Is a Government Contract Your Next Win as a Small MSP Business?

The federal government has a goal of awarding almost a quarter of contracts to small businesses. Be prepared to take advantage of the next opportunity.

There is a misconception among small businesses that they can’t get federal government contracts. The truth is, however, the federal government has a goal of awarding 23 percent of prime contracts to eligible small businesses. Moreover, the federal government has exceeded that goal for the last six years. In 2018, the U.S. government awarded 25.05 percent of federal contracts totaling $120.8 billion to small businesses.

The Small Business Administration publishes an annual scorecard that also shows the U.S. government’s goals for awarding contracts to specific types of small businesses. In 2018:

  • Goal for small disadvantaged businesses, 5 percent; contracts awarded 9.65 percent
  • Goal for service-disabled-veteran-owned small business, 3 percent; contracts awarded 4.27 percent
  • Goal for women-owned small business, 5 percent; contracts awarded 4.75 percent
  • Goal for HUBZone (businesses located in underutilized zones), 3 percent; contracts awarded 2.05 percent

The Small Business Administration (SBA) points out the U.S. government is incentivized to award contracts to small businesses to provide opportunities to these groups as well as spur the economy and job creation and have the advantage of ideas and innovations from businesses of all sizes.

First Steps

If you’re convinced that government is a viable market for your small managed services provider (MSP) or value-added reseller (VAR) business, the SBA is an excellent resource of information and guidance. The SBA advises that businesses entering this market:

Meet size and basic requirements: Before you can do business with the federal government as a small business, you need to prove you are, indeed, a small business. You can use the SBA’s Size Standards Tool to determine if your business qualifies. Also, acknowledge that the government prefers to do business with established companies with good reputations. You will also need to comply with all laws and regulations.

Market research: Use information from the Federal Procurement Data System – Next Generation, USASpending.gov, and Agency Recurring Procurement Forecasts to learn which government agencies are buying, what they buy, and who is getting contract awards.

Register: To bid on government contracts, you need to get a Dun & Bradstreet Number, classify your products and services with NAICs Codes, and register with the System for Award Management (SAM).

How to Tap into the Opportunity

Once you have collected all the information and completed the registrations you need, you can list your business in databases that government agencies use to search for contractors, such as the Dynamic Small Business Search (DSBS), maintained by the SBA.

You can also search FedBizOpps.gov, where government agencies are required to advertise all contracts over $25K. You may also want to investigate the benefits of pursuing a contract with the U.S. General Services Administration (GSA).

Is Your Business a Good Candidate for Subcontracting?

An alternative to establishing your business as a prime contractor — one that works directly with the government — you can consider subcontracting. Some government contracts require that large companies subcontract work from small businesses. You can find subcontracting opportunities by following these links:

As a subcontractor, you will need to follow all regulatory and contract compliance requirements and be subject to monitoring throughout the project.

Step Outside Your Comfort Zone

If your team is currently only working with businesses and organizations in the private sector, establishing yourself as a service provider for government agencies will require a vastly different approach than nurturing prospects and making sales calls.

There are definite advantages to pursuing business opportunities in government, including eliminating guesswork. Government agencies are required to plan a budget for the year, showing exactly what they will purchase and how much money they’ve set aside for the project — and that information is available to you through resources in the public domain.

You can also dig a little deeper to find agencies that aren’t meeting their goals for awarding contracts to small businesses or prime contractors that need to find small businesses to work with.

With some research, you can know exactly where to focus your efforts. Are you ready to take advantage of the next opportunity?