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 specifically for small businesses. But there’s one catch: federal contracting is time-intensive and often intimidating. It requires extensive, sometimes painstaking steps, from registering your business to finding relevant proposals and then eventually bidding on these 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 financial and growth benefits of these lucrative opportunities.
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, where you can find government contracts available for bid, and then how to approach the bidding process.
Why small businesses seek government contracts
Though there are a lot of reasons why a small business would benefit from winning government contracts and funding, it primarily comes down to this:
The U.S. government is the world’s largest buyer of products & services
The budgets that federal agencies have at their disposal to purchase from companies just like you is astronomical. By ignoring government contracts, you’re forgoing the largest avenue for new customers and revenue available in the country.
23% of contract dollars are set aside for small businesses
Yes, this was mentioned earlier, but we can’t understate how significant this is. That’s 23% of over $700 billion that the U.S. government spends annually on federal contracts. And recognizing that agencies have to meet this 23% target can give you a major leg up. Through the Federal Procurement Data System, you can see which government agencies aren’t yet meeting that target, giving you a much stronger chance of procuring a contract when you bid.
Federal Contract Awards by Year ($ Billions)
Source: HigherGov
There really isn’t a good reason not to go after government contracts.
Requirements to bid on government contracts
The primary piece of information you’ll need to bid on government proposals is a UEI. This is a 12-digit code that’s given to businesses when they complete their SAM registration. For more information on these, see our dedicated resources:
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.
In addition to your UEI, you’ll also need to identify which NAICS code matches your products and services. This is a standardized number that identifies what category each falls under (businesses will typically have a primary NAICS code but occasionally will also have multiple secondary codes).
How to bid on government contracts
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.
Where to find & bid on government contracts
There are a few different avenues for seeking out government contracts, including:
SAM.gov
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.
Subcontracting
Another 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, SubNet. 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.
Bid-matching services
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 to support you through the proposal process.
GSA Schedules
Sometimes known as “getting on the GSA Schedule,” these are lists of pre-approved vendors that the government can work with. Getting a contract with the GSA is not only a great way to be put on this list, but also to find a number of interesting contract bid opportunities for the future.
DSBS
The Dynamic Small Business Search, or DSBS, is another source of opportunity for contract bids. However, the DSBS actually works in the other direction from other methods, with government agencies using the database to find small business contractors for a proposal (rather than the contractor searching for a proposal to bid on). This is why it’s critical to have a strong business profile that’s optimized to showcase your strengths. Thankfully, DSBS registration and marketing are one of the many services we offer our partners, applying our years of expertise to ensure that your profile is set up for discoverability and success.
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 necessary information for you to make your bid.
Identify the solicitation type
Just like types of contracts, 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.
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 wise 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 streamlines the browsing and bidding process for federal contracts. This provides a great starting point for jumping into the market with a team of specialists to support you along the way.
