Did you know the federal government is the largest single purchaser of goods and services in the world? Of the more than $500 billion in contracts awarded every year, the federal government has a goal to set aside 23 percent for small businesses. This represents a big growth opportunity.
For example, business owner Scott Williams started pursuing government contracting opportunities after he purchased Folsom Sheet Metal in 2013. His Tallahassee, Florida-based business has since secured seven government contracts valued at over $4 million.
If you’re looking to get into government contracting, here are some initial steps you’ll want to be familiar with.
Assess your readiness for government contracting
Before doing business with Uncle Sam and bidding on contracts, you’ll first need to check off the following boxes:
- Determine whether your business offerings are in demand. Use resources such as USAspending.gov and Agency Recurring Procurement Forecasts to conduct market research and gauge whether the federal government is currently buying your products or services.
- Obtain a DUNS number. In order to bid on government proposals, you must have a unique nine-digit identification number called a Dun & Bradstreet (DUNS) number. You can apply for a DUNS number here.
- Know your NAICS code. To move ahead as a contractor, you’ll also need to match your products and services to a North American Industry Classification System (NAICS) code. To find your NAICS code, view the NAICS code list at the U.S. Census Bureau.
- Meet size standards. Use the SBA’s Size Standards Tool to determine if your business meets the government’s size requirements for contracts reserved for small businesses.
- Register with SAM. Finally, you must register your business with the federal government’s System for Award Management (SAM), a database that government agencies search to find contractors.
Learn about the types of federal contracts
Once you’ve met these basic requirements for government contracting, it’s now time to identify which types of federal government contracts your business is eligible for. There are:
- Competitive set-aside contracts and sole-source set-aside contracts: A competitive set-aside contract is one that is reserved for small businesses and is open to competition. A sole-source set-aside is also reserved for small businesses but can be issued without a competitive bidding process under special circumstances (e.g. in situations where only a single business can fulfill the requirements of a contract). Some set-asides are open to any small business, while some are open only to small businesses that participate in SBA contracting assistance programs.
- Joint ventures: In this scenario, two or more small businesses may pool their efforts by forming a joint venture to compete for a contract award. Small businesses that participate in the All Small Mentor-Protégé program can also form a joint venture with a mentor (which can be a large business).
- Subcontracting: Another way that a small business can get a foot in the door with government contracting is through subcontracting. Some government contracts require large companies to subcontract with a small business, which creates more opportunities for small businesses to get involved in federal contracting. SBA’s SUB-Net database lists potential subcontracting opportunities. Learn more about subcontracting.
After you’ve met these requirements, you can market your small business directly to a government agency or prime contractor to find potential federal and subcontracting opportunities. You can also conduct research through the Federal Procurement Data System and USASpending.gov to determine the needs of agencies or prime contractors and then show them how your business can fulfill those needs.