How to Become a Government Contractor: Essential Steps
Government contractors are vendors who sell their products and services to the state, local and national government. Many businesses are looking forward to this industry with the idea of expanding their market and gaining more significant profits.
With more than $100 Billion spendings every fiscal year, the United States is known to be the greatest consumer around the world — no wonder why businesses are facing the competition to be considered as government contractors.
Although the government contracting industry is a big opportunity for any business, it is still not easy to be part of it. First, you must pass through a detailed registration process and contractors’ regulations to be eligible as a government contractor.
If you are interested to know how to become a government contractor, you’ve come to the right place because this site has got you covered. Make sure you read along because this article will provide you with the essential steps you need to follow to be a successful government contractor.
How do I become a government contractor?
Establish a Business
Starting your own business is the first step toward becoming a federal contractor. Creating a small business from scratch is not an easy thing to do. But if you really want to sell your product or services to government customers, you need to push hard on establishing a business. As a result, having a well-established business means being able to supply the number of things that your customers and clients require.
Register your business
Once you have established and thought of a business, you need to process the following requirements to ensure that your business qualifies for government contracting.
1. System for Award Management (SAM)
SAM Registration is necessary for government contracting opportunities because they hold the state’s contracting database. This database can be used for looking for government contracts or other businesses working with federal agencies.
2. DUNS Number
The Data Universal Numbering System (DUNS) from Dun & Bradstreet (DB) is a nine-digit number used to represent small businesses, corporations, or firms instantly.
Once you have your DUNS Number, it will remain the same throughout the lifespan of your business. On the other hand, the DUNS number is also used to trace the financial transactions of businesses worldwide.
For registration and obtaining a DUNS number for your small business, you may have it for free by using their online DUNS request service platform.
3. North American Industry Classification System (NAICS)
The North American Industry Classification System gives a unique code to categorize small businesses and companies and collect their economic status. Every business must obtain this code to apply for federal contracts.
However, if you are interested in working in different industries or operating in different niches, you must obtain multiple NAICS codes.
4. Employer Identification Number
Some small business owner that is just starting in business chooses to use their Social Security Number (SSN). However, the government requires large and small businesses to obtain EIN (Employer Identification Number). EIN or also known as Federal Tax ID Number, can be obtained free of charge from the Internal Revenue Service (IRS)
5. Commercial and Government Entity Code (CAGE)
Like the NAICS code, the CAGE code is a five-character unique code given to every business. CAGE code will serve as an identifier to your business, allowing the government agencies and contracting authorities to recognize your company quickly.
6. Apply for certification
There are different certifications that the federal government can offer to any business, and they are called the set-aside program and sole-source contracts. These certifications bring out great benefits, but you must complete an application with the Small Business Administration or SBA to be eligible for certification under these programs.
Whenever you accomplish applying for certifications, it is highly recommended to keep all your certificates in one place and make lots of copies of the documents and requirements you sent to the SBA to have them ready if a federal agency asks for them.
Meanwhile, if you wish to change your contact information or any information during the application process, you must contact the SBA immediately to revise your application. For more information, contact the SBA or visit their website at https://www.sba.gov.
Search for open federal contracts online.
Once you are done with the preparation, certification, and other paperwork, you can now search for open federal contracts.
As mentioned above, the System for Award Management holds a database of government contracts open for bidding. With that being said, you can look for federal agencies that might be willing to buy your products or services. You can also use the website to get detailed information about the government’s past purchases and the recent biddings open for any business.
Check for smaller state and local contracts.
Program certifications may take a while before you get classified. But suppose you are eager and excited about winning your first government contract. If that’s the case, you should consider bidding on local and state government contracts before moving to federal contracts.
State or local government contracting opportunities may not procure all the time, but once they do so, they indeed look for vendors that can provide their needs and acquire or purchase in incredible amounts.
Local governments may not be a big market than the federal government. Still, your experience when you work with them is enough to help you enhance your knowledge, skills, and confidence to work with the more extensive clients in the marketplace.
Each state and local government has its process and detailed regulations to be eligible as a state contractor. Visit your local government’s procurement office or log in to their official website to learn more about the registration process and available contracts in your state.
Research government agencies
Suppose you are aiming to work for a particular government agency or department. In such a situation, you’ll need to undertake extensive research on them, their budget, how they buy things and services, or how they run their business in general.
Researching information about the particular federal government department in advance will give many benefits and enough time to prepare. But, take note that this step can be optional if you are just hoping to work for any government agency.
Meet size standards
Each NAICS code has a size standard set by the Small Business Administration. Business sizes standards define the maximum size that businesses and other organizations can qualify as small businesses for a particular contract.
