For the fourth time since 2010, the OPEN for Government Contracting initiative from American Express released a survey looking at small business trends in the Federal procurement marketplace.
By Lourdes Martin-Rosa, American Express OPEN Advisor for Government Contracting
Many businesses assume federal contracting is only available to large companies, yet small businesses have an opportunity to work directly with the U.S. government. As the world’s largest customer, the U.S. government purchases everything from airplanes and pencils to IT services.
Each year, the Small Business Administration (SBA) works towards the goal of designating 23% of contracts to small businesses. As a result, about $90 billion in federal contracts went to small businesses in fiscal year 2015. And, in the same year, 5% of federal contracts went to women-owned small businesses, marking the first year the government met its goal of awarding 5% of contracts to women. The latest Trends in Federal Contracting for Small Businesses report by American Express OPEN, a survey of small business owners who are active federal contractors, offers insight into what steps your business can take to bid successfully on a government contract.
Be prepared to invest time and money
Successful small business government contractors are prepared to invest in their procurement efforts. Active federal contractors reported spending an average of $148,124 in time and money last year seeking federal contracting opportunities, an increase of over $22,000 for the same figure in 2013, according to the latest survey. This investment includes covering staffing needs, and time spent researching new opportunities as well as preparing formal bids.
Leverage smart strategies to get your start
As with any new pursuit, getting your foot in the door is often one of the hardest parts of working with the federal government. One way to overcome this challenge is to work with other experienced business owners. Many businesses that are new to the procurement landscape find that “teaming” with other businesses to win a contract is a great way to get experience in the space.
Another proven tactic is to build a subcontracting relationship with large federal contractors known as a “primes.” The American Express OPEN survey found that over the past three years, two-thirds of subcontracting bids have yielded contracts. Overall, 38% of government contractors agree that it has become easier to win contracts because of solid teaming and subcontracting partnerships.
Make yourself stand out
Among active contractors surveyed in 2016, 62% agreed that it is getting harder to win contracts due to increased competition, up from 52% in 2013. As a first step, be sure to register on the System of Award Management (SAM) and the Dynamic Small Business Search (DSBS) database, two places where primes often look for qualified subcontractors.
One way to differentiate your business is to take advantage of any small business certifications you may qualify for, outlined on the Small Business Administration (SBA) website. These certifications identify certain kinds of businesses that have historically been underrepresented in government contracting:
- Women-Owned Small Business Federal Contract Program (WOSB): Qualified firms with 51% women ownership can become a certified WSOB. Women can learn more about the WOSB program and receive help navigating the process of federal contracting through ChallengeHER, a joint initiative from the SBA, Women Impacting Public Policy (WIPP) and American Express OPEN.
- The Service-Disabled Veteran-Owned Small Business Concern Procurement Program (SDVOSB): Once certified, qualifying veterans can receive access to a number of bids which are set-aside for exclusive competition among service-disabled veteran-owned small businesses.
- Historically Underutilized Business Zone Program (HUBZone): Businesses in designated urban and rural areas can gain preferential access to certain federal procurement opportunities through this certification.
- 8(a) Business Development Program: This SBA program helps small, disadvantaged businesses compete for government contracts.
Take advantage of free resources
In addition to certifications, there are various events around the country that can help small businesses simplify the process of doing business with the government. For example, the American Express OPEN for Government Contracting Success Series offers programs nationwide for contractors at all levels of experience. Small businesses can also find counseling and training in regional Association of Procurement Technical Assistance Centers (APTAC) and America’s Small Business Development Centers (SBDCs).
The SBA also hosts events and trainings throughout the year tailored to helping small businesses do more business with federal agencies.
Know the benefits
Government contracting can be a huge growth opportunity for your business. While competition for federal procurement opportunities is increasing, government contractors consistently say the effort pays off. According to the survey, 57% said their revenues have grown as a direct result of federal contracting, and at an average rate of 61%. Half say their company’s profitability has increased, while 42% report greater organizational efficiency. Finally, 35% have hired additional full-time workers thanks to federal contracts.
Working with the U.S. government requires time, hard work, investment and perseverance but the benefits and potential business growth are worth it. Are you ready to begin pursuing government contracts? Visit openforum.com/governmentcontracting for more information and free resources to help your business put its best foot forward.
Lourdes Martin-Rosa is the American Express OPEN Advisor on Government Contracting and President of Government Business Solutions. She helps businesses navigate the federal procurement landscape and prepare them to compete for government contracts. www.americanexpress.com/us/small-business/openforum/keywords/government-contracting