Last Updated: Jan 13, 2014
Government contracting seem too complicated for your small business to try? It’s a huge potential source of income, so don’t be too quick to disqualify yourself. Here’s what you need to know to get started in government contracting.
Acquiring a large, loyal customer base is essential for a business to run successfully and make a profit. However, have you ever thought about including the federal government as a part of your customer base? It seems like kind of a crazy idea upon first glance, but the U.S. government is the largest purchaser of goods and services in the world. That means that they put a lot of money into getting those goods and services: around $90 million in 2012 for small business alone.
That’s a huge source of revenue for your business, too big to pass up in fact. The government has interests in all sorts of industries, so don’t think yours is automatically disqualified. They need goods and services from IT solutions to construction to janitorial work. Unless your company focuses primarily on sarcastic bumper stickers, there’s probably a market for your industry.
While it’s a good idea to get involved in government contracting, it’s important to realize that – since you are working with the government – there are going to be a lot of hoops to jump through, registering processes, and a whole lot of acronyms. The registration process alone is often enough to deter most businesses from becoming a federal vendor, but hang in there, it’s actually not so bad.
First, register with the Systems of Awards Management (SAM) through the Small Business Administration. SAM is basically a federal vendor database that enables government agencies to search and find businesses that can fulfill their needs. When registering with SAM, you’ll fill out information about your business, i.e. socio-economic status, location, size, industry, etc.
All of that information is identified using codes. To identify your business’s physical location, there’s a D-U-N-S number; to classify your industry, there are NAICS codes. You will also need your businesses Federal Tax Identification number, also known as the Employer Identification Number. Your business’s Standard Industrial Classification (SIC) codes are also necessary during the registration process.
The more information that you fill out in SAM, the easier it is for government agencies to find you. There’s nothing better than having a customer come to you, especially if it’s a customer as big as a government agency. Remember, though, contracting also exists at the state and local level, so doing business with government agencies like the IRS or the DoD is going to be a little more rare.
Once you’ve gotten all registered, you can start bidding on available government contracts. You can do this by using an online bid notification service, by using fedbizopps.gov, or other tools. There are different advantages to using different systems, so it’s important to do your research. For example, fedbizopps only posts invitations for bids (IFBs) that are $100,000 or more, so a different notification system might be worthwhile if you are looking for smaller contracts.
There are also a lot of resources that can teach you how to properly bid on contracts and write bids of your own, like the government contracting classroom provided by the SBA, or seminars offered by a local university or government agency. It’s most important to accurately assess whether or not your business can complete the contract and all of its stipulations before you bid.
Do not focus on the entire government. Look at what agencies could use your goods or services and market yourself towards them. Read past bids that have been awarded in your industry and what government agencies have awarded them. The more you know, the better you will do. Remember, you don’t have to go in alone. Partnering with another business is a viable option for completing a government contract.
You’re Ready To Start
Getting involved in government contracting is much more than just gaining a new customer. By proving yourself in the federal marketplace, you create long term business relationships that provide a steady stream of revenue for your business. Contracts can last years, so it’s a long term investment, and if a government agency likes you, you will be awarded. A lead nurturing client approach, then, is best.
Jeremy Higbee is a freelance writer for the bid notification tool: BidSync