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How to Boost Your Small Business by Becoming a Government Contractor

Federal contracts can be a boon to small businesses, but securing one might seem daunting. Follow this advice to get a leg up on competition.

By: Kristin Colella, Contributor
 United States capitol
Becoming a government contractor is a competitive opportunity that can powerfully increase a business's customer base. — Getty Images/uschools

As a small business owner, you’ve probably explored various ways to grow your customer base, but have you set your sights on Uncle Sam? If you haven’t looked into selling to the federal government, you could be missing out on a lucrative financial opportunity. Considering that the U.S. government is the largest purchaser of goods and services in the world, why not get in on the action?

The federal government awards hundreds of billions of dollars in federal contracts each year to businesses to meet the needs of federal agencies and the military—everything from computer ink to furniture to forklifts. These contracts don’t just go to large corporations, though. The government is required by law to consider buying from small businesses, and has set a goal of awarding at least 23% of all federal contracts to small businesses.

Unfortunately, many smaller companies shy away from government contracts because applying for one (called “bidding”) can seem overwhelming, from reading through lengthy solicitations to putting together a comprehensive proposal that meets many specific and detailed requirements.

You’ll also typically be competing with other companies to win a contract, so there’s no guarantee that your time and effort will pay off. Luckily, we spoke to a handful of experts for the inside scoop on how government contracts really work. Here’s what you need to know to be successful.

Are your products needed?

You might be wondering if the government actually needs the types of products or services you offer, but don’t count yourself out too soon. Maurice Harary, owner of The Bid Lab, a Manhattan-based company that writes proposals for businesses bidding on government contracts, has seen opportunities for small companies in a broad array of industries. “We have clients in fields such as medical, marketing, technology, legal, construction, public relations and real estate,” he said. “We really haven’t seen an industry that hasn’t had opportunities.”

To get a better idea of whether the government buys what you sell, it’s a good idea to look up your industry’s six-digit North American Industry Classification System (NAICS) code. You can then enter your code into a search on USASpending.gov to see what contracts have been awarded to members of your industry in the past, including the price awarded. (Tip: You might have multiple NAICS codes if you sell multiple products and services.)

Finding opportunities

To search for contract opportunities, check out the Federal Business Opportunities website (called FedBizOpps for short), which lists all open federal contract opportunities over $25,000. There are various kinds of solicitation notices that you’ll find, and it’s important to know the differences. A contract opportunity that is currently open and accepting proposals is called a Combined Synopsis/Solicitation, and typically includes contact information, deadlines, and information about how to submit your proposal. It may also be called a Request for Proposals (RFP) or a Request for Quotes (RFQ).

Other notices that may come up in your search results include a Presolicitation, which is a notice about a contract opportunity that will open for proposals in the future; and Sources Sought, which is a request for information from a federal agency to help it understand the interests and capabilities of businesses that would submit proposals for a future contract.

It’s a good idea to use the search filters that FedBizOpps provides. “I think a lot of people feel frustrated because they’ll see a perfect RFP, and then they realize it’s due the next day which really stinks,” said Harary. “Be sure to filter by ‘Posted Date,’ so if you check every week, you’ll just review the opportunities that have been posted within the past week.”

You can also filter results by keyword(s), just be aware that every solicitation that contains those words may come up, even those unrelated to your industry. “Always have a human going through it—perhaps someone who does business development or marketing for your company,” Harary added. “The AI is just not there yet.”

Don’t overpromise in your technical proposal, because that becomes part of your contract and you’re going to have to deliver to those technical specs.

Todd Overman, chair of the Government Contracts Practice Group at Bass, Berry & Sims

Look for set-asides

To help create a level playing field, the federal government offers some contracts that only small businesses can apply for—called small business set-asides. You’ll first need to qualify as a small business to bid on these (you can use this online tool to help you check).

“Keep in mind that yourNAICS code is tied to the size standard and it varies by industry, so just because you’re small in one industry doesn’t mean you’re small in another,” said Ambika Biggs, a government contracts attorney and partner with Hirschler in Tysons, Va.

Some set-asides are intended for small businesses in certain socio-economic categoriesthat participate in the Small Business Administration’s (SBA’s) contracting assistance programs, including women-owned small businesses, service-disabled veteran-owned small businesses, small businesses in a historically underutilized business zone(HUBZone), and disadvantaged small businesses in the 8(a) Business Development program.

