Every business is interested in ways to grow and diversify its customer base.
Normally, a business achieves success with an audience and over time expands its offerings to reach new types of consumers or businesses.
One area of significant opportunity for businesses to consider is to sell to the U.S. government.
The U.S. federal government is the largest buyer of goods and services in the world. It supplies the world’s largest civilian and military workforce with everything it needs from basic office supplies, food, clothing and computers to industrial machinery, vehicles, aircraft and ships.
What’s more, the government has rules in place to ensure there are opportunities for small and mid-sized businesses, as well as businesses owned and operated by minorities, economically disadvantaged groups, women, veterans and others.
Interested In Becoming A Government Contractor?
Contact us today about getting a business and market assessment done. An assessment will help you better determine your capabilities, and identify the right opportunities in the federal government for your business.
How much opportunity really exists for businesses to sell to the federal government?
In total, the federal budget for FY2020 (set to end on September 30, 2020) will be over $4.7 trillion. For the 2020 fiscal year, President Trump and Congress agreed to support a $320 billion increase in spending over the levels set in the Budget Control Act of 2011. This increase in spending is part of a recent trend in grown government spending that has been going on throughout the Trump administration.
Of course, not all of the $4.7 trillion is available for government contractors. Federal contract spending for FY2020 will be about $565 billion. And much like the federal budget, contract spending has also been on the increase.
Government Contract Opportunities On the Rise
As the chart above indicates, federal contract opportunities are continuing to rise. Though much of the spending increases have come as a result of Defense spending, the number of opportunities for small and mid-sized businesses has increased across most federal agencies.
Government-wide Acquisition Contracts (GWACs) Continue To Grow
As shown in the Bloomberg Government chart on this page, federal spending has continued to grow on GWACs that agencies use for IT purchases. Since IT is a growing need, this contract vehicle, which opens doors to many small and mid-sized businesses. GWACs spending has just about doubled in the last 5 years to $17 billion+.
Other Transaction Authority (OTA) Spending Is Now Over $7 Billion
Over the last two years, OTAs have increased in popularity, especially within the DoD. The benefit of OTAs as a contract vehicle is that they are designed to speed up the acquisition process and reduce significant red tape for businesses. This helps the military get much needed products and services delivered faster, and benefits contractors by reducing the time to delivery and payment.
Teaming Agreements are on The Rise
The government uses different types of contract vehicles to secure what it needs. Aside from Sole Source contracts (contracts awarded to one company) designated for certain types of businesses, contracts that involve teams of companies to fulfill requirements have increased in popularity. Teaming agreements are when two or more companies combine resources to meet the requirements of a government contract. The benefit to a teaming agreement is that it gives more contractors access to federal opportunities. A prime contractor can supplement its capabilities by building a team of companies. Sub contractors can each focus on a piece of a contract they do well. For both companies, teaming gives them access to an opportunity they would be able to win on their own. This benefits the government, because a well-constructed team reduces overall risk and can keep overall costs down so a contract stays within its budget.
Based on the data, there a significant opportunity for small and mid-sized businesses to provide goods and services to the federal government. In fact, as the government continues to expand spending in areas of information technology, cybersecurity, data protection and other critical areas, the need to reduce bureaucracy, increase the speed of procurement and open doors for more businesses to compete means the opportunity is better than at any point in history.
So, how does a business get started in government contracting?
GDI Consulting has compiled some steps to help you get started.
1. Conduct A Business and Market Assessment
While you have identified that the federal marketplace has opportunities for businesses, the most important step you can take is to have an impartial assessment done of your business and the market opportunity, including government agency needs and any competitors or incumbents (an incumbent is a business that was awarded a contract that is coming up for a new bid).
A business assessment will help your organization better understand its strengths and weaknesses, as well as your core capabilities. However, you also need to map your capabilities to government needs.
To map your capabilities to government needs you need a government market assessment. Whether your target audience is a specific government agency or agencies with similar needs, a government marketing assessment complements the business assessment by laying the foundation for a business development / capture plan and marketing plan. This is where you develop an understanding what your government customers want and why, as well as how your company measures-up against the competition.
The next step is to complete some important administrative steps, such as registering your business. For example, you will need to get a Dun & Bradstreet (DUNS) number. A DUNS number is a unique nine-digit identification number for each physical location of your business.
To be prepared when you start that process, make sure you have the following information:
Legal name of your business
Doing Business As (DBA) or other name by which your business is commonly recognized
Another steps will be to match your products and services to a North American Industry Classification System (NAICS) code. NAICS codes classify businesses based on the particular product or service they supply. A business will generally have a primary NAICS code, but it can also have multiple NAICS codes if it sells multiple products and services.
Lastly, you will want to register with the federal government’s System for Award Management (SAM). SAM is a database that government agencies search to find contractors.
And depending on what was determined in your business and market assessment, you also may register with General Services Administration (GSA) or other specific government agencies.
NOTE: Many companies are led to believe that all they need to successfully sell to the federal government is their own GSA Schedule. There is a misconception that a GSA Schedule will include a company into the government’s buyer catalog and orders will start to come in. First, that is not how GSA functions. Second, GSA only represents a fraction of federal contracting spend. And third, not every business is well-suited for the GSA Schedule.
3. Determine Your Business Size / Classification
If you are a small business, you need to make sure your size qualifies you for small business contracts. Depending on your ownership, you also could be eligible for specific designations such as “Veteran Owned,” “Minority Owned,” and “Woman Owned” small business.
4. Meet Compliance and Certification / Authorization Requirements
In order to participate in government contracting, you must comply with all laws and regulations. The federal government’s purchasing process is governed by the Federal Acquisition Regulation, which also is known as the FAR. Regulations covering government contracting programs for small businesses are listed in 13 CFR 125.
You also need to be aware if your organization, its employees and/or supply chain need any type of certification. DoD contractors are preparing for a new cybersecurity certification that will start to be required of contractors in RFPs. This certification mandate is going to appear in RFPS in the Fall of 2020.
If your company provides cloud-based solutions, you may need be FedRAMP Authorized.
Overall, the complex web of compliance issues that face businesses of all sizes is best navigated with skilled professionals. The government is extremely adverse to risk, and failure to be in compliance or have authorized solutions can mean immediate rejection of all your government bids.
5. Begin Searching for Opportunities
Once the administrative pieces have been completed, you should start to use SAM and other tools to begin searching for opportunities.
There are a number of software tools and providers, however having a team of professionals identify opportunities that are the best matches for your business can help you save time and money.
Download “How To Get Started In Government Contracting”
Complete this form and we will send you a PDF of our guide, “How To Get Started In Government Contracting.” The guide will be published in February 2020.
Interested in becoming a government contractor? Have questions?