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Should I Become a Government Contractor?

Triumph Business Capital

November 23, 2015

Last year, the U.S. government shelled out $447.6 billion in contract spending. Want a piece of that action? Becoming a government contractor definitely has its benefits, but if you’re thinking about taking the plunge into performing government work, it’s important to weigh the pros and cons first.

Pros of Becoming a Government Contractor:

Government Contract Salary & Compensation
In general, government contractors can expect to be paid more than government workers doing the same job. If you own a small business and you’re considering applying for government contracting jobs, you can expect to receive fair market compensation or better — but you will be competing with other vendors who submit bids for the job.

Fortunately, you can find out exactly how much the government has paid for similar government contractor jobs in the past by searching the Federal Procurement Data System. (Unlike private sector customers, the government shares its spending history. After all, it’s funded by taxpayers — so they figure you have a right to know how much you spent.)

Do Contractors Get Benefits?

Since government contractors are not government employees, you won’t get the generous benefits for which full time government workers are eligible.

If you like the idea of working for the world’s largest employer, but don’t want to be employed by the government full-time, contracting can be a great way to go. You do have to abide by the terms of your government contract. However, once the work is over, you can choose to end your business relationship with the government if you decide it’s not for you. Or, you may wish to court the business of a different government agency. The flexibility of government contracting, compared to full-time government employment, lets you test the waters of performing government work, with relatively little risk.

Free Resources
The government wants to work with small businesses — and you’ll find a bevy of online resources available to help you navigate the process of government contracting. For starters, try the Federal Business Opportunities website, the Government Contracting Small Business Development Center (SBDC), and

Opportunities for Special Designation Businesses
Are you a Woman-Owned Small Businesses, Small Disadvantaged Business, or Service-Disabled Veteran-Owned Businesses? These are just a few of the special designations that can qualify you for preferred consideration when applying for government contract work. Learn more by visiting the website for the Office of Small and Disadvantaged Business Utilization.

Excellent Payment History
The government has a high credit rating, and a solid history of paying its bills. For small businesses, this is a big benefit, providing reliable cash flow.

Cons of Becoming a Government Contractor:

Slow Payment
While the government is a reliable customer, it can be a bit slow to pay. Fortunately, companies like Triumph Business Capital can help with cash flow while you’re waiting for payments to arrive. We specialize in providing invoice factoring for government contractors, and can get you paid up-front, which can help with interim expenses.

Rules and Regulations
It’s no secret: government contracting involves a lot of rules. When you become a government contractor, you will be asked to abide by precise specifications when responding to the Request for Proposal (RFP) — but that’s just the beginning. If you’re approved for the government contract, you may have to submit to government-approved accounting systems, purchasing methods, project management tools, and more. It can be helpful to evaluate the costs of complying with these regulations, weighed against the benefits of financial gain, before applying for any government contract.

Your financial records may be audited at any time by the government — but becoming a government contractor may expose you to even more scrutiny. Be sure your ducks are in a row, and you’ll have nothing to worry about.

No Stability
As with any contract work, government contractors can be fired at any time. Because of this, being a government contractor does not imply the same stability often associated with being a government employee. However, if you are able to fulfill the terms of your contact to the government’s satisfaction, it’s unlikely that you will be let go before its completion.

Triumph Business Capital provides a range of services for government contractors. If you decide that government contracting is a good fit, let us know how we can help.