As media reports of declining construction spending have rolled in month after month, one bright spot has remained in spite of the slowing market: federal construction projects. Federal spending on construction in recent months has actually run contrary to private sector figures.
Unfortunately, far too few small businesses take advantage of federal contract opportunities, even though the federal government is required by Congressional mandate to direct 23 percent of its contracts toward small businesses. Despite this mandate, the latest figures from the Small Business Administration indicate that the federal government fell short of this figure.
Although there are various factors behind this shortfall, two things are pretty clear. First, if more small businesses were competing for these contracts, more would win them. And second, small business owners who are savvy about the process of securing government contracts are the ones most likely to land them. To make sure you're among the savvy, follow these tips designed to help you get your start in federal contracting.
Prep for Success
There's no doubt that bidding for government contracts can sometimes require more perseverance and paperwork than bidding in the private sector. That said, you can make the process a lot easier if you have some basic information lined up in advance. When dealing with the government, a handful of ID numbers and codes are critical to identifying your company and what it does. To acquire this important information about your company, a good starting point is the Data Universal Numbering System (DUNS) number, which the government uses to identify all contractors. You can receive one for free from Dun & Bradstreet.
You will also need to apply for a Federal Tax ID number-also known as an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN)-if your company does not already have one. You can acquire one through the IRS using Form SS-4.
To classify potential contractors by their line of business, the government relies on both the NAICS (North American Industry Classification System) code and the SIC (Standard Industrial Classification) code.
Finally, make sure you have accurate financial routing information for your business. Since the government prefers to pay invoices by electronic-funds transfer, you will need to contact your bank or financial institution to verify this information.
With these basics at your fingertips, you have all you need to make things official. The last step is to create a profile on the Central Contractor Registration database. The CCR is where all government agencies and prime contractors turn when they are looking for potential vendors. While entering your data, keep in mind that your profile will be your company's introduction to potential clients, so make sure your message comes through loud and clear. You should, for example, fill out more than just the mandatory fields because the optional data can provide valuable details that will help your company stand out. Just be sure to treat your profile as an online elevator pitch, because it is important to be both clear and succinct.
Take Advantage of Special Certifications
The federal government is obligated to award a certain percentage of its contracts to various underrepresented and disadvantaged groups. If you think your business may qualify, you should register with the U.S. Small Business Administration (SBA), whose Small Disadvantaged Business (SDB) and 8(a) programs are designed to help specific groups secure federal contracts and subcontracts. Businesses owned and controlled by African Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans and Native Americans are likely to benefit from the programs.
Also keep in mind that your background or gender may help you compete in the bidding process. Veteran-owned business, service-disabled veteran-owned businesses and women-owned businesses all may qualify. Among these groups, women business owners particularly stand out, since they won only 3.4 percent of all federal contracts-in spite of the government's obligation to award 5 percent of all contracts to women-owned businesses.
To help educate women about how they can apply for and secure federal procurement opportunities, American Express OPEN has partnered with Women Impacting Public Policy (WIPP) to launch "Give Me Five: Education and Access for Women in Federal Contracts," a national program designed to educate women business owners on how to apply for and secure federal procurement opportunities.
As part of the program, OPEN and WIPP have also co-authored a helpful guide called OPEN BOOK: Government Contracting, which is available for free to all small business owners on OPENForum.com, an online resource designed to help small business owners better manage their businesses.
Consider Subcontract Work
Getting your foot in the door is sometimes the hardest part in landing government contracts. First-time bidders can be at a disadvantage because the government often relies on established relationships when selecting contractors. Fortunately, large construction projects often depend on a host of subcontractors, which could be your ticket in. The experience you gain as a subcontractor will serve you well as you compete for prime contracts in the future.
If you potentially qualify for special certifications, keep in mind that this may also work to your advantage in gaining subcontracts. When companies land a prime contract valued at more than $1 million, they must provide a plan that offers subcontracting opportunities for multiple small business categories.
Small business owners sometimes imagine that landing government contracts is too daunting or somehow out of their reach. But by tackling the process with a straightforward approach, you'll find that the same skills you've developed to grow your business in the commercial sector will serve you well. Commitment, hard work and smart networking, after all, are just as valid in the government sector. So put your strengths to work and take advantage of the sector that can weather any economic downturn.
Anne Robinson is vice president and senior counsel for American Express OPEN. She provides legal guidance for all small business products and services and serves as a subject matter expert on government contracting.
Construction Business Owner, February 2009
