Are you qualified?
Selling to the federal government (directly or through prime contractors) can be a great source of revenue for Small Businesses but to get those contracts, you have to understand and navigate the process successfully. The qualifications needed are:
Start with a profitable, established business. The Federal Government is very risk adverse. A brand new business or a business that has yet to show a profit will have difficulty securing federal contracts. Normally, a government contracting officer likes to see that a business has been in existence for about two years and has past performance in the area (service or product) they are bidding on.
Get a D-U-N-S number and Cage Code. Go to http://www.dnb.com/get-a-duns-number.html and follow the instructions to obtain a D-U-N-S number for federal contracting (there is no cost to obtain the number).
- Register your business on the System for Award Management (SAM) site. The System for Award Management (SAM) is the Official U.S. Government system that consolidated the capabilities of CCR/FedReg, ORCA, and EPLS. There is NO fee to register for this site. There is no cost to register from the following link https://www.sam.gov/portal/public/SAM/. User guides and webinars are available under the Help tab.
- Determine business size. Determine your North American Industry Classification System Codes (NAICS). This helps you identify your products or services to potential customers both within the federal government and also the commercial sector. The NAICS Codes also determine your recognized business size within that particular market. A government contractor can then determine if they can qualify as a small business under SBA size standards.
- Develop or update your business plan. The next step that a company needs to take when considering moving into a large new market is to ensure that the company’s business plan supports the initiative. This means you should analyze the corporate structure, financial status, administrative capabilities, production and distribution capabilities, and delivery methods to determine if you can sustain a long-term commitment to a marketing effort that may not produce revenue for several years and then deliver as promised when you have an opportunity. Most seasoned entrepreneurs will tell you that by far the most value in writing a Business Plan is the thought process behind it. PLAN YOUR WORK AND WORK YOUR PLAN!
- 2-3 years of commercial experience. Newly formed companies should not target a large specialized market, like the government, as their initial market. Government buyers are risk averse and have no incentive to take a chance on a new company. Government contracting officers want to ensure they are dealing with a company that has a successful track record and that demonstrates they can deliver the goods or services they are seeking. They are looking for past performance and if you are new to the government market you need to show them a track record in the commercial marketplace.
- Electronically capable. Virtually all government contracts are advertised, negotiated, and awarded electronically. Additionally, most government invoices and payments are made electronically. You are at a severe disadvantage if you are not able to conduct business online. There are also many government purchasing mechanisms that are only conducted via the Internet. A professional looking, user-friendly web site is also often very helpful for conducting business with government. You should make doing business with you as easy as possible since the government marketplace is very competitive. Use an Internet provider that is capable of transmitting large files and provides a professional business appearance – personal Internet services such as AOL or Hotmail are generally not adequate to handle online business transactions and most federal agencies have firewalls in place that preclude receiving emails from AOL, Hotmail, and other non-professional email providers.
- Financially stable. Similar to the issues of a start-up business, you should not attempt to enter a large specialized market if you are struggling to make payroll or have an inadequate cash flow. Contracting officers are looking to buy the best possible goods and services for the best price – we as taxpayers expect as much. Ensure that your company is able to sustain the financial obligations required to work through the procurement process before entering the government marketplace.
- Good customer mix. Large specialized markets like the government marketplace can make dramatic shifts in their focus because of events, such as a war or a natural disaster. If a company is too dependent on these markets, a shift of emphasis to respond to a major event can be devastating. To ensure business stability over the long term, it is recommended that the business have a well balanced mix of revenue streams.
How do you get started?
- Develop a winning strategy – What agencies have bought products/services like yours in the past? Which companies have been awarded these contracts? How much have they been paid? Answers to questions like these are necessary to develop a winning strategy, guide your target marketing, and give you a competitive edge. Educate yourself on entrepreneurship and your industry by joining trade associations. Talk with other business owners in your industry.
- Obtain appropriate certifications – Once you know which agencies or prime contractors have the highest potential for your product/service, the next step is to determine what certification(s) will set you apart from your competitors.
8(a) Business Development Program helps small, disadvantaged businesses compete in the marketplace.
HUBZone Program helps small businesses in historically underutilized urban and rural business zone communities gain preferential access to federal procurement opportunities.
Service-Disabled Veteran-Owned Businesses provides procuring agencies with the authority to set acquisitions aside for exclusive competition among service-disabled veteran-owned small business concerns.
Small Disadvantaged Businesses Firms that are considered to be small disadvantaged businesses can compete for certain federal contracting opportunities.
Women-Owned Small Businesses Federal Contract program authorizes contracting officers to set aside certain federal contracts for eligible women-owned small businesses.
- Market to public agencies and prime contractors – With a strong capability statement at hand, attend networking and outreach events where federal agencies on your target list are present.
- Identify and respond to opportunities – use every opportunity to actively seek out potential contracts through look-ahead lists published by every agency and via FedBizOpps.Gov which publishes all federal procurements over $25,000.
- Be prepared to respond to appropriate opportunities via response to RFQ/RFP or Bid process.
- Get bonding and financing – Obtaining financing and bonding for your business can be challenging and will take time and resources. You may need to consider a number of options. Be sure to start early and work it in parallel to your marketing efforts.
Orange County SBDC’s training and consulting services assists businesses to develop a government marketing strategy for selling to federal governments or prime government contractors. Further, we assist with certification, marketing, and introduction to buyers in the contracting arena, and obtaining appropriate financing for working capital or building and equipment, as well as, bonding when required.
Develop a marketing plan which includes a well-polished, two sentence elevator pitch, a targeted capability statement, and a detailed PowerPoint presentation to be delivered in successive meetings with a potential new customer. Each capability statement should be tailored to the mission needs of the prospective customer in a similar fashion that a resume is tailored to a potential job advertisement.
Information resources and networking opportunities help business clients stay abreast of the ever changing government and prime contractor procurement process and personnel. Orange County SBDC sponsors “matchmaking” events, providing critical opportunities to connect with agency buying officers, prime contractors and other businesses that may offer teaming or subcontracting opportunities.
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