It should come as no surprise that the U.S. Government is our nation’s biggest purchaser of goods and services. What is impressive is that 23 percent of that spending, amounting to $115 billion, is set aside specifically for small businesses. So, what does it take to bid on government contracts for small businesses and win your share?
Steps to Bidding on Government Contracts
Step 1 – Get prepped and qualified
- Ensure your business qualifies as a small business for government contracting purposes. Refer to the U.S. Small Business Administration website for size requirements by industry.
- If you haven’t already done so, register online with the IRS for an employer identification number. There’s no cost and you’ll receive your EIN immediately.
- Register online with Dun and Bradstreet for a free, immediate DUNS number. This unique business identification number is required to bid on federal contracts.
- You will also need to obtain the classification codes for the product(s) or service(s) you offer. Find Federal Supply Codes, known as NAICS codes, online. Department of Defense Product Service Codes can be found here.
- Once you have your codes, register your company with the System for Award Management (SAM), so it can compete for government contracts for small businesses.
Step 2 – Get on agency bidding lists
Locate the agency that offers the government contracts for small businesses that you seek and ask to be added to its bidders’ list. Some federal, state or local agencies may require you to prequalify and provide your business profile information. At the local level, it may just take a phone call or a letter asking to be added to the proposal list.
Step 3 – Obtain applicable certifications
Minority, veteran, disadvantaged or women-owned enterprises can receive extra points during the bid review. However, government agencies typically require certification for such a business designation. Your business can obtain this certification through the Small Business Administration, your state’s business offices, or tribal and local governments.
Step 4 – Attend bid meetings
Once you’re on its proposal list and a contract comes up for bid, the agency sends out an announcement about the proposal. Sometimes it requires that businesses attend an initial meeting before they are eligible to bid on the contract, allowing you to ask questions and clarify any issues about the proposal or process. Afterwards, if your business is qualified, it will receive a request for proposal (RFP).
Step 5 – Submit your bid based on the Request for Proposal
Respond to each requirement outlined in the IFB in your bid. Also make sure it is clear and spotlights the advantages of working with your company.
Step 6 – Bid Review
Government agencies award contracts based upon a review and scoring of the proposals submitted weighted as identified in the RFP. You may also have to participate in an oral interview to answer questions posed by the panel.
Step 7 – Contract Award
After final review and scoring, the government agency awards the contract based on its internal criteria. A company that offers experience, stability and the best prices is the most likely candidate to win the contract. Be aware that government contracts for small businesses are known for slow start-ups and lengthy payment processes, so be prepared for those.
How to win government contracts:
Here are some tried-and-true tips from successful small-business contractors:
Dip your toe in first – start small.
Bid on projects worth as little as $3,000 just to get your foot in the door.
Begin by subcontracting.
Identify larger prime contractors and offer to provide services to them.
Prepare to invest – and be persistent
Winning a government contract takes more prep work than you may think. And, you may have to bid on multiple projects before you land a contract.
Determine if your business qualifies as a subcontracting area reserved for a specific percentage of the government’s annual spending. These earmarks include:
- Veteran-owned small businesses – 7%
- Women-owned and/or disadvantaged small businesses – 5%
- Companies operating in economically distressed HUBZones – 5%
Cultivate one-to-one relationships with people who can help
There are many opportunities to meet with federal officers who make the contract decisions. Make it a priority to build relationships with government procurement officers and liaisons from the Office of Small and Disadvantaged Business Utilization (OSDBU) who will lobby on your behalf.
Another great way to get a jumpstart is to bid for contracts as part of a team – another great reason to forge partnerships with other small contractors.