.8 billion in fiscal year 2009, up more than $3 billion from the previous year.1 This number is expected to keep growing in the coming years. Even though these agencies are part of a giant bureaucracy, the process of becoming a government contractor isn’t necessarily complicated. Follow these 13 steps to begin.
This objective view of your business should cover your products and services, marketing and operational plans, the competition, your firm’s strengths and weaknesses, and staffing needs. It should also define your goals, approach, market differentiators and available resources for pursuing government business.
Before you begin working with the government, you will need to obtain a North American Industry Classification System (NAICS) number, which the government uses to categorize products and services. Find your NAICS code by going to census.gov/eos/www/naics and choose the code that best describes your products or services.
Federal agencies are required to award at least 23 percent of all purchases to small businesses. To see if your business qualifies as a small business in the eyes of the government, review the Small Business Administration's size standards at sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards. All you need is your NAICS number, number of employees and annual receipts. Think your company is too big? You may be surprised at how large a company can be and still be considered “small” — and, therefore, eligible for numerous contract opportunities.
You need a D-U-N-S Number to do business with the U.S. Government. This is simply a business identification number, similar to a Social Security number. You can get a D-U-N-S Number for free by contacting Dun & Bradstreet at 866-705-5711 or fedgov.dnb.com/webform.
This number identifies companies wishing to do business with the federal government. Commercial and Government Entity (CAGE) Codes are automatically created once companies complete their CCR registration.
Make sure all your products and services are identified with an NSN designation. Contact the Defense Logistics Information Service at 877-352-2255 to obtain NSNs.
This is the primary source for government agencies to learn about prospective vendors. It lets them search based on each vendor’s abilities, size, ownership and other parameters. In most cases, you need to be registered in CCR to win a contract from any federal civilian or military agency. This is also a handy site for setting up your invoices to be paid electronically once you are doing business with the government. To register, go to ccr.gov. You will need to provide the following:
Your Taxpayer Identification Number (issued by the IRS for your business, not unlike a Social Security number)
Bank account information including routing number, account number, bank contact information, remittance information for mailed checks and whether you accept credit cards; the ability to process credit card payments will increase the number of government contract opportunities available to you
Capability narrative (that is, what products and/or services you offer)
Key words that apply to your goods and services (250-word limit)
Past performance summary
The federal government sometimes gives preference to certain businesses: those owned and run by socially and economically disadvantaged individuals; those whose primary locations are in disadvantaged urban and rural communities; or those with at least 35 percent of employees, including leased, temporary or union employees who work a minimum of 40 hours per month, in a historically underutilized business zone. Visit sba.gov/content/guide-size-standards to determine if your business qualifies.
Visit orca.bpn.gov to record all of your company’s required representations and certifications so they can be accessed by federal purchasing agencies.
Read the Federal Acquisition Regulations (FAR) at acquisition.gov/far. The FAR is the primary regulation that all federal agencies follow when purchasing goods and services. The most important section to read is part 19 (about small businesses programs).
Each federal agency produces an Annual Procurement Forecast, which is maintained by its Office of Small and Disadvantaged Business Utilization (OSDBU) or equivalent. Agencies are required to post actualized forecasts on their website by October 1. You can contact each agency OSDBU at acquisition.gov to see what goods or services they anticipate buying.
You can also market your goods and services as a subcontractor through prime contractors. The Small Business Administration’s site SUB-Net (web.sba.gov/subnet/search) is a valuable resource for obtaining information on subcontracting opportunities. Prime contractors and government, commercial and educational entities post solicitations or notices there. You can also find Department of Defense subcontracting opportunities and prime contractor contacts at www.acq.osd.mil/osbp.
Select your prospective government customers and research their requirements so you can make highly relevant offers that solve their unique challenges. Identify the agency personnel who make and influence these buying decisions and schedule appointments to speak with them in person. Provide “leave-behind” materials, such as brochures and catalogs. A word of caution: procurement and program personnel are limited in what they can discuss with potential vendors, so be careful to learn about each agency’s principles of competition before approaching them.
Attending small business fairs and networking sessions is another terrific way to make contacts and gain exposure to key agency personnel. Many agencies host events that emphasize how to do business with the government and provide information regarding their program activities. The General Services Administration Expo, for example, hosts more than 10,000 agency customers each year. You can learn about the GSA Expo and other small business events at expo.gsa.gov, gsa.gov/sbu and businessmatchmaking.com. Some agencies require potential vendors to register on their databases in order to do business with them.
Once your business is prepared to sell to the government, it’s time to start the process of finding the best opportunities for your company. This stage involves a great deal of information, but once you learn the structure of the government procurement process, you’ll be on your way. Read about the following details of government procurement to identify the methods, areas and contracts that have the highest potential for success.
