The Basics of Government Contracting

There are several core basic concepts that every business needs to be aware of if the company wants to pursue, and successfully win, a federal, state, or local government contract.

Government Contracting is a relationship-driven business.

While it is true that relationships are essential to any successful business, this is especially true in government contracting.

For example, procurement managers for a local county government told over two-dozen businesses in attendance that each manager has "go-to lists" of people and companies for when they send out certain types of projects that do not require public advertising. These lists are companies they have met with and trust.

Federal and state government buyers also have built similar relationships with businesses and people in the industry.

Therefore, when you are looking for opportunities, you need to remember that strong relationships can open doors to opportunities you may never know about. What's more, they could be the difference on whether or not the requirements for a government project meet your capabilities or those of a competitor. If you are a source of knowledge for a government buyer, and you have built a positive and trusting relationship, the chances your company can win a specific government contract increases.

Past Performance

The government weighs past performance in the government or commercial sectors very highly. The term "past performance" means that your company has demonstrated the ability to do the work the government needs.

Unfortunately, many businesses misinterpret past performance. They either believe they need to have past experience delivering for the government (not always necessary). Or the company believes that past experience delivering a product or service for a group of small, five-person businesses is proof the company can deliver for an agency of over 50,000 or 100,000 employees.

Remember: your past experience needs to be very relevant to the needs of the government buyer. And you need to have been very successful with what you delivered.

The reason why past performance is so essential is because the government is highly adverse to risk. Businesses need to be reliable. The government has to have full confidence that you can deliver for its constituency, which could be its own employees or the general public.

Solid Financial Background

In additional to past performance, government buyers also review the financial stability of a company. The actual vetting process varies between agencies and contracts, but you can be certain that you will need to have a positive financial history to show, as well as working capital that demonstrates your business is sound.

Well-Written Proposal

There are many professional proposal writers in the govcon industry, and this is for a reason. Winning a government contract depends on many factors, including a well-written proposal to the government.

Government buyers outline in their solicitations what they are looking for, and how they want the proposal to be structured. Your company will need to have a high attention to detail, and remember that a proposal to a government agency is not about how you promote your business or how you market your products and services. It is all about following the specific instructions of the government buyer, and meeting the government's needs.

How Is Your Business Classified? What Certifications Do You Have?

When it comes to government contracts, especially those that are going to prime contractors, small businesses are always in need. The government and prime contractors often have set-asides for small businesses, and requirements that a certain percentage of a contract award goes to a small business, or a woman-owned business, or a business that meets some other qualification or certification.

If you run a small business, you need to review what possible certifications your company qualifies for. Are you an "8a," or "Woman-Owned Small Business (WOSB)"? Are you a "Service Disable Veteran Owned Small Business (SDVOSB)"?There are many different types of certifications for businesses that could give you a strategic advantage when competing with other businesses for government contracts.

One word of warning... There are many businesses that try to game the system by placing a spouse or other person in a ceremonial leadership position in order to qualify for specific certifications. It is unclear to us how aggressive the government is in determining if a certification claim is fraudulent. What's more, it is possible you will compete against companies that are trying to "game the system" by claiming certifications that they probably should not qualify for. The government's goal in awarding contracts to specific groups is to help balance the playing field, especially for groups that have been historically or presently are disadvantaged in the marketplace. We recommend you be aware of these facts, and choose the best and most ethical path for your company.

Understand Contract Vehicles

On Government, we are building a list of Contract Types to help provide clarity into the different ways the government procures the products and services it needs. Click here to view Contract Types.

Keep in mind that when the government has urgent needs (either a critical project or a deadline to spend its allocated money) it will look for the contract vehicles that have the greatest flexibility and can lead to the fastest awards. This can benefit your company, or benefit more established businesses. Therefore, it is important to understand contract vehicles, and who they benefit. It will help to define your marketing and relationship-building strategy.

Brand / Perception In The Marketplace

Who you are seen as by the marketplace is another critical component to government contracting.

Your company's brand and identity is another key piece to winning a government contract. Are you executives visible in the industry? Do you employees attend seminars, conferences, and govcon networking events? Are you regularly producing thought-leadership and conducting webinars for government buyers and businesses on problems your company solves? In order to be successful in the government contracting industry, you need to be highly visible and make positive contributions. Those actions will help build positive brand recognition, and get your company on the radar of key decision-makers.

Government System Registration

Many companies new to government contracting make the mistake of immediately going out and getting a GSA Schedule. Or registering with other government systems like SAM, DSBS, FBO and more. The truth of the matter is - you need to determine your strategy or gameplan for government contracting before you start registering. It is entirely possible that the kinds of contracts you want to win will never be listed in or acquired through GSA.

What's more, if you are mainly interested in state contracts, simply registering in all 50 states may not be worth your time, if it turns out the opportunities you want are only in several states.

Therefore, it is important for you to understand the registration systems available, but to know your plan and market strategy BEFORE you invest time and resources in registering on different government websites.

For questions about government contracting, please be sure to use our "Ask A GovCon Expert" question form.



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