What do computers, oatmeal cookies, and tires have in common? The U.S. Government is the largest buyer of each. As the single biggest purchaser of goods and services in the world, the federal government spends $500 billion every year, with over $100 million going to small businesses, according to the U.S. Small Business Administration (SBA).
That’s a lot of opportunity for small businesses. But navigating the rules and regulations that govern these contracts can be frustrating for companies that don’t do their homework first, leading to delays that impact cash flow.
“There’s definitely a learning process,” said Judith Roussel, Director of Government Contracting for the SBA. Fortunately, there are also plenty of resources to educate companies on how to win a piece of this lucrative government business.
Entrepreneurs vs. bureaucrats
One of the biggest differences between entrepreneurs and bureaucrats is how they make purchasing decisions. Small business choices are often made by owners who are personally invested in the outcome, and able to make decisions quickly. Government purchasing, however, follows certain laws to make sure taxpayer money is spent well and that all businesses have equal opportunities to win each contract.
Decision making is structured at every step of the way, from advertising a bid to awarding a contract, said Roussel, and may involve multiple layers of approval.
“You have to be prepared and you have to know the rules of the game,” she said. “Oftentimes there are big dollars on the table and there’s a lot of opportunity. But you don’t want to misstep.”
Get to know the SBA
By law, the federal government must award 23 percent of its contracts to small businesses, and new legislation may increase that amount to 25% this year. The SBA works to help fill these slots with small business sellers, and has many resources to help businesses get qualified, including free online contracting courses.
The SBA’s Procurement Center Representatives (PCRs) make sure federal agencies set aside contracts for small businesses in various categories, such as those owned by service-disabled veterans, women and minorities. As such, PCRs are a great resource for steering small businesses in the right direction, Roussel said. The SBA provides a complete list of PCRs on its website.
Start with subcontracting
Further help is available from the SBA’s Commercial Market Representatives (CMRs) who counsel small businesses on how to get subcontracts. It's often a good first step for companies that are new to the game, Roussel said.
The SBA offers a formal mentorship program that enables larger prime contractors to offer development assistance to disadvantaged small businesses in exchange for an opportunity to jointly bid on their contracts. The guidance helps small businesses learn the ropes and create a track record of successful work to help them win future bids, Roussel said. The program is so successful the SBA is making a similar Mentor Protégé Program available to all small businesses later this year. Companies can find subcontracting opportunities on the SBA’s Sub-Net database.
Do your homework
The small businesses that are most successful at winning contracts are those that do their homework, said Roussel. Companies can start by registering with the System for Award Management (SAM) to determine if they can be classified as a small business and whether they’re eligible for preferential status. Once they’re certified, small businesses can go to fedbizopps.gov to find contracting opportunities.
Although the government sets aside contracts for small businesses, they aren’t just handed out, said Roussel.
“You have to go after those contracts; they’re not going to be given to you,” she said. “That’s one thing we can never say too much: you still have to do all the homework and the preparation, you have to know your business well, and you have to market yourself.”
Steady government business can lead to long-term growth for many small firms. While the process may be time-consuming, learning how to work with the government can definitely offer big rewards to small business contractors.
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