Purchases under $3,000, which don’t require competitive quotes. Agencies can make these purchases on a government-issued credit card without getting approval from a procurement officer (hence, the ability to process credit cards is important to selling to the government). To sell your goods and services through micropurchases, contact small business specialists at the agencies you’re targeting. Each federal agency has a specialist to assist small businesses. These specialists act as advocates, providing information and guidance on doing business with their agency, procurement procedures and marketing opportunities.
A streamlined way for agencies to solicit and compare bids valued at over $3,000 and under $100,000. It requires less documentation and involves fewer approval layers than typical government contracts. These contracts are to be awarded to small businesses, unless the contracting official can’t find two small firms that can compete on price, quality and delivery. If you would like to sell products or services through simplified procedures, make sure you’re registered with CCR and ORCA.
Used when an agency’s requirements are very clear, specific and complete. The agency issues an invitation bid, describing to potential vendors the product or service needed; instructions for responding; conditions for purchase, delivery and payment; and a submission deadline. On a predetermined date, each sealed bid is opened in a public setting by a government contracting officer. All bids are read aloud and recorded. The contract is then awarded to the lowest bidder found to be responsive to the government’s needs. You can review new bid invitations at fbo.gov.
A more complicated and time-consuming process typically used by agencies for purchasing highly technical products valued at more than $100,000. Agencies issue a request for proposal (RFP), inviting vendors to respond. These proposals can be subject to negotiation after they’re submitted. If the government is merely considering acquiring goods or services, it may issue a request for quotation (RFQ) to gather data from available vendors. Responses to RFQs are for information-gathering purposes and aren’t considered an official offer to the government. RFPs and RFQs are available for review daily at fbo.gov.
Used by multiple government agencies to gain economies of scale from shared purchasing needs, such as furniture, carpeting, office machines and perishable foods. The government awards these centralized buying vehicles to multiple potential vendors and negotiates prices ahead of time. This way, when an agency needs those goods or services, it can choose one of the vendors on the list and acquire the necessary items much faster than with a traditional RFP process. For example, Governmentwide Acquisition Contracts (GWACs) are consolidated purchasing agreements for the acquisition of IT products and services. You can find and respond to GWAC opportunities by going to fbo.gov.
The most successful government contractors seek out opportunities in which they can excel. Use the following resources to identify opportunities that align with your skills and offerings.
Visit fbo.gov to find available opportunities valued at more than $25,000. (Simply log in as a vendor, click on “opportunities” and enter your NAICS code to find out what various agencies are buying.)
Visit web.sba.gov/subnet to find subcontracting opportunities.
Contact the various government agencies to request access to their "Bid Board." You can log on to these sites and bid on all products and services by NSN number. Usually this information is available at agency sites under category names such as "doing business with the government" or "SBA opportunities."
Federal agencies can use GWACs and the GSA’s Federal Supply Service Schedule Contracts to buy commonly used products, services and solutions. If you would like to be considered for inclusion in these contracts, follow these steps.
Before filling out a solicitation to participate in a GSA contract, you will need to submit a “past performance” form to Dun & Bradstreet’s Open Ratings site. The GSA’s Open Ratings give an objective evaluation of vendors’ previous performance by polling a series of customers. Simply contact Open Ratings at ppereports.com or firstname.lastname@example.org and provide them with your D-U-N-S Number, anywhere from 6 to 20 customer contacts, including email addresses, plus a fee.
Once you receive your Open Ratings evaluation, go to gsaelibrary.gsa.gov to view schedule contracts, choose a schedule that matches your products or services and submit the solicitation provided.
Within 30 to 180 business days, you should hear whether your solicitation was approved. If it is rejected for any reason, you can request a debriefing from a GSA contract officer within three days to learn why. If your solicitation is approved, you’ll receive a contract number that allows you to list your products and services on the GSA Advantage!® website (gsaadvantage.gov), an online shopping service for all government customers.
For more information about the GSA Schedules, call 800-488-3111 or go to gsa.gov and click on “GSA schedules” to walk through the submission process. Also see American Express OPEN’s GSA guides at http://www.openforum.com/governmentcontracting/resources.
Familiarizing yourself with procurement timelines is an important step to becoming an accomplished government contractor. Use this checklist to mark important milestones in the process. After each point, take notes on areas that you need to develop in order to be better prepared next time.
Lay the groundwork before you submit your proposal. Conduct research so you fully understand how the agency you’re targeting works and who the key players are. You should have a keen understanding of the agency’s needs and have introduced yourself to the right procurement officer and agency influencers.
Visit fbo.gov, recovery.gov and other sites to search for relevant contract opportunities. Set up alerts so you will automatically be notified of new contracts that may fit your company. When speaking to procurement officers, ask if new contracts are coming up that your business could fulfill. Make note of contract opportunities that you wish to pursue.
