How to Become a Federal Contractor
Small businesses may have a tough time finding success, but one of the benefits they can take advantage of is becoming a federal contractor with the U.S. government.
At first, working directly with the federal government may sound intimidating, but in fact, they are the world's largest customer. Every year, the government spends hundreds of billions of dollars to satisfy the necessities of both the military and federal agencies around the country. Out of that spending, 23% of contracts are awarded to small business, so there's certainly a piece of the pie at stake if you can learn how to get involved in the process.
The good news is that becoming a federal contractor is a lot easier than you think. As long as you meet certain standards and keep your business up-to-date with the latest compliances, you can enjoy a consistent revenue stream with tons of possibilities for growth.
If you're ready to prepare your business for a new world of opportunities, then here's what you need to do to become a federal contractor:
Is Federal Contracting Right for You?
Before you get started as a federal contractor, it's important to ask yourself if the opportunity is right for you.
Although it can be a lucrative decision, being a part of the General Services Administration (GSA) and bidding for contracts does come with many factors that you should consider beforehand. For instance, research shows that the best candidates for success as a GSA Multiple Awards Schedule (MAS) contractor have these points in their favor:
• Has allocated $80K-$130K in capital to maintain and execute a government contract
• Has multiple contacts in the federal contracting community
• Has a minimum of 2 years of experience working as a prime or subcontractor for the federal government
• Has a GSA MAS mentor or contact in the field to consult with
• Regularly attends GSA workshops and seminars
Of course, being new to federal contracting means that you won't have all of these experiences in place, but it's worth comparing them to your own development to understand what you need to be successful in the field. In addition, the greatest challenges that small businesses face during their early contracting development are...
• Competition and awards of federal contracts are expensive and time-consuming
• Setting aside resources and finances to maintain federal contracts is challenging
The initial phase of federal contracting can be tough for many small businesses, but the results are highly lucrative for those that can stay the course. Typically, the average time it takes for a small business to win its first contract is between 8-9 months, so as long as you can plan ahead for that duration, you'll be in a good position to start your contracting journey on the right foot.
Preparing Your Business for Federal Contracting
Once you decide that federal contracting is right for you, your next steps are to prepare your business for the market.
Altogether, preparation involves researching the demand for your products or services, ensuring compliance with federal rules and regulations, developing a business a plan, finding your classification codes, and registering for the right databases.
Are Your Products and Services in Demand?
Just like any other industry, you have to see whether or not your products and services are in demand for the federal government.
The best way to check how successful your business can be as a federal contractor is to use the Contracting Opportunity Finder set up by USA.gov and search for open contract opportunities related to your field. You can easily search for keywords, locations, dates, and any special business types to filter out contracts and see what matches best with your offerings. You can also FedBizOpps or the GSA Forecast of Contracting Opportunities finder to explore current bids.
Ensuring Compliance and Meeting Regulations
Your main goal is to earn a profit from federal contracting, and in order to do that, you have to avoid costly mistakes that often come from not abiding by certain regulations.
According to the Federal Acquisition Regulation or Defense Federal Acquisition Regulation Supplement, you must follow a set of rules to be in good standing with the federal government before you can win contracts. Some of the most basic rules involve...
?The amount you can spend on work or materials for the contract
?Requirements according to the Buy American Act and the Trade Agreements Act
?The amount of work you can subcontract and who you choose to subcontract with
?Bookkeeping and documentation of work related to the federal contract
?How your business sources and manufactures materials
Understanding the rules can be a bit tricky, but thankfully, resources like the Small Business Administration (SBA) offer guidance to help you along the way. You can also reach out to a Procurement Center Representative (PCR) who can walk you through the compliance process if you need further assistance.
Developing a Business Plan
After you've figured out what you need to be in good standing, your next move is to develop a business plan that includes the amount of work and potential success you can gain from winning a federal contract.
Keep in mind, fulfilling a federal contract requires a lot more legwork than your normal operations. Rather than typical projections from seasonal consumers or specific campaigns, taking on a federal contract may call for...
• Additional staffing to increase output
• A new marketing strategy to accommodate clients and maintain outreach for a certain period of time
• New revenue assumptions and viability after winning and completing the contract
It's always a better idea to create the full scope of your business to ensure that you can not only execute the job well but that working as a contractor makes sense for you in the long-term. The last thing you want is to find that you'll be low on resources or won't be able to deliver results on-time because of other clients and projects, so be strategic in your preparation.
Locating Industry Codes and Registering Your Business
With a firm strategy in place, you're now ready to locate your correct industry code and register your business for the right databases.
Finding Your North American Industry Classification System Code
In order to bid on federal contracts, you have to know your North American Industry Classification System (NAICS) code.
This is a six-digit number that helps government agencies identify your business when they look to award contracts. To find your code, click the NAICS link and use the search bar on the left-hand side to enter in keywords related to your industry. After you run the search, a list of business activities will appear and you can locate which one best suits your products and services. Write this down and keep it on-hand for later.
Obtaining Your Data Universal System Code
After you find your NAICS code, you need to obtain your nine-digit Data Universal System (DUNS) code.
This code is managed by Dun & Bradstreet so that the federal government can look into your business's credit history. You won't be able to compete for federal contracts unless you have a DUNS code, but registration is free for all federal contractors and fairly simple to set up.
Registering Your Business for the System for Award Management
Lastly, you must register your business in the System for Award Management (SAM).
You will use your new SAM account to bid on federal contracts and maintain your business's information, certifications, and compliances so that government agencies can verify them quickly if and when you're selected for a project.
Keeping your SAM profile updated is crucial, so make sure to create your free account and make it habit to check it on a regular basis.
Bidding On Federal Contracts
With your registration complete, you're now ready to start bidding on federal contracts.
Using the same resources from your initial planning phases, you can begin searching for contracting opportunities that match your profile. Feel free to browse postings on...
You can even sign up to receive notifications on your account so you can apply for any new opportunities as soon as they show up.
Solicitation vs. Pre-Solicitation
Once you find a project that seems like a good fit, it's important to read all of the information pertaining to the contract so you understand what's required of you and how you can plan accordingly.
This is especially the case when it comes to postings that label themselves as either a "solicitation" or "pre-solicitation."
The ladder is only a request for information about your business, not actually a request for a bid, so try your best to distinguish the two so you can start applying for opportunities that are ready to pull the trigger.
Consult with a PCR
Before you fill out your proposal and submit all the necessary documentation and pricing info, it's always a good idea to consult with a PCR to ensure that everything is correct.
You don't want to lose out on a major client just because you filled out a form wrong or made a mistake with your pricing. A PCR will make sure everything is correct and put you in the best position to succeed.
In fact, the main reason why small businesses miss out on federal contracts is because proposals are filled out incorrectly or are missing information.
Waiting for a Response
After you submit your bid, it can take anywhere from 30 to 120 days to get a response.
A contracting officer (CO) goes through every proposal and they gauge how successful a business will be in delivering results. For example, contracts are typically awarded on the following criteria:
• The terms and pricing of the proposal
• References showcasing the success and reputation of a business
• The overall responsiveness of a business
Once your proposal is evaluated, a government representative may contact you to discuss next steps, or you may receive notice that your proposal was rejected. In any case, don't lose hope if you don't land your first few projects. Working as a federal contractor takes time, and if you can remain steadfast, you'll no doubt land a contract that's worth your while.