The U.S. government is the world’s largest customer, spending billions of dollars every year on goods and services and buying everything from hair care products to cyber security consulting. Although selling to Uncle Sam might seem challenging, the payoff can be an upward spike in the growth of any company, large or small.
Do’s and Don’ts for
Government Contracting
Selling to the government can be a huge growth opportunity for small businesses, but the process can seem confusing. These are mistakes businesses should be careful to not do:
- Waste time chasing contracts that cannot be won.
- Not understand that a Request for Proposal lists all the regulations that become the terms and conditions for the contract.
- Sign teaming agreements with primes that are open-ended and could lead to no work after time and money is expended in the chase.
Starting with well-established business practices, businesses can follow these additional steps to achieve success:
- Develop a well-thought-out selling plan utilizing past performance that clearly describes the business’s true capability.
- Get coaching to learn how to manage the proposal process.
- Go into every contract knowing where risk is in advance and have a well-thought-out risk mitigation plan.
- Plan in advance of doing any work on any contract how the company will perform key project management processes such as meeting deadlines and submitting invoices to be paid for its products or services.
The federal government sets a statutory goal to award 23 percent of its contracts to small businesses. Included in this goal are groups of small businesses with various characteristics, each having its own goal established by federal executive agencies. As an example, 5 percent of contracts should specifically go to women-owned small businesses.
Getting started with focused research can make all the difference in whether success comes sooner or later or never. The first question to answer is, “Does the government buy what I sell?” Of course, the answer to that question must always be some form of “yes.” The next step in preparation is learning how the federal government is buying a particular product or service. The government buys stand-alone products but also buys larger procurement packages that are multiple goods and/or services wrapped into one. Knowing this ahead of time gives a business owner an advantage, helping him decide whether the company should work on its own or work as a subcontractor under a large prime contractor.
Get into the System
The first step for a company to be considered a vendor to the U.S. government is to register in the supplier database known as SAM (System for Award Management). This is important for two reasons: The government buyers will be able to find the company in their supplier search, and companies must be in this database to be paid. Large prime contractors also look for small-business partners in SAM because they are often required to have a certain percentage of their subcontractors be a representation of small, certified businesses.
In addition to SAM, another key website is Federal Business Opportunities, where most of the current solicitations to buy goods and services can be found. This site is a very important tool for market research to find out how the government bought products and/or services in the past, which businesses can learn by using an archives search. Even if a business owner thinks his company is too small to manage a government contract, looking at current solicitations opportunities and previously awarded contracts may help a business owner find a way to get started as a subcontractor to a larger, more experienced firm. Teaming or subcontracting is a good way to get a foot in the door.
Certifying a business is a great way to position a company to capture what are called “set-aside procurements.” These ensure that a small company in a particular category, such as women-owned or service-disabled veteran-owned, has to compete only against others in their size and certified category. Certifications are one of the ways the federal government has attempted to level the competitive playing field. For those small businesses that qualify, a competitive edge can make a tremendous difference in growing the company from a small regional provider to having a larger, national competitive reach. A recent survey by American Express OPEN reported that two-thirds of women-owned firms (67 percent) find the women-owned small business (WOSB) certification useful in seeking contracting opportunities. The “Contracting Support Small Businesses” page on the U.S. Small Business Administration website describes the various categories and opportunities.
Peggie and James Simmons of Assets Conversion Inc. in Phoenix are an example of a small company applying for a certification for minority business owners. They have found that getting an 8(a) certification as the marketing tool will help scale up the growth of their company. In their case, they also have the ability to apply for a service-disabled veteran-owned certification as well. Having additional certifications will only increase a small company’s competitive edge. Using these certifications during the government’s fiscal fourth quarter’s frantic buying season which ends September 30 can be a win-win for both government procurement officials trying to meet small business goals and a company looking for a small contract to build up their past performance for future competition.
Benefit from Self-Awareness
A special process known as capture management is a marketing technique that the large primes use and one that small businesses should learn from and apply to their companies as well. Capture management is the process of knowing and understanding one’s own company and how it is positioned in the marketplace so that the right decisions are made in terms of what contracts to chase and what contracts to let go.
Capture management ultimately leads to the key decision called “bid/no bid.” One of the mistakes small firms make is chasing too many procurement opportunities that, in fact, they could never win. In addition to helping make the best bidding decision, capture management works when a business owner and his leadership team have made a focused effort to learn and understand the entire acquisition process and how to maximize the company’s marketing dollars.
Many small businesses have successfully used government contracting as a way to scale up their existing business by diversifying their contract portfolios in the commercial and government marketplaces. Those companies that become successful in the government space find the new knowledge they develop to win contracts strengthens their ability to grow their commercial business. The federal government can enable a small business to expand to a national reach in one contract when it takes the time to learn about and utilize all the tools available to it.
Doña Storey is the American Express OPEN Advisor on Scale Up, advising entrepreneurs on how to find rapid growth through corporate and government procurement as well as helping large organizations scale their entrepreneurial partners to better meet demand in both the commercial and government marketplaces. She is an entrepreneur herself with extensive experience running and scaling up a business. For more resources on government contracting, visit www.openforum.com/governmentcontracting.
