For many small businesses looking to grow, federal contracts provide one of the most significant opportunities for expansion. Every year, the government sets aside at least 23% of federal contracting dollars for small businesses specifically. But there’s one catch: federal contracting is time-intensive and, often, intimidating. It requires multiple, sometimes painstaking steps, from registering your business to finding and then eventually bidding on contracts.
That said, the rewards greatly outweigh the initial investment. And once your business is set up and you’ve got your first government contract, it’s a matter of rinsing and repeating, all the while reaping the benefits.
At FAMR, our goal is to simplify the process of setting up your business to be eligible for such contracts. In this article, we’re going to break down why government contracts are appealing for small businesses, how you can find government contracts available for bid, and then how to go about this bidding process.
Why small businesses seek government contracts
Though there are a lot of reasons why a small business would benefit from government contracts, here are a few of the main aspects that make it so appealing:
The U.S. government is the world’s largest buyer of products and services
Essentially if you ignore government contracts, you’re forgoing the largest avenue for new customers and revenue in the United States.
23% of contract dollars set aside for small businesses
Yes, this was mentioned earlier, but we can’t understate how significant this is. That’s 23% of $500 billion that the U.S. government spends annually on federal contracts. And recognizing that agencies have to meet this 23% target can give you a major leg up. Through the Federal Procurement Data System, you can see which government agencies aren’t yet meeting that target, giving you a much stronger chance of procuring a contract when you bid.
There really isn’t a good reason not to go after government contracts.
How to bid on government contracts
Before you can bid on government contracts, you must register your small business. This on its own is where many small businesses might cut their losses, as the registration process can be arduous and overwhelming. You can learn more about the process here, or go ahead and set up a conversation with a registration specialist who can support you during these first crucial steps.
Once you’ve registered your business, you will then need to set about the task of finding government contracts for bid and responding to requests for proposals.
Finding Government Contracts for Bid
There are a few different avenues for seeking out government contracts, including:
SAM.gov, which stands for System for Award Management, is a government-wide database for vendors seeking out government contracts. This will be your go-to avenue for finding “prime” contracts to bid on, in which your business works directly with government agencies. Learn more about SAM registration here.
One way you can get your foot in the door with government agencies is through subcontracting. As mentioned above, vendors who get contracts directly with agencies (like via SAM.gov) are known as prime contractors. Subcontractors, on the other hand, are brought on by the prime contractors to help complete a portion of the work designated by the prime contractor.
You can find available subcontracting opportunities via the SBA’s searchable database, SUB-Net. If this is your first time working for a government agency and you’re not familiar with the proposal process, this is a great place to get started.
If you’re unsure about which government agencies your small business is best suited for, working with a bid-matching service can help you navigate contracting opportunities. Check out your local Procurement Technical Assistance Center (PTAC) to see if they offer free bid-matching services (most do!). This is especially useful for first-time contractors, as PTAC can connect you with experienced government contracting mentors who can support you through the proposal process.
How to prepare your proposal
Once you’ve found a contract that is a good fit for your small business, you can begin preparing your proposal. Government agencies are required to share the details of the contract before you submit your proposal, giving you any information you may need to make your bid.
Identify the solicitation type
There are three main types of solicitations a government agency might ask for:
- Request for Proposal (RFP) – Typically used for larger acquisitions, RFPs allow for agencies and prospective vendors to negotiate the terms of contracts.
- Request for Quotation (RFQ) – A simplified acquisition procedure, RFQs are often used for contracts under $150,000.
- Invitation for Bid (IFB) – With IFBs, there is no negotiation between agencies and vendors.
Follow the formatting instructions for solicitations
Just as important as the contents for your proposal, government agencies expect vendors to follow specific formatting requirements, including order, structure, and time frame requested. The SBA’s Government Contracting 101 workbook can provide you with the guidance needed to get started.
How to price products and services
The price you place on your service is key in getting your first federal contract, so you’ll want to be sure to bid competitively. For your first contract, it may be prudent to expect a contract where your business may not make a lot of money. However, the experience with the procurement process, plus the networking you’ll build with the agency, will set you up for more federal contracts at higher rates down the line, allowing you to increase your bids over time.
Starting from the beginning? You don’t have to do it alone
If you’re just starting your federal contracting journey and aren’t yet registered, we recommend utilizing the support of registration specialists, like the ones at FAMR. If you’re already registered, the FAMR portal, which streamlines the browsing and bidding process for federal contracts, provides a great starting point for jumping into the market with a team of specialists to support you along the way.