How do I get started in pursuing government contracts?
The information in the following paragraphs will guide you through the actions a business owner needs to take to get started in pursuing government contracts. You can find additional information on each topic at the Links and Tools portions of the Resources page of this website or at the subpages within the What We Do page of this website. At some point you may need specific assistance with some topic and want to meet for a one-on one counseling session. You can either go to the Locations\Interactive Map page of this website to find contact information for PTAC Advisors or register online at the What We Do\Register for Counseling page and someone will follow up on your request. Know that it is normal to feel a sense of ‘overwhelm’ when you first look into the possibility of selling your goods or services to a government, tribal, or educational entity.
Assess your business for contract-readiness
Except in rare instances, the (Federal)* government only purchases goods and services from businesses meeting these three criteria:
1) have been in operation two or more years
2) have a strong track record in the commercial sector
3) have the personnel, resources and financial strength to bid on and perform under government contracts
If your business does not meet these criteria, please contact your local Small Business Development Center [http://www.nmsbdc.org] for help improving your business status. However note that while the Federal government requires a business to be in operation for at least 2 years, various government entities, the State, counties, cities, etc. may have different requirements regarding the number of years a business has operated.
If your business does meet the criteria, read on.
Identify your product or service
There are several systems in use that put goods and services into categories and give them a code. You could start by searching for your appropriate code within the North American Industry Classification System (NAICS). Some agencies might require you know your code within the Federal Supply Codes (FSC) or the Product and Service Codes (PSC) or the General Service Administration Special Item Number (SIN) system.
Note that the State of New Mexico and other local government entities may use different codes; e.g., the State requires selecting codes from the State GSD Commodity List.
Determine desired geographic area
Consider where you believe you could provide your product or service. Think about whether you want to attempt to get federal, state or local contracts. Narrow down the geographic area to states to which you could deliver your goods or services.
Get registered on the appropriate databases
If you plan to market your goods or services to the federal government, you will first need to obtain a DUNS number from Dun & Bradstreet (D&B). Contact D&B at either 1-866-705-5711 or go to http://fedgov.dnb.com/webform. These are specific contacts for businesses interested in government contracting and there is no charge.
Once you’ve obtained a DUNS number, register with the System for Award Management (SAM) (https://www.sam.gov/portal/public/SAM/#1) . In the process of registering on SAM, you will also be asked to add a Small Business Administration (SBA) profile. This is important as it is related to your company appearing in the Dynamic Small Business Search database.
There are also specialized registration databases for many states, military installations, national laboratories, cities and counties.
Get familiar with the regulations for your industry
Some industries require a safety plan while other industries require a company be insured. Bonding is required at various dollar amounts for construction companies and others. Get up to date with the licenses and certifications typically required in your industry. Consider whether you have the required clearance to do business with military installations and national laboratories. It’s not a book to be read in a single sitting but small business owners need to apprise themselves of the applicable regulations found in the Federal Acquisition Regulations (FAR).
Check to see whether you qualify for any federal certifications
Your business may qualify for the 8(a) program, which is administered by the U.S. Small Business Administration (SBA). The same agency determines whether businesses qualify under the Historically Underutilized Business Zone (HUBZone) program. Veterans who are business owners should consider becoming verified as a Veteran-Owned Small Business or as a Service-Disabled Veteran-Owned Small Business (SDVOSB). Companies can self-certify as either Women-Owned Small Business (WOSB) or Economically Disadvantaged Women-Owned Small Business (EDWOSB) by following certain steps and uploading documentation to the SBA General Login System.
Determine whether your accounting practices are in order
First determine whether your company is following generally accepted accounting principles. Federal regulations on this topic are in FAR Part 31 (Contract Cost Principles and Procedures).
For federal contracts your accounting system must be compliant with the requirements of the Defense Contract Audit Agency (www.dcaa.mil). The Department of Defense requires all vendors to use the Wide Area Workflow (WAWF) invoicing system.
For more information and assistance
After reading this FAQ answer, you may have additional questions you want to discuss with a PTAP Advisor. Contact information for Advisors in on this website HERE.
What is a Request for Proposal?
The federal government buys billions of dollars of goods and services each year. Each state and local government also purchases goods and services. A government agency may know what it needs; in that case the government buying office will put out a bid package (aka solicitation package) describing a problem or requirement. Vendors have the opportunity to propose a solution to the problem and calculations of the cost. If the agency estimates there will be multiple vendors interested in the bidding process, the agency publicly announces a “Request for Proposal (RFP).” The RFP is part of the process for negotiated bids.
A business responds to an RFP by submitting a proposal by the deadline contained in the RFP. The general content explanation of what an RFP will include can be found in FAR Part 14 – Sealed Bidding, which includes the Uniform Contract Format. Most vendor responses to a solicitation contain the following sections at a minimum:
- Requirements matrix showing each requirement extracted from the RFP and where and exactly how in the proposal the vendor’s response is documented
- Executive summary: a synopsis of why the government customer should buy from the proposing vendor and any unique details about the vendor pertinent to the proposal
- Profile of vendor organization and past performance/relevant experience
- Technical/management discussion: a requirement-by-requirement narrative of how the vendor meets the requirements and a discussion of how the vendor will manage the contract if it is awarded
- Cost section: a presentation of all costs, including the cost basis (e.g., how labor rates were calculated), operating costs, maintenance costs, implementation plan, and implementation schedule
- Quality assurance plan, usually synonymous with AS9100, if required by the RFP
How do I determine whether my business is ‘small’ and why is that determination important?
