Advice from experts on how a small business can qualify for a government contract.
Consumer demand may remain sluggish, but the federal government is still pouring stimulus dollars into the economy, to the tune of more than $500 billion annually. And though most government contracts go to big corporations—the GEs and Boeings of the world—23 percent of all government spending (some $115 billion) is set aside specifically for small businesses.
The process of winning a federal contract can be painstaking, long, overwhelming, and certainly competitive, but the potential payoff can be huge. If you are interested in government work, how can you get started?
American Express OPEN's Victory in Procurement program for small business recently conducted a survey of 1,500 entrepreneurs who were government contractors or actively pursuing a contract. A panel of three small business owners and two government officers gathered as part of an all day event organized by OPEN at the Grand Hyatt Hotel in New York on March 31 to discuss the survey's findings with more than 400 small business owners and to offer their tips to make government contracting easier for your business. Here's what they had to say:
Start small. This was the No. 1 tip from successful small business contractors. Government agencies view past performance as a key indicator of potential success, and to get your foot in the door, you should bid on projects worth as little as $3,000. A good strategy is to start by subcontracting. More than half of all the surveyed federal contractors said they got their start by pursuing these opportunities. "Find out who the larger prime contractors are, and offer to provide your services to them," says Julie Weeks, president and CEO of Womenable, a business consulting firm based in Empire, Michigan, that focuses on enabling women's entrepreneurship.
Do your research. "Many small business owners think that the government's not going to buy what they have," says Susan Sobbott, president of American Express OPEN. "[But] they buy almost everything." Much of your research can be done online. The first place to start is registering yourself on the Central Contractor Registration (CCR) database, where you can create a profile making it easier for government procurement officers to find your product. Then, get on the pre-approved bidder list on the General Services Administration (GSA) schedule, where you can also look up what your competitors are doing. For a complete list of all Federal Business Opportunities, visit fbo.gov. Knowing your specific target market will help, says Randall Lebolo, president of Lebolo Construction Management, a construction company in Boynton Beach, Florida, whose business is now 90 percent government contracts.
Stay persistent. In the survey, contractors reported that it took almost two years on average to win their first federal contract. "Preparing for a government contract is like training for a marathon," Sobbott says. The most successful contractors unsurprisingly invested the most time and money in the bidding process—an average of $86,000 in cash and resources during 2009, according to the survey.
Cultivate relationships. "You think of the federal government as this cold entity, and that it's all about putting together a big proposal, but it's still all about relationships," says Maureen Borzacchiello, president and CEO of Creative Display Solutions, a trade-display company in Garden City, New York, that has bid on five contracts. Relationships with government procurement officers are crucial. Agencies also have liaisons from the Office of Small and Disadvantaged Business Utilization (OSDBU) who will lobby on your behalf. Partnerships with other small contractors are also important; bidding for contracts as part of a team is another good strategy for getting started.