Responding to a government request for proposal (RFP) can be complex and arduous. Read through the RFP carefully and note any questions you may have for the procurement officer. Note: If you’re fairly new to the process, you may want to consider asking a consultant for advice on how to craft the best response. Also note upcoming proposal writing workshops in your area.
Each RFP states the submission deadline and usually includes the agency’s expected response time. Response timelines can vary widely depending on how pressing the agency’s need is.
Once you have completed the RFP, submit it according to the desired method (email, web or postal mail) and make a note of the date you submitted the materials.
Once the agency receives all of the bids, the evaluation process begins. The agency will evaluate the proposals based on each company’s ability to perform all of the requirements, past performance record, ability to deliver, pricing and any quality assurance processes it has in place.
The agency may conduct further evaluations to ensure that a proposed bidder has the ability to meet the requirements. This might be as simple as a cursory verification of the facts provided in the RFP or as extensive as a tour of the company’s facilities and face-to-face discussions with technicians.
The agency may contact you to negotiate the price and terms of the agreement. You need to have a strong negotiator lined up to work on your behalf and be sure to have an attorney review all documents before signing.
The agency will issue a public announcement of its intent to award the contract to a given bidder. The contract price will also become public information. If you win, you’ll likely need to complete several administrative tasks before the contract is officially awarded. You’ll also want to re-read the contract and contact the procurement officer or government inspector working on the contract if you have any questions or concerns.
Carefully read contract language regarding payments. You may want to ask the procurement officer about applicable programs for accelerating payment to small businesses.
The Request for Proposal (RFP) process is much the same in the public sector as it is in the private sector. A customer documents their requirements and needs, then vendors explain why they are qualified to provide that good or service. The customer then selects a vendor based on the RFPs that are submitted.
Filling out the RFP can be time consuming for you and your staff, so it’s important to develop a “bid/no bid” decision-making strategy to decide whether an RFP matches with your business. Consider the following questions when evaluating a potential proposal. The time you invest can help you to focus your efforts on the highest potential opportunities.
While answering “no” to this question isn’t an automatic “no bid,” it does mean that you may need to supplement any product/service deficiencies by partnering with another business or subcontractor (for example, through Teaming USASM). In such a case, you may want to work closely with those potential teaming partners when completing the RFP and assign responsibilities for writing/providing the proposal content in advance. A determination should be made prior to proposal submission, and all parties should agree to the RFP’s terms and conditions and costs.
An assessment of your likelihood to win needs to include a clear identification of the value you bring to a project over another vendor. Anyone considering your bid may ask this very question, so thinking about it yourself can help you prepare your pitch or else identify that you do not have one. As an additional strength test, ask a partner or peer to review your pitch. Their honesty could give you the confidence you need to move forward, or the wisdom to walk away.
“You need a project with good specifications so you can review those and go after the contracts that focus on what your specialty is,” says Alan Wozniak, president/CEO of Pure Air Control Services Inc., a government contractor in the indoor air-quality industry. “That will really help you align with the ones that you have a greater chance of succeeding. We always stick to proposals that have good specifications.”
Before responding to any government solicitation, you may want to check the history of the agency’s product/service awards and its purchasing methods at https://www.fpds.gov. For example, if a contract has been awarded in the 8(a) program, it is more than likely to be awarded again to an 8(a) certified firm. A clear understanding of how an agency awards its contracts could save you valuable time. You can also access sales reported by GSA Schedule contractors at https://ssq.gsa.gov.
The strongest bids are those based on a pre-existing relationship or foreknowledge of the opportunity. If the RFP is the first time you’re learning of the project, be sure you understand the project’s funding, history and requirements, as well as customer expectations for the project. You can gather this information by contacting the government agency directly during the pre-bid process. Wozniak has also found it helpful to educate the procurement officers and buyers before the bids even go out.
“We sponsor about two dozen webinars, seminars and presentations each year,” he says. “We like to help them learn what they really need, so they know what to look at when reviewing the bids. Many have gone the cheap route and have taken the lowest bid and realize later that they still have a mess instead of understanding what they need upfront.”
In addition to calculating the time required to complete all of the RFP requirements, don’t forget to factor in additional costs — labor, printing, shipping, packaging, samples and travel expenses— when determining your company’s business’ total financial commitment to the bid process. This will help you create a risk/reward scenario that may be the most important factor in your “bid/no bid” decision.
There are many contracting opportunities available, so be sure you spend your valuable time and energy on projects that fit your company’s specifications and that you have better chances of winning.
The companies and organizations responsible for the websites listed on this page do not necessarily endorse American Express OPEN®. Prepared for American Express OPEN by Bredin Business Information.
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