There is a misconception among small businesses that they can’t get federal government contracts. The truth is, however, the federal government prioritizes using small businesses for work.
In July 2022, SBA announced that the administration surpassed its small business contracting goal. The government had awarded $154.2 billion, or 27.2 percent of contracting dollars, to small businesses. This represented an $8 billion increase from the previous fiscal year. Additionally, 21 federal agencies scored an “A” or “A+” for their achievements in small business contracting.
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 2021:
- The goal for small, disadvantaged businesses, 5 percent; contracts awarded 53.38 percent
- The goal for service-disabled-veteran-owned small businesses, 3 percent; contracts awarded 30.58 percent
- The goal for women-owned small businesses, 5 percent; contracts awarded 20.99 percent
- The goal for HUBZone (companies located in underutilized zones), 3 percent; contracts awarded 28.58 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, spur the economy and job creation, and have the advantage of ideas and innovations from companies of all sizes.
Suppose you’re convinced that government is a viable market for your small managed services provider (MSP) or value-added reseller (VAR) business. In that case, the SBA is an excellent resource of information and guidance. The SBA advises that companies 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 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 and Agency Recurring Procurement Forecast 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 necessary registrations, 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.
Is Your Business a Good Candidate for Subcontracting?
You can consider subcontracting as an alternative to establishing your business as a prime contractor – one that works directly with the government. Some government contracts require that large companies subcontract work from small businesses. You can find subcontracting opportunities by following these links:
- Subcontracting Network database
- General Services Administration’s Subcontracting Directory for Small Businesses
- Department of Defense Subcontracting Opportunity Directory
- SBA’s Directory of Federal Government Prime Contractors with a Subcontracting Plan
As a subcontractor, you must 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. For example, 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?