The Code of Federal Regulations Title 13 part 121 states all the given rules and laws for businesses made by the government. So, before you submit your proposal to any government clients, make sure that you meet the size requirements set by the SBA.
You may check the SBA’s Table of size standards and size standards tool for more information about your business qualifications for contracting projects.
Place Your Bid
Once you have settled every requirement, you can now bid for government contracts. However, here are a few reminders before placing your bid:
- Carefully study each contract because the government strictly follows its rules and regulations. You may be disqualified for competing whenever you make a single mistake.
- Ensure that you understand all the contract’s conditions to avoid legal implications. Contract conditions are always included in the agreement, but their concept came from the Federal Acquisition Regulation.
If you are experiencing a hard time with government contracts, you can outsource or hire government procurement consulting services to help you complete your bidding process. Although, take note that their consulting fees can crumble down your profit.
Receiving an answer
Agencies are always busy and taking a lot of time to review a proposal. A contracting officer is assigned to each evaluation, and it usually will take them thirty to one hundred twenty days to complete the review.
Here are some factors that the contracting officer and government agency consider before awarding a contract:
- How responsible and responsive the business
- How technically acceptable the proposal
- Past performance references
- Pricing the and terms
Receiving an answer if you won the contract or not may take some time, but one thing is sure to happen – you will receive personal updates from the government entity when the process is complete. Also, since the bid is open to the public, the government publicly announces which bid was awarded, including the company name and projected amount.
Network within government and procurement programs
Government contracting does not end with just processing and dealing with the federal agencies. You shall learn how to win and develop a business relationship with the people in the industry.
Networking and talking with the people in the agencies can help you understand their needs and budget capabilities. Whenever you get the chance to meet a person from a particular department, you will also deeply understand how they work with government vendors. Also, by making relationships with them, you are not just aiming to win government contracts but also building the trust necessary for doing business.
Attend government agency events
It is not necessary to talk to the government agencies one by one to network with them. The reason is that SBA and other government agencies host workshops, conferences, seminars, and other events, which serves a great purpose to meet with the staff in different federal government departments and other government contracting agencies.
With the help of information technology, most federal agencies nowadays conduct their events using online platforms, so there will be no excuses for you to miss out on this chance. Additionally, government procurement experts attend these events and share their knowledge, experiences, and expertise in the field. That is why as long as you have an internet connection, you can register and participate in their events.
Find a mentor
Things might get overwhelming when you first step into the world of government contracting. That is why it could be an excellent opportunity to find a mentor who can help you understand the industry successfully.
You can ask for the help of the people you met at the networking events or broaden your knowledge by participating in mentorship programs sponsored by the government.
One of the mentorship programs is offered by the GSA, which can help you navigate the bidding process and win a government contract. A Multiple Award Schedule (MAS) and a Federal Supply Schedule, generally known as GSA Schedules, are also available from the GSA. GSA Schedule Contract is a long-term governmentwide contract with commercial firms providing more than 11 million commercial items and services at bulk discount pricing to national, state, and local government buyers.
Another one is the Small Business Administration’s 8(a) program that can help you to connect with a successful federal contractor. This program also offers a contract that is purposely given to qualified companies.
Some contracts require large companies to work with small businesses as subcontractors. Subcontracting for a larger company awarded a prime contract can be an excellent option to become a government contractor, especially if you think your business is not ready to handle a federal contract alone.
When you undergo as a subcontractor, your business will not be announced as the winner of the proposal. However, subcontracting can help you to build performance, gain better ideas and experiences that can sharpen your business skills which will be beneficial when you apply as a prime contractor in the near future.
If you are interested in trying, you may find subcontracting opportunities by visiting the SBA’s website.
How much does it cost to become a government contractor?
Large amount of financial investment is required to start a small business from scratch. Along with that when you plan to work with the government, expect to pay a great amount of money for processing the requirements, certifications, etc.
With that being said, I cannot give you a detailed computation for the exact cost to become a government contractor because processing fees or capital may differ depending on the business and the paperwork needed.
Is it worth becoming a government contractor?
Is it worth it to become a government contractor? I cannot give a definite answer whether it will be beneficial to your company or not because it will all go back down to your eagerness and willingness to take risks in working for a new market.
Definitely, there are pros and cons to becoming a government contractor. Many say that the industry has sustained its small business and remained in the competition. At the same time, others say that the contracting industry did not work for them.
Nevertheless, as a small business owner, all your decisions will affect the overall outcome of the company. With that said, if you want to pursue government contracting, make sure that you are willing to overcome every challenge along the way and will push through to creating a successful company.