“The Small Business Administration’s Office of Government Contracting & Business Development works with federal agencies to award at least 23 percent of all prime government contract dollars to small businesses and help federal agencies meet specific statutory goals for small disadvantaged businesses, women-owned small businesses (WOSB), service-disabled veteran-owned small businesses (SDVOSB), and small businesses that are located in historically underutilized business zones (HUBZone)”. – The Small Business Administration
U.S. federal government contracts represent a tremendous sales and revenue opportunity for Entrepreneurs.
But, how does an Entrepreneur take advantage of the world’s largest customer?
As a part of its responsibilities, the Small Business Administration (SBA) helps Americans start, build, and grow businesses. The SBA works with federal agencies to help small businesses win government contracts.
The U.S. Government buys all types of products and services in both large and small quantities and is required by law to provide opportunities for small businesses.
The SBA website explains that the government is very particular about how it purchases products and services. The general aims of the rules and regulations governing federal contracts are to ensure that:
- Competition is fair and open. The process of requesting proposals, evaluating bids, and making awards should take place on a level playing field with full visibility. Any business that is qualified to bid should be considered.
- Products and services are competitively priced. The government seeks pricing that is commensurate with its formidable buying power.
- The government gets what it pays for. The government protects itself by carefully defining requirements, terms, and conditions for all purchases. Contractors must document that they have fulfilled all requirements and met all terms in order to be paid.
- Both the government and contractors comply with the law. Different rules and regulations apply to different types of purchases. The Federal Acquisition Regulation (FAR) or Defense Acquisition Regulation Supplement (DFARS) apply to most federal agencies. Individual organizations often have their own rules as well.
There are two broad categories of government contractors:
- Prime contractors bid on and win contracts directly from government agencies. After award, the prime contractor company is the entity that is legally responsible for all aspects of fulfilling the contract, such as interacting with the government customer, recruiting staff, organizing and managing teams of subcontractors, and meeting all delivery requirements. Both large and small businesses can serve as prime contractors.
- Subcontractors join prime contractors’ teams, usually to provide a specific capability or product. Subcontracting is an excellent way to enter the government contracting market and to participate in larger-scale opportunities. The advantage of being a “sub” is that you’ll be responsible only for your area of expertise, not managing the entire contract. You can gain valuable experience (called “past performance”) that will qualify you for future contracts. Note that you will serve two customers. Your prime contractor will determine what percentage of the work (called “workshare”) and which assignments (called “tasks”) you will receive. In addition, you may or may not work directly with the government, at the discretion of your prime.
To serve as either a prime or a sub, you’ll need to qualify as a small business and register as government contractor. Then, you can begin to seek both prime contractors and federal agencies as customers.
For several reasons, the government is particularly concerned with including small businesses as it buys goods and services:
- To ensure that large businesses don’t “muscle out” small businesses
- To gain access to the new ideas small businesses are great at providing
- To support small businesses as engines of economic development and job creation
- To offer opportunities to disadvantaged socio-ethnic groups
To these ends, most government agencies “set aside” a percentage of their acquisitions (what they buy) for small and disadvantaged businesses. In some cases, these set-asides might consist of certain types of tasks on larger contracts. In other cases, entire contracts may be designated for small businesses. Get all the details on set-asides in the SBA Small Business Set-Aside Opportunities section.
The SBA goes to great lengths on its website to help you see:
- Whether government contracting is right for your business
- What you need to get started as a federal contractor
- How to find government contract opportunities and customers
The SBA offers resources for digging into the nuts and bolts of government contracting, including:
- The Government Contracting Classroom—An extensive range of training courses on different aspects of government contracts, bids, and contract jobs
- Commercial Market Representatives—Counselors located in SBA area offices who can help you identify potential prime contractor “teaming partners,” and
- Center Representatives who assist small businesses in obtaining federal contracts.
To learn more about this subject, go to the SBA website to access information on:
- Getting Started as a Contractor
- Finding Government Customers
- Resources for Small Businesses
- Government Contracting Programs
- For Contracting Officials
In the last fiscal year, the federal government awarded its highest ever percentage of contracting dollars to small businesses, totaling over $90 billion. Those resources supported more than half a million jobs in communities across this country.
All Entrepreneurs would do well to take advantage not only of these opportunities, but of much more offered by the SBA. Since its founding on July 30, 1953, the SBA has delivered millions of loans, loan guarantees, contracts, counseling sessions, and other forms of assistance to small businesses.
What are you waiting for?