The U.S. federal government is the largest purchaser of goods and services in the world. For small businesses negatively impacted by the pandemic over the past two years, this may offer a glimmer of hope as many attempt to pivot to stay afloat. While several businesses were forced to close due to losses, new businesses were formed by laid-off or dissatisfied workers.
But new firms are more vulnerable to economic swings. Generally, they do not have the capital or financial cushion of more established firms. One way for small and medium-sized businesses to mitigate swings in revenue is to have a mix of public and private-sector clients. When the economy weakens, the federal government usually increases spending to stimulate economic activity.
Winning government contracts, however, takes preparation and most small businesses aren’t ready to sell to the government when they need it most. Here are some tips to help you prepare to compete and win in the government contracting space.
It’s rare for a business new to government contracting to win a prime contract off-the-bat. Contracting officers are conservative by nature and need to see staying power before considering a firm for an award. The best way to gain experience and prove your ability to do the work is by being a vendor or subcontractor to a prime already awarded a contract.
Large public contracts often fold services into one large award to make the process more efficient. Awards often require that large firms use small businesses as subs to meet government small and disadvantaged business contracting goals. Websites such as sam.gov and fpds.gov are great places to search for open and awarded contracting opportunities and identify primes who may need the goods or services you provide.
In 2020, the federal government awarded $34.0 billion to SBA 8(a) certified firms. The 8(a) program is for small, disadvantaged businesses. Many of those contracts are sole-sourced, meaning that the awards were made directly without having to go through the RFP and bidding process. State and local governments also set aside contracts for small businesses or those owned by minorities, women, LGBTQ+, or other types of underrepresented businesses. Additionally, certifying with the Minority Supplier Development Council as a small business and/or disadvantaged business enterprise within the state the business is based is also helpful.
While there are strong opinions diminishing the value of certifications, they are a free or low-cost way to open up another revenue stream for your business. The process is usually straightforward, and when it’s not, there is free assistance available through resources like PTAC. Winning one contract with the help of certification will more than compensate for the time and cost of certification.
Certifications are also useful in winning non-government business. Companies like Wells Fargo, Facebook and PayPal, among many others, have recently committed millions of dollars to support small, disadvantaged businesses.
The General Services Administration, GSA, helps government contracting officers find qualified firms to fulfill government needs. Applying for a GSA Schedule is more involved than getting certifications, but the benefits are also greater. Only 4% of registered federal contractors have a GSA contract, so the pool of competitors is reduced.
Getting approved by the GSA also makes contracting easier since pricing and scope of services are negotiated up-front. This saves the buyer and seller time and effort. Finally, being on a GSA schedule increases the likelihood that a Contracting Officer will find a firm and reach out directly should an opportunity arise as opposed to the firm hunting for possible open RFPs.
Like most things worth pursing, becoming a successful government contractor requires persistence. Learning the ins and outs of government contracting takes time. There’ll be missteps, but there’ll also be learnings that will make you more competitive the next time. The system is designed to weed out companies that don’t have staying power, so don’t be that company. Find an experienced firm willing to mentor a newcomer through programs like the SBA’s Mentor Protégé program and shorten the learning curve.
Ultimately, firms that stay focused and continue to grow their public and private client bases are rewarded and have the greatest chance of weathering the next economic challenge.