The SBA’s website includes information about eligibility requirements for each program and how to get certified. Also, keep in mind that when you search for opportunities on FedBizOpps, you can use a filter for set-aside contracts.

Preparing your bid

Once you’ve learned how to search for opportunities and have completed all of the necessary registration requirements, you can then begin to bid on contracts. Review all solicitations carefully to make sure your company can handle what the job requires and that it meets all regulatory requirements.

"Don’t overpromise in your technical proposal, because that becomes part of your contract and you’re going to have to deliver to those technical specs,” said Todd Overman, chair of the Government Contracts Practice Group at Bass, Berry & Sims in Washington, D.C. Unfortunately, if you don’t deliver, it could result in the termination of your contract.

Your proposal should also include pricing information. You’ll want to be realistic and not overcharge, while also keeping in mind that the government sometimes chooses the best value over the lowest price, Overman said. For reference on how much to charge, consider consulting your commercial pricing list, as well as the prices of past bids that have been awarded for similar contracts.

Also, don’t neglect what you may think are minor details. “Sometimes people forget that there’s a real person looking at your document, so make it look good,” said Harary. “Try to use images, nice graphics, good spacing and consistent grammar and spelling.” And while it may sound obvious, make sure to send your proposal to the correct e-mail address listed on the solicitation. “These are things that may seem small, but the government can be really stringent about, especially if they’ve received a lot of proposals and are trying to whittle them down,” said Biggs.

If all this sounds complicated and you can afford it, you might want to consider hiring a company that specializes in bid management to handle the bid process for you, including writing your proposal.

Receiving an answer

The government typically takes 30 to 120 days to review submissions, and assigns a contracting officer to handle each review. While bids are not generally public information, the government will publicly announce which bid was awarded, including the company name and amount of the award. (You can technically request to see another contractor’s bid under the Freedom of Information Act, but certain confidential information will be redacted, including the company’s pricing and technical proposals.)

According to USA.gov, government contracts are awarded based on several factors, including how responsible and responsive your business is, how technically acceptable your proposal is, your past performance references, and your pricing and terms of the proposal.

What if you lose?

If you didn’t win the contract, ask for a debriefing to find out how you were evaluated. If you want to challenge the award decision, you can file what’s called a bid protest, but you have to act fast. Typically, bid protests must be filed within 10 days of the when the basis of protest is known (that is, either the award notice or your debriefing).

“When you are the protestor, you are really trying to throw as much mud at the wall and see what sticks, but your arguments can be dismissed if they’re late or not supported by facts,” said Overman. “You can come up with arguments of why you were evaluated improperly or why the awardee was given too good of an evaluation, like there’s no way that price makes sense or that company has an organizational conflict of interest.”

Although filing a bid protest is well within your rights as a citizen, Harary said to use it carefully. “It should really be a last resort, because you’ll be making the procurement officer do extra work and you don’t want to be someone that is just a complainer,” he said.

Biggs also warned that even if your bid protest is successful, it doesn’t necessarily mean you’ll be awarded the contract. “It could just mean the agency did something incorrect when they were making the decision and they may have to go back and do a re-evaluation or fix whatever it was that’s wrong,” she said. In some cases, businesses will be allowed to re-bid on the contract.

Obtaining a GSA Schedule contract

Another way to sell to the government is by obtaining a General Services Administration (GSA) Schedule contract. Schedules are long-term, government-wide contracts between commercial suppliers and the government that allow you to sell to any federal agency. Vendors are pre-approved and ceiling prices and other terms are pre-negotiated, so the process is a lot quicker and more streamlined than with public bidding, plus you’ll face less competition.

GSA Schedules are categorized by types of products and services—you can find the list of Schedules on the GSA website. For instance, IT services and software are sold through IT Schedule 70.

Keep in mind that holding a GSA Schedule contract only qualifies you to sell to government agencies; it doesn’t guarantee sales, so you’ll still need to market yourself. But first, to get approved you’ll have to complete a number of registrations and certifications, and you’re typically required to have been in business for at least two years.

Consider subcontracting

If you don’t think your business is ready to handle a “prime” federal contract, which requires contracting directly with the government, you might want to consider subcontracting for a larger company that has been awarded a prime contract. In fact, many government contracts require large companies to subcontract with a small business.

“The bidding process is usually much simpler and it’s a great way to get your foot in the door,” said Overman. “It can also help give you past performance references, which will be important down the road if you apply for a prime contract.”

The SBA’s website includes links to directories where you can find subcontracting opportunities.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published April 05, 2019

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