Government Contracting 101

Working with the United States Government is completely different than working with any other client. The Government is required to award 23% of all contracting dollars to small businesses. This guide will explain the ins, outs, and expectations of contracting. We will explain how to get started, what to do and how to maximize your efforts with greater return. Our world is full of opportunities for increased revenue and business growth.

Learn all about what contracting is and
how to navigate through the Federal maze.

Introduction

The Government contracting world could be a difficult thing to master if you don’t have the right knowledge and know-how to procure contracts. Working with the United States Government is completely different than working with any other client. There are extensive laws and regulations that have been established to properly settle contractual disputes. This rule book is called the Federal Acquisition Regulations or FAR.

Despite the complexity of Government contracting, the reward is completely worth the work. The Government is required to award 23% of all contracting dollars to small businesses. The Government spends hundreds of billions of dollars with small businesses to achieve their yearly goal. This shows that small businesses have a lot of opportunities to capitalize on Government spending.

 To succeed in the complex world of Government contracting, you will need an education. This guide will explain the ins, outs, and expectations of contracting. We will explain how to get started, what to do and how to maximize your efforts with greater return.

Getting Started in Government Contracting

First, the word “acquisition” in the contracting world means to procure goods and services on behalf of a government agency. The rule manual, FAR, is the principal rules relating to Federal procurement in the United States. However, the rule book only applies to Executive branch agencies which is the branch of Government that does the most spending. You should read over the rules before getting started to see what applies to your business and how to govern your business accordingly. The website that the Government updates and uses as their primary source of regulations and guidelines is Acquisition.gov and can be accessed from anywhere in the world.

Contracting Officers

Each department and Federal agency have their own contracting officers and procurement agents that handle the purchasing of goods and services. Although they are all governed by the FAR, they also have their own rules and regulations for each department and agency contracting officers are granted authority to award contracts on behalf of the Government by way of a “warrant” given by a cabinet-level official.

All opportunities will go through the designated CO for the department or agency. They will submit requests for proposal to any contractor they have built a relationship with. Generally, their contractors have nurtured a relationship with the agency/department contact and these contractions don’t have to go through the normal procurement process.

Procurement Levels

Micro-purchases: Acquisition of goods and services at the lowest monetary value. The threshold for this level is $2000 for construction, $2,500 for services and $10,000 for goods. These are not required for competition like other procurement levels.

Simplified Acquisitions: These contracts are not required for a formal evaluation. The threshold for this level of procurement is $250,000 and usually saved for small businesses to compete for an award.

Regular Purchases: All other procurement is considered a regular purchase. They must go through the competitive process and advertised on the open solicitation market.

Acquiring Goods and Services

When a Government agency or department discovers a need for goods or services they manage the need through their administration and develop an acquisition plan. This will determine the type of contract they need. Depending on the level of procurement, the contract will be put through the competition and bidding process.

Types of Contracts

The type of contract determines the expectations, rewards, and obligations for both sides of the fence, the Government and the contractor. The type of contract determines the level of responsibility of the contractor regarding timing, cost and performance, as well as the amount and nature of the profit incentive for satisfaction of the contract.

• Fixed-Price Contracts: provides a firm price for the services or items supplied in the contract. Usually, the price is adjustable only based on target cost or ceiling price.
• Cost-reimbursement (cost-plus): the contractor is paid for all allowable expenses plus additional profit. The contractor is obligated to account for the costs.
• IDIQ: Allow more flexibility for the Government and is awarded to pre-approved vendors.
• Sole-Source contracts: can be issued without a competitive bidding process. Usually happens when only one business can fulfil the contract.
• Set-Aside Contracts: a contract that is specifically meant for small businesses and requires the business to be social-economically certified. This happens automatically for contracts under $150,000.

Properly Registering Your Business

To do business with the federal Government, there are steps that must be taken first. Before you can even be considered for a contract, every business must register their business properly.

• Register your business for an Employer Identification Number – this is a permanent tax number
• Find and declare your North American Industry Classification System (NAICS) codes – this describes the type of services you provide or products you supply
• Register with the System for Award Management (SAM) – this is the system used to pay out all contracts, grants and federal funding
• Obtain your Commercial and Government Entity (CAGE) code – this is your code for your facility, one for each physical location
• Apply and get certified for a socio-economic certification – this allows your business the opportunity for set aside contracts

Socio-Economic Certification

If your business qualifies for any of the Business Development Programs available to small businesses, you should participate. These programs allow you to become certified based on your socio- economic status. Certifications qualify you for set aside contracts that are guaranteed to be given to a small, certified business.

