Small Businesses Seeking Contracts with the Government: Where to Start?
As start-up businesses develop their business plan, research their marketplace for vendors, and look for multiple revenue streams, they should definitely consider competing for government contracts. Consider first that, in this year alone, the federal government will spend over $560 billion through contracts for goods and services. Then consider that the Federal government has a statutory goal of setting aside 23% of that amount to contract with small businesses. That alone is probably interesting enough to look into contracting with the government. However, there is an added advantage. The government is an incredibly reliable source of income for your business. In fact, as some small businesses are struggling to maintain a consistent revenue stream due to COVID-19, the government is finding ways to pay contractors and support them through this crisis. Not all contracting partners can do that like the government. That is a pretty attractive contracting partner. So, where do I start?
There is a lot of free information on the internet that can help you understand the government procurement process, and there are agencies and departments within several agencies that exist to help you better understand it. In fact, there is so much information out there; it is sometimes difficult to decide what to do first. I recommend a few things that are free of cost that will help you determine if you want to do business with the government and possibly get started in that process:
- Determine if there is a market for your good or service with the government,
- Learn more about the government Procurement Process by accessing online sources and government agencies who exist to assist small business, and
- Identify some “easy wins” to quickly get started.
Determining if the Government is a “good” market for your company.
The government is compelled by statute to publicize requirements so that eligible contractors can compete for contract award. These requirements are theoretically available to all responsible contractors and are generally required to be competed amongst them. The government, however, sets aside some contracts to benefit preferred groups like small businesses or socio-economic groups (HUBZone, Service Disabled Veteran Owned, Women-Owned Business). Set-asides are good for small businesses because it largely excludes “big business” and allows similarly situated small businesses to compete for government requirements. That all sounds good, but “how do I know if the government needs or wants what I have to offer?”
There are several free online sources to identify how the government spends its money. However, there are three I would like to mention here. The first is probably the most commonly used: beta.sam.gov (formerly fbo.gov). This website is how the government publicizes contracting opportunities and requests proposal submission. It provides fantastic visibility of contract actions from all government activities and a good idea of which agency needs what good and service. A second source is a planning tool from the government Services Administration (GSA) (www.gsa.gov/smallbizforecast). This site provides information on planned contracting opportunities and makes it easier to find future government requirements. The third source is from the Small Business Administration’s Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program (sbir.gov/solicitations). Sometimes described as “America’s seed money,” the SBIR program invests in innovative small business technologies and services and encourages small businesses to engage in federal research and development that has the potential for commercialization. This site identifies SBIR/STTR opportunities for the federal government and has quick links to many of the SBIR participating agencies to explore interesting opportunities further.
Learning more about the government procurement process and government agencies who assist small businesses.
I recommend visiting three websites to learn more about how to become a government contractor and learn more about the government procurement process. Each site has a great deal of reliable information to help you navigate the ever-changing environment of government procurement. Each one is designed and maintained to inform, support, and service small businesses. Of course, one of the first information sources I would read is the Small Business Association website (sba.gov). This site is full of information on “federal contracting,” funding opportunities, size standards for small businesses, contracting assistance programs, and links to counseling and help. It also helps you learn more about planning your enterprise with topics like market research, writing business plans, calculating start-up costs, and other critical items like registering your business, marketing and sales, and hiring employees.
Another informative website is usa.gov. This is a government-sponsored website that gives general information about “U.S. government services and information” that range from benefits, grants, and loans, to healthcare, education, housing, and small business. In its small business information, they give an excellent introduction to federal government contracting. It provides a step-by-step list of how to get companies ready to bid and win federal government contracts.
The last source I will mention is not a website but a physical place called the Procurement Technical Assistance Center (PTAC). The PTAC’s goal is to expand the number of businesses capable of participating in government contracts and is administered by the Defense Logistics Agency with locations in 48 states, Washington, D.C., Puerto Rico, and Guam. Procurement Center Representatives at the PTAC provide in-person counseling and training services for small business owners. They provide technical assistance to businesses that want to sell products and services to federal, state, or local governments, and these services are mostly free or come with a nominal cost. DLA manages a website that helps you identify small business programs and enables you to find your local PTAC (https://www.dla.mil/SmallBusiness/PTAP/PTAC/).
“Easy wins” to get started quickly.
There are several prerequisites to start competing for government contracts. A few of them cost very little and are relatively easy to complete but are necessary for all potential government contractors. Three of these are 1. Register for a Data Universal Numbering System (DUNS) code, 2. Register in the System for Award Management (SAM), and 3. Look up the North American Industry Classification System (NAICS) code for your industry.
The DUNS code is a nine-digit code used to identify and access information on businesses. A DUNS number identifies organizations and companies doing business with the government and is necessary for each separate and distinct operation of your business. You can request a DUNS number via the web at https://fedgov.dnb.com/webform/.
The System for Award Management is an official U.S. Government website where you can register to do business with the U.S. Government. Every business wanting to contract with the government must have an active registration in SAM. SAM can be found at https://www.sam.gov/SAM/.
The NAICS is the standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. Codes are assigned by looking at the “primary business activity” of the contractor and are determined by the contractor by searching the NAICS codes and choosing the one that most closely corresponds with your primary business activity. You can conduct this search by either searching the database at https://www.census.gov/eos/www/naics/ or downloading the 2017 NAICS Manual.
The information sources above are fantastic informational sources to start building your business. They will help you make an informed decision on whether your small business has a market with the government and whether you want to pursue that income stream. However, this information is just a start to creating a successful business plan, marketing strategy, and government contracting business.