There's no denying this year has been one of uncertainty and slowdowns across countless industries. Although opportunities have dried up in some areas, other sectors remain stable and profitable. One such sector is federal contracting. Many enterprises whose commercial markets have suffered this year have leaned more heavily into their contract work for the government.
After taking stock of what the contracting market offers and which businesses are positioned for success, consider the four straightforward steps you'll need to follow to successfully enter this profitable and rewarding market.
The current state of federal contracting
The 2020 Bloomberg Government report revealed that contractor spending is up from last year, with a whopping $597 billion in federal government spending in fiscal 2019, a 6% increase from 2018's $561 billion. This follows four consecutive years of growth since the $442 billion allocated in fiscal 2015, and sets a record high for spending.
Federal contracting provides a viable route for growing your business no matter the size, as the government leans on many different types of service providers beyond leading defense contractors. In fact, the government aims to award at least 23% of federal contracts to small businesses. This includes businesses in:
- Research and development.
- Sustainment supplies and equipment.
- Electronic and communication equipment.
- Clothing and textiles.
- Supplies and equipment.
- Office management.
- Facilities and construction.
- Information technology (IT).
- And many more.
If your business could fill one of these needs, here are the four steps to take to become a federal contractor:
The government has strict guidelines, regulations and laws that apply to federal contracts and the businesses that receive them. These vary by industry and sector. Take some time to research and learn about the responsibilities of federal contractors provided by the Small Business Administration (SBA). Any errors or missteps can create costly legal problems.
It's also a good idea to know the six-digit North American Industry Classification System (NAICS) code that applies to your business. This is necessary to compete for federal contracts.
Obtaining a federal contract requires registration in a few areas. Much like knowing your industry's NAICS code, you'll also need to register for a Data Universal Numbering System (DUNS) code to apply for federal contracts.
Once you're ready to take the next step, you'll have to register and create an account on the government's System for Award Management (SAM). This is the official site for registering your business with the government. It's also where you'll upload and store important information for your business, such as certifications and licenses.
It's important that you create an internal business plan that directly addresses your external contract proposal. This plan should include your marketing plan for the contract, staffing and employment details, certifications, specialization, experience and other pertinent information that relates to your industry.
You will also need to calculate and include a comprehensive cost analysis and profit-margin outline for the services or products the government will be contracting from your business.
After conducting all the prerequisite research, registration and planning, you can move into the bidding phase. The government's SAM site offers a search option where you can look up procurement notices and bidding opportunities from federal contracting offices. You can search by keyword, soliticiation ID or a particular agency's name.
Once you find a solicitation that fits your business, carefully review all the contracting documentation. If you have any questions, be sure to reach out and ask so that you're fully aware of what the opportunity requires and entails.
Based on this information, follow the solicitation instructions for filling out and submitting all the requested forms, and for providing all the technical, past performance and pricing information in the appropriate manner.
Be prepared to negotiate with the government for the most optimal offer. In many instances, you'll be competing against other industry peers for these contracts, so you'll need to ensure your prices and offerings are the best possible that you can provide.