The Truth About Government Contracting

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Uncle Sam spends over half a trillion dollars a year on everything from to toilet paper to tanks. In fact, I'd be hard pressed to think of a product or service that Federal, State, or local government agencies don't use. The good news is they want to buy it from us, small business owners. And thanks to the American Recovery and Revitalization Act (ARRA), there's never been a better time to set your sights on government contracts.

Consider the following:

1. The government has set a goal to purchase 23% of its goods and services from small firms. Within that goal, buying objectives for specially designated small businesses include: women-owned business (5%), small disadvantaged businesses (5%), those located in HUBZones (3%), and firms owned by disabled veteran-owned firms (3%). (The Department of Transportation's web site has a good explanation of who qualifies for these special small business designations.)

2. A special SBA 8(a) business assistance program is available to help socially and economically disadvantaged small businesses access government work. The 8(a) program provides for training, mentoring, set-aside contracts, and non-competitive bidding to help eligible businesses succeed.

3. All federal purchasing contracts between $3,000 and $100,000 are set aside exclusively for small businesses. Over 29,000 active federal opportunities in this category are searchable at the Federal Business Opportunity website.

4. Any contractor that receives a federal contract in excess of $100,000 must agree that small businesses will have the "maximum practicable opportunity" to participate as subcontractors in the contract.

5. Prime contractors with federal contracts in excess of $500,000 are required to solicit subcontract bids from the specially designated small businesses. You can find these opportunities on the SBA's web site. ARRA opportunities are shown separately on this SBA page.

6. Some government contracts (including those of State and local agencies that utilize Federal dollars) offer extra benefits for specially-designated small businesses. These benefits can include:

• Non-competitive bid contracts (also known as sole-source contracts)
• Higher set-asides amounts
• Bid preference (for example, a small business bid can be 5% higher and still win over a large bidder)
• Prompt payment arrangements

So how do you win government contracts? If you read last week's article, The Truth About Business Grants, you're ahead of the pack. In many ways, government grants and a government contracts are similar. In either case, they give you money and expect something in return. In either case, the competition is going to be fierce. And in either case, it's the U.S. Government you're dealing with so keep the aspirin handy.

Here's the gouge:

Step 1: Read the article about grants. Really, I'm not just cross-selling here. Until you have your federal tax ID, DUNS number, and Central Contractor Registration (CCR), you're not in the game. You'll also want to start the certification process if you qualify for any of the special small business designations (e.g. woman-owned, HUBZone, disadvantaged, disabled veteran, 8a).

Step 2: Watch the SBA's video on basics of government contracting. The presentation is focused on ARRA opportunities, but its content is relevant to all types of government contracting.

Step 3: Drink a big cup of coffee and read the Federal Acquisition Regulations. Start with Part 13 Simplified Acquisitions, Part 15 Contracting by Negotiation, Part 19 Small Business Programs, and Subpart 8.4 Federal Supply Schedules.

Step 4: Go to FederalBizOps / FBO.gov and have a look around. There you'll find every small business set-aside contract opportunity (including ARRA contracts). Their tutorials are quite good.

If you sign up for access (you'll need a DUNS number), you can create a watch list, sign up to be notified of changes on a particular solicitation, save your searches, create search agents that email you matching opportunities, and much more.

Check out the Advanced Search option. There you can search both open and closed bids by date, location, set aside category, type of contract, keyword, industry, and date. Among other things use it to check out winning bids, learn from the experience of others, and find prime contract contacts.

Step 5: Root around on USASpending.gov. While not all agencies participate yet, it's an amazing resource for gaining both a macro and micro view of who's spending money on what. Keep digging and you can actually get details on contract and grant winners.

Step 6: Learn all you can about how to respond to a Request for Proposal (RFP), Request for Qualifications (RFQ), and Request for Information (RFI). Your local Small Business Development Center, Chamber of Commerce, or economic development agency may hold courses, meet-ups, and other programs that will help you navigate the maze of government procedures. The U.S. GSA also holds training programs throughout the country.

Step 7: Put together the boilerplate portions of an RFQ so you can respond quickly when opportunities present.

Step 8: Complete the ORCA application (Online Representations and Certifications Application) — it's an e-government initiative designed to replace much of what used to be required in every response to a contracting opportunity.

Step 9: Check out your State and local government agency web sites. They'll each have a section called "doing business with us," "solicitations," or something similar. Most rely on the CCR certification, but some agencies have their own certification process, set-aside categories, etc. Jump through whatever hoops you need to do business with them. Be sure to add your name to their mailing lists.

Step 10: Get to know the people in your market — the contracting officers, the prime contractors, and the subcontractors. Google them. Craft an email introducing yourself and your business. Be sure to tell them if you hold one of the special small business designations, they may be able to use you as a subcontractor.

Step 11: Start selling. Respond to RFPs. Ask for feedback if you don't win; they're required to provide it, but try not to abuse the privilege. If you sell a unique product or service, read up on Sole Source Contracts (FAR Subpart 6.3).

Step 12: If you're selling commodity-type products, consider getting on the GSA Schedule. It's sort of an Amazon for government shoppers.

In case it's not obvious from reading all this, success in government contracting doesn't happen overnight. It's a process. You either have to be in it for the long haul, or not at all.

A word of warning: The government contracting web sites seem to be a great source of email addresses for companies trying to sell to you instead of the government. Information about every active government contract is available free on the web. You don't need to pay for it. While some services add value to the search for contracts, check them out thoroughly before you send money.

As always, we'd love to hear about any great resources you've found in government contracting. And we especially appreciate your Tweets!