What’s challenging, steeped in regulations, yet can become very lucrative? Initially, government contracting is a maze to navigate, but the payoff can be significant for small businesses looking to expand. You’ll have to invest sufficient time and resources to win bids, but following best practices can optimize your efforts.
Here are the do’s and don'ts of small business contracting:
Do register on the right databases
The Central Contractor Registry is where federal agencies connect with vendors and small businesses. You’ll want your business to be listed in this database to optimize your reach. Other notable databases include the Dynamic Small Business Search (DSBS) and beta.SAM.gov.
Do use resources offered by the U.S. Small Business Administration
The U.S. Small Business Administration offers tips for winning federal contracts, business development programs, certifications, and more. Just make sure you’re categorized as a small business to take advantage of these resources.
Do follow federal accounting requirements
It’s not uncommon for government contracts to impose customized invoicing requirements. Each contract will outline specific details. However, be prepared to receive payments on a 45-to-60-day basis. In some cases, payments can take as long as 90 days. When you do accept payment, make sure it's via credit cards or electronic ACH transfers—or you may wait even longer.
If your business is struggling with cash flow, consider accounts receivable financing.
Do refer back to the FedBizOpps
The FedBizOpps (FBO) is the central clearinghouse for federal government contract opportunities. The federal government is required to post all opportunities of more than $25,000 here, along with project details. It’s a great resource for understanding the market, the major players, and how Agencies buy goods and services.
Do become familiar with government contracting regulations
Government contracting is abound with laws and regulations. However, the two most important laws small businesses need to be aware of are FAR (Federal Acquisition Regulations) and FASA (Federal Acquisition Streamlining Act). The FAR is designed as a guide, not a rulebook. However, versing yourself will help you avoid potential pitfalls. (3)
Do strive for long-term relationships
Successful businesses know the most critical component of working with Agencies isn’t securing contracts, it’s developing long-term business relationships. Work to understand your client—their specific needs, goals, what they buy, the Agency’s process, and their past partnerships. Constantly strategize how to deliver a better customer experience and focus on building trust with your clients. (1)
Do get everything in writing
Getting everything in writing helps ensure both parties are on the same page. Plus, digital documentation is usually admissible as evidence in court should legal disputes arise. Written audit trails can also help you keep track of project deadlines and goals.
Do polish up your website
After discovering your business, most government actors will visit your website. It’s essentially the first impression of your business. You’ll want to optimize your firm’s unique selling points and thoroughly describe your products, services, and past partnerships. Make sure your site is up to date with any certifications and qualifications you may have earned.
Be open to networking with everyone - from Government Agents to other small business owners. Not only can this open the door to potential opportunities, but you may even gain insightful training resources.
Procurement Technical Assistance Centers (PTACs) offer small businesses training, one-on-one counseling, and more at little or no charge. And make sure to meet with an Agency's small business office to learn about upcoming opportunities.
Do seek commercial item status
Commercial item contractors are exempt from many traditional government contract requirements. This helps reduce administrative costs and risks. Commercial item status can also increase your supply sources and simplify compliance requirements.
Don’t set up a meeting before you’re ready
Landing a one-on-one with a potential government client is exciting, but don’t jump the gun. Make sure you’ve researched the opportunity, the client, and anticipated their needs. Position your business as the solution and bring supporting documents—such as customized, Agency-targeted collateral—to the table.
Don’t forget to follow up
If you don’t hear back from a prospect during the sales process—follow up. If your client hasn’t reached out in a while—follow up. Staying in constant communication helps you understand your clients’ needs and solve problems as they arise.
Don’t present a broad range of offerings
This can confuse government Agencies and impede a decision. Worst case, it can take focus away from your top selling points. Instead, hone in on the specific products or services most relevant to the contract. A contractor that’s doing an excellent job of offering a narrow scope of services is Fincantieri Marinette Marine.
Don’t hog the conversation
Whether you’re pitching your business or filling the client in on project progress, you don’t want to dominate the conversation. Give the government Agent space to ask questions and provide feedback. When they talk, listen, take notes, and send follow-ups. (1)
Don’t rely on the same pitch
Even if you have the perfect proposal nailed, not updating it to the specific needs of each RFP will ultimately work against you. You don’t need to do a rewrite every time, but you should tailor each pitch to highlight solutions you can offer for each scenario. Start by understanding the client’s needs and then customize a plan that fits.
Don’t offer what you don’t have
When you’re in the bid for a contract, it’s easy to overstate your capabilities. However, offering anything that’s not tried and true can set your business up for disaster. Stick to what you know you can deliver as well as what sets you apart from your competitors. (2)
Don’t give gifts
In the business world, it’s normal to treat prospects to lunch or send gifts to clients. But this doesn’t translate to government clients. Federal laws prohibit giving gifts in exchange for contracts or favoritism. Even if you’re not engaging in active bribery, even an innocent dinner can run the risk of trouble.
Don’t forget to protect your company
Partnering with other businesses gives you exposure, allows you to pool resources, and opens the door to new opportunities. There’s a ton of benefits to partnering - so long as your business is adequately protected. First and foremost, perform a background check on every potential partner. Then, be sure everything is in writing and signed. ProPricer Contractor Edition can help with this—store all estimates, formulas, qualitative information, and signed documentation in one secure, centralized place. (1)
Don’t go after every bid
Chasing after every RFP will deplete your time, money, and resources. It’s better to skip some bids in favor of focusing on the ones with the most potential. Before applying for a bid, do some research on the competition, assess your relationship with the prospect, and consider how well you can deliver. (2)
Don’t use software that’s incompatible with the government’s
Using software that doesn’t align with the government’s will create confusion, complicate the proposal process, and ultimately make your business look inefficient. On the other hand, the right software helps ensure smooth proposal progress.
ProPricer is the leading proposal software program, trusted by the government and private businesses alike. Growing small businesses opt for free ProPricer Express to improve bid quality, negotiate pricing positions, analyze what-if scenarios, manage data, and more. Plus, with both parties on the same system, you’ll expedite and simplify the entire proposal process.
Learn more about ProPricer Express here.
- UpCounsel Article: The Do’s and Don’ts of Government Contracting
- Federal News Network Article: 5 Critical Mistakes Small Business Contractors Should Avoid
- WoltersKluwer Blog: Government Contracting Rules You Need to Know