How do I determine whether my business is small?
You can start by following the steps at the following U.S. Small Business Administration (SBA) page to find out whether your business is small: http://www.sba.gov/tools/size-standards-tool?ms=fp
What does it mean to be a small business?
The SBA is responsible for setting the standards regarding what qualifies as a small business. The SBA uses the North American Industry Classification System (NAICS) as the basis for its size standards. The size standards apply to all for-profit industries. Size standards represent the largest size that a company (including its subsidiaries and affiliates) may be to remain classified as a small business concern.
The size standard is usually stated in terms of:
- Number of employees over the past 12 months, or
- Average annual receipts over the past 3 years
Why is the small business designation important?
According to federal laws and regulations, small businesses in general and small business in certain socio-economic categories are given special consideration in order to help them compete in the marketplace. Here are some facts to consider regarding small business designation.
- Currently, federal agencies as a whole are required to award 23% of all contracts [by dollar amount] to small business
- Currently, federal agencies as a whole are required to award 5% of all contracts [by dollar amount] to Woman-Owned Small Businesses (WOSB); 3% to Service-Disabled Veteran-Owned Small Businesses (SDVOSB), 5% to Small Disadvantaged Businesses and 3% to certified Historically Underutilized Business Zone (HUBZone) Small Businesses
- Each federal agency has its own goals for what percentage of its contracts are awarded to the socio-economic categories
- Contracts within federal agencies can be ‘set-aside’ for each category of small business including 8(a), SDVOSB, HUBZone, or WOSB; a contract can also be set aside for ‘Total small business’
- Any large federal prime contractor with a federal contract valued over $650,000 (or $1,500,000 for construction) is required to have a formal, approved plan for utilizing socially and economically disadvantaged small business subcontractors
- Financial assistance in the form of loans guaranteed by the SBA are available to qualified small businesses
For more information and assistance
After reading this FAQ answer, you may have additional questions you want to discuss with a PTAP Advisor. Contact information for Advisors is on this website HERE.
What happened to CCR (Central Contractor Registration)?
The System for Award Management (SAM) is the Federal Government’s database for companies to register in order to do business with the Federal Government. SAM replaced Central Contractor Registration (CCR) and Online Representations and Certifications Application (ORCA), the government’s long-standing vendor databases. Effective in 2012, SAM combined the following systems:
- Central Contractor Registration (CCR)
- Federal Agency Registration (Fedreg)
- Online Representations and Certifications Application (ORCA)
- Excluded Parties List System (EPLS)
There is no charge to register in SAM. If you were previously registered in CCR, you must register in SAM in order to migrate/transition your legacy (CCR) and manage your data. Additional steps are required to activate your SAM registration and complete the registration process.
How will SAM benefit me?
The overarching benefits of SAM include streamlined and integrated processes. Only one ID and password is required to use all elements of SAM.
What is the U.S. General Services Administration (GSA) and what is a ‘Schedule’?
The U.S. General Services Administration (GSA) purchases goods and services of all kinds, many of them being commercial or general purpose in nature. The GSA helps other federal and even state and local agencies obtain merchandise and services at volume discount pricing. It is responsible for the government’s office space and facilities management. Information technology, credit card services, shipping services and long distance telecommunications can all be arranged through the GSA. In terms of dollar amount of purchases by federal agencies, the GSA is the third largest buyer.
Clearly a simple catalog is not enough to organize and present all the goods and services offered by GSA. Instead, all these items are organized according to categories known as ‘GSA Schedules’ or simple ‘Schedules’ or sometimes ‘Multiple Award Schedules’.
Small business owners who wish to be a part of this system submit GSA Contract proposals to GSA and if successful, they are awarded a contract in one particular Schedule, e.g., Schedule 48 = Transportation, Relocation and Delivery Solutions. Being on the Schedule is an opportunity to obtain contracts, but it is not a guarantee that a business will make sales to any government entity. The business owner must market his or her product or service appropriately and obtain a certain dollar amount of government contracts or purchase orders or credit card purchases each year in order to stay on the Schedule. One good place to start if you want to pursue being on a Schedule is to visit http://www.gsa.gov/forbusiness/
Visit the GSA eLibrary [http://www.gsaelibrary.gsa.gov/ElibMain/home.do] to get a sense of the scope of contracts. The GSA eLibrary is online so it is available 24 hours a day, 7 days a week to provide up-to-date information on which suppliers have contracts and what items are available, by using various search options, such as:
- Contract Number;
- Contractor/Manufacturer Name;
- Schedule Name, Schedule Number, Category/Sub-Category Name, or Category Number/Special Item Number (SIN); or
- Technology Contract Name, Contract Number, or Category Name/Number
How do I sell my product to the Commissaries or a PX?
For Army & Air Force Exchange Service (PX/BX)
For Navy Exchange Service (NEX)
For Marine Corps Exchange Service (MCX)
For Coast Guard Exchange Service (CGX)
For All DOD / Military Commissaries