Federal contracts look like a mixed blessing to many small business owners. On the "blessing" side, they tend to be larger and more lucrative than the private contracts that a small business typically lands. According to a 2011 American Express OPEN government contracting survey, "small business contractors are more likely to exceed $1 million in revenue versus their non-contracting peers. Nearly half (47 percent) earn revenues in excess of $1 million, versus the 5 percent of all small businesses that have achieved that level of business success."
In the "mixed" column, small businesses often fear that competing for federal contracts is considerably harder and far more confusing. They also worry that the process takes much longer to close. Fortunately, landing a federal contract doesn't have to be that hard, and the odds are actually in your favor.
"Contrary to popular belief, doing business with the federal government is easier than you think," says Lourdes Martin-Rosa, American Express OPEN advisor on government contracting and a mentor to small businesses interested in accessing and landing federal contracts. "There's no secret recipe to obtaining the government as a customer and getting in on the billions of federal procurement dollars."
How to Land Your First Federal Contract
Winning a federal contract essentially depends on you knowing what to do, when to do it, and who to turn to for professional help. Before you get started with the process, keep in mind that the federal government wants to work with you as much as you want to work with it.
"In 2011, the U.S. government spent nearly $91.5 billion on products and services supplied by small businesses," says Martin-Rosa. "Given the government's procurement goals of awarding 23 percent of its spending to small businesses, 5 percent to minority-owned businesses and 5 percent to women-owned businesses, federal contracting is an important avenue of growth for many small businesses to consider."
According to Martin-Rosa, conducting business with the feds doesn't differ from doing business with the public sector. "Hard work, perseverance, marketing techniques and relationships are required to win contracts," says Martin-Rosa. "There are, however, important steps you must take to pursue federal contracts."
12 Steps to Securing a Federal Contract
Martin-Rosa provides these 12 specific steps and other knowledgeable sources augment her points. All the sources quoted in this article agree on a precise path to that all-important first federal contract.
1. Get your business noticed
Register your business in a portal called System for Award Management (SAM). The key database under SAM is the Central Contractor Registration (CCR), and you need to make sure to complete it with all the accurate data related to your company.
The CCR contains the company profile, which houses information about the services and products that a company provides; points of contact, the status of the small business and documentation of performance in the marketplace. Essentially, this is the first key step in doing business with the federal government.
Also be sure to add your business to the Small Business Administration's Dynamic Small Business Search. Registration is free, but you must have the following information in order to register:
- DUNS (Data Universal Numbering System) number
- TIN or EIN (Tax ID or Employer ID Number)
- Product or Services Classification Codes (NAICS)
- Communication links Points of Contact (POC)
- Company website
2. Certify your business to gain a competitive edge
Visit the Small Business Administration website to determine if your business qualifies for any Small Business Certifications. You may be able to identify your firm as a small business, veteran owned, small disadvantaged business, and/or woman-owned small business. Any of these certifications help you stand out from competitors.
"Although the certification processes may be time consuming and perceived to be invasive, the certifications offer many sales and development opportunities for those businesses that complete the processes," adds Crystal L. Kendrick, president of The Voice of Your Customer, a minority-owned marketing firm that was named NMSDC National Minority Supplier of the Year.
"The federal government also tracks sales to certified disadvantaged businesses by agency and encourages those agencies that do not meet their goals to increase their spending with certified disadvantaged businesses," says Kendrick. "Certifications are effective ways to reduce the competition pool and to introduce your business to the federal procurement officers."