Becoming certified provides opportunities to team with prime contractors that are attaining contracts. Primes look for certified businesses that can fulfil their obligation on set aside contracts. Contracting officers and Prime contractors are required to utilize small, certified businesses to carry out all or portions of their contracts. It’s basically guaranteed revenue.

Types of Certifications

• WSOB – Women Owned Small Business
• EDWOSB – Economically Disadvantaged Women Owned Small Business
• VOSB – Veteran Owned Small Business
• SDVOSB – Service-Disabled Veteran Owned Small Business
• 8(a) Business Development Program – socially and economically disadvantaged
• HUBZone Certification – Historically Underutilized Business Zones

Finding Contracts

One place that houses open solicitations is SAM.gov. There are additional websites and platforms that list contract opportunities. Most small businesses are not aware of all the options, and they refer to their local city, county and state websites. Finding the right contract can become like finding a needle in a haystack if you are not familiar with all options.

Select GCR Pro

Select GCR Pro is Select GCR’s proprietary program. This program connects to all government data sources and displays all available government contracts and contacts. It makes sourcing contracts and contacts easy and simplifies and streamlines the government contracting process.

Users can perform searches based on applicable codes, keywords, geographic area and even specific business and agencies. View all the open solicitations on federal, state, and municipal levels. Additionally, access re-compete and low competition contracts. Simply market your business to the heavy hitting Prime contractors, or department awarding CO’s.

Teaming Ventures

Get involved in larger contracts by becoming a subcontractor. Prime contractors are required to sub a portion of their contracts to small businesses. Sometimes it goes even further and requires a socio-economic certified business to be awarded a portion of the contract.

Not only does this give businesses an opportunity to gain contracts, but it also gains the knowledge only experience can bring. Learn from the Prime contractor how to properly procure a contract from start to finish. It’s invaluable experience and adds to your performance history.

Winning Contracts

Being awarded a contract can be an easy process but very competitive depending on the type of contract you’re bidding on. The best way to go about the process is to meet with the procurement agent prior to bidding on a contract. Building a relationship with the agencies and department contacts you want to do business with will ensure they remember your name when it comes time to generate proposals. Government buyers usually award contracts to businesses they know. Getting involved before bidding on contracts means a little marketing effort is required.

You must do market research to find contacts for agencies and departments and introduce your business. They must understand your business’ capabilities. This occurs by sending them a government resume or capabilities statement, then following up with a phone call to schedule a meeting with the buyer. Once a Request for Proposal (RFP) is posted about a contract, there is limited time for communication between the buyer and the contractors bidding on the contract. This is why building a relationship prior to bidding is important.

Writing Proposals

Once a contract has been drawn up and a request for products/services is released, there will be an opportunity to bid. This is otherwise known as a Request for Proposal. It’s imperative to know this process and how it’s navigated. Your proposal must be strong and competitive, and it must be easily understood and concise. It must answer every question on the proposal fully and honestly.

Pre-Award Audits

There are contracts that require companies to have an accounting system that can account for both direct and indirect costs related to the contract. Usually, agencies and departments will perform this check prior to awarding the contract. However, this can be performed at any time during the contract period. You must have an accounting system and be able to demonstrate said system prior to obtaining any costs on the contract.

Contract Execution

The next phase in the process is executing your contractual obligations. Your business will be required to manage the project and keep basic principles in mind. Your business must stay in compliance and must conduct business in an ethical manner.

The rules and regulations of the Federal Acquisition Regulation and the Procurement Integrity Act must be followed. Along with the Defense contract Audit Agency cost accounting standards, these regulations manage the process by which the government purchases goods and services.

Ethical Business Practice

Your business must completely avoid all conflict of interest and refrain from influencing contract award or federal employees. Also required are proper appearances, actions, and full disclosure. You must have a high standard of conduct and maintain a high degree of public trust. Also, you must be completely impartial and lack preferential treatment.

Utilizing Resources

If you have any issues, questions or concerns along the way, reach out to your contacts you have relationships with. Prime contractors, contracting officers, and procurement agents can all help you when problems arise. They are not obligated to help, but that’s why you develop relationships with your contacts. When people know you, they are more likely to help you and want you to succeed.