Federal agencies shell out more than $425 billion a year on everything from bulletproof vests to office furniture. So it makes sense for small businesses to try to turn the government into a paying customer.
“The U.S. government is not only the world’s largest purchaser of goods and services, we practically buy everything imaginable, ” says Debra B. Libow, a Small Business Administration procurement center representative. Even better, she says roughly 23% of all government spending is earmarked to go to small businesses.
While landing the world’s largest spender as a client is enticing — especially during a recession — the process of obtaining a federal contract is not, says Patrick Malyszek, president of M3 Federal Contract Practice Group, a federal procurement contract consultancy in Endicott, N.Y. Applying for a contract can take a long time and is laced with regulatory nuances, such as how to solicit government employees and antikickback procedures. And even after you land a contract, failing to meet government expectations can have drastic consequences. ” I’ve seen the government wipe out smaller firms by not paying them timely or not paying them at all, ” he says.
To make sure your contract results in profits instead of headaches, here’s a primer for working with the government.
Before a business can take on a government contract it needs a Federal Tax Identification Number. Assigned by the IRS, this unique number identifies the company as a business. Also, make sure to figure out which North American Industry Classification, or NAIC, code corresponds to your business. This code helps government procurement personnel sift through the many companies looking to land a government contract. (Search for a NAIC code here .)
To become an official seller, you must register with the Central Contractor Registration and the Dynamic Small Business Search database. In your profile, identify appropriate keywords that describe your company and update this data regularly. For advice on how to register, check out the SBA .
Learn the rules
Government agencies are sticklers for the rules — and there are plenty of them. Just giving a federal employee a pen with your firm’s name on it can be considered a violation, says Malyszek. To make sure you stay on the government’s good side, check out the federal acquisition regulations , which provide the framework for how the government buys products and services. The SBA also offers free online courses on working with the government here . Other web sites worth visiting include the U.S. Department of Defense’s Office of Small Business Programs and the Office of Federal Procurement Policy .
” When you’re selling something, you don’t just run out there and sell. You have to find out who your competitors are. Find out what agencies are buying. And figure out how to price competitively, ” says Barbara Kasoff, president of Women Impacting Public Policy, a Washington, D.C.,-based nonprofit that counsels female business owners on how to work with the government. One way to do that is to network. Try joining nonprofit business associations such as the American Small Business Coalition or Count Me In , or industry-specific associations.
Get your business’s financial house in order
Sorry, start-ups. But when it comes to working with the government, businesses need to have a two- to three-year track record that’s in top shape, says Kasoff. Make sure the business has a solid credit score and a stellar Dun & Bradstreet financial rating, she says.
Find the right opportunities
Sift through available contract opportunities by visiting the Federal Business Opportunities web site and INPUT , a Reston, Va.-based research firm that tracks contract opportunities within the government. As the main purchasing agent for the federal government, the U.S. General Services Administration is also a source for contract possibilities. Another option: big federal contractors including Lockheed Martin and Booz Allen Hamilton that offer subcontracting opportunities.
Do your due diligence
Learn as much as possible about each agency you’re hoping to work with. Visit that agency’s web site to learn about what products or services they use and figure out how your company’s might fit in. Then, see if the agency has a small-business liaison you can contact — most do, says SBA’s Libow. (A list of agency contacts is available at the Federal Office of Small and Disadvantaged Business Utilization Directors Interagency Council .)
-Write to Diana Ransom at email@example.com
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