The Federal Government is the largest buyer of goods and services in the world. The government buys a large number of goods and services from private businesses just like yours. Yes, doing business with the government can be a steady and reliable source of revenue, but breaking into government contracting can be challenging.
If you are thinking about doing business with the government, there are a few things you will want to take into consideration. The following list will help you assess your readiness. After reviewing the list if you feel you aren’t there yet, contact the Kentucky Small Business Development Center
to help develop a strategy to move your business toward government contracting.
1. Are you an established business?
An established business is one that has all the necessary licenses to do business and the necessary insurance coverage to protect both the business and the contracting entity from unforeseen liabilities and breaches of contract.
In addition to being licensed and fully insured, surety bonding may be required depending on the type of business and work involved. Make sure you are aware of your responsibilities in this area and that you have access to a bonding entity if required.
2. Are you a low-risk option for the government?
Procurement officers, who purchase on behalf of the government, prefer a low-risk choice. Do you have a track record of on-time service delivery, reliable goods, sticking to agreed budgets? Is your team qualified? Does your company have a strong industry reputation? You’ll need to evidence all these capabilities when you bid on government contracts.
3. Does your company have a history of sales or other experience in the line of work you’re offering?
If you want to do business with the federal government you need experience. Nearly all federal contracts require at least two years of experience performing the work required by the contract.
This experience can be based solely on the business owner’s experience prior to forming the business, based on experience of the employees of the business or based on work the business has successfully completed. Be prepared to provide proof of performance and strong references, so focus on what you do best. This will also help you home in on your value and separate you from other businesses.
If you are new to your profession and are unable to provide a history of such experience, you are not ready to compete for government contracts.
4. Do you know if the government buys your product or service?
One of the best ways to determine if the government buys your product or service is to look at historical buying patterns. Many, but not all, government buying offices maintain databases of current or previous buys. Some of these databases are accessible online, in other cases, you will need to contact the buying office directly to obtain this information.
Examples of online databases of information include:
- A comprehensive database that gathers government bid opportunities from various sources including: FedBizOpps, which consists primarily of federal government bids over $25,000; Defense Logistics Agency (DLA) and other federal purchases, which includes some, but not all federal government bids under $100,000; and a state and local government bids database (USABID). To log in at this site, enter ssguest for both the mailbox and password. Most local government (i.e., city, county) bid opportunities in Kentucky are not viewable by general users.
- Scroll to the “Vendors / Citizens” heading, click on “Find Opportunities” – This database consist primarily of federal government buys over $25,000.
- List of products and services for which the federal government awards schedule contracts (pre-negotiated contracts for items or services used by multiple agencies, such as furniture, office equipment, marketing services, etc.)
- Select “ALL STATE Master Agreement Report” for a list of Commonwealth of Kentucky statewide price contracts.
- Commonwealth of Kentucky search of various state contracts, grants, and memoranda of agreement
This representative listing of databases with past or current bid opportunities will help you to answer the first important question: Does the government buy my product or service?
5. Can you afford to do business with the government?
It can take longer to receive payment for services provided to the government. In most cases, payment is received 30 to 45 days after services are completed. However, it can take much longer, especially if you are unfamiliar with the invoicing system the agency uses and the paperwork they require with the submitted invoice. If there are problems, can you pay your employees and cover your overhead until the payment arrives? The government does not prepay for materials and other goods. Are you able to cover the costs until payment arrives?
6. Are you comfortable working on a computer?
About 90% of the paperwork necessary to take on government contracting requires computer and online activity. This includes registering in required government databases, submitting bid proposals, and filing invoices and progress reports. Businesses without access to computer and internet services are at a competitive disadvantage for government contracts.
For more tips and insights on breaking into and growing your business in the government contracting marketplace, check out these resources: