4 Frequently Asked Questions About Government Contracts
Did you know that the government is legally obliged to purchase goods and services from small businesses? The US government awards yearly contracts to small business owners that want to do business with the government. Not many business owners know take advantage of this opportunity because (1) they lack government contract financing and (2) they don’t know much about it.
If you’re planning to bid for government contracts, here are four factors you’d want to know about.
1. Who can qualify for government contracts?
All types and sizes of businesses can bid for government contracts. The bidding is done through municipal and state governments and federal agencies. These contracts can be for goods and services or for research or technical assistance.
Businesses can benefit much from acquiring government contracts. Doing business with the government can promote healthier revenue stream, improve your reputation and credibility, as well as increase your chances of acquiring more government contract opportunities in the future
Even though the government awards most contracts to large companies, there are numerous opportunities for small businesses. In fact, the federal government awarded $105 billion to small businesses in 2018.
2. Does the government consider my company as a small business?
The federal government has strict qualifications as to what constitutes a ‘small business’. Before bidding, it’s important to understand the guidelines and determine whether you can qualify or not. Keep in mind that the qualifications vary depending on the industry you’re in.
To know if your company fits the government’s criteria of a small business, check the primary North American Industry Classification System (NAICS) code for your company. The next step is to visit the Table of Small Business Size Standards and look for your code. You’ll be able to see the number of employees and the gross profits a small business should have.
3. How can I find government contracting opportunities?
If you think your company qualifies as a small business, it’s time to search for government contracts. There are three best ways to find one:
- FedBizOpps: The government contracts listed on the Federal Business Opportunities database are valued over $25,000. If you’ve already registered your business, you can look for these opportunities and place your bid.
- SUB-Net: Prime contractors that have larger government contracts are obliged to provide subcontracting opportunities to other businesses. Small business owners can bid for these contracts which are listed on the SUB-Net. You can find contracting opportunities at the SUB-Net database, and then enter the NAICS code for your industry to see a list of solicitations.
- GSA Schedules: GSA Schedules contain long-term contracts for goods and services. This database processes billions of purchases annually and it comprises the largest percentage in federal procurement expenses. Small businesses can benefit a lot from GSA Schedule contracts. However, it’s important to remember that acquiring one can take time, effort, and commitment. GSA provides business owners with a toolbox to help them get started.
4. What type of products and/or services does the government purchase?
Government agencies may want to purchase different types of products and services – from reams of bond paper to paper towels and kitchenware. To avoid wasting your time for nothing, it’s important to make sure you can provide whatever the government is asking. If you’re up for the challenge, you can bid on the contract.
Let’s say the government wants to buy office supplies. Even if you sell office supplies, you need to make sure that you can meet the specifications before bidding for the contract. If the government wants stainless steel computer desks and you only sell wooden desks, you’ll waste time and effort bidding on contracts you can’t fulfill.
Aside from products, the government will also offer contracts for services such as technical assistance, intellectual property, research on new technology or product, or information on software. You can check out contracting opportunities in your state or local government on the Federal Business Opportunities website.
Government Contract Financing to Fund Your Small Business
Winning government contracts can increase your company’s revenue stream. However, you may need a significant amount of working capital to supply goods and services to the government. SMB Compass offers government contract financing to small businesses looking to do business with Uncle Sam. We offer loan programs to prime contractors and subcontractors alike. To know more about our loan products, simply call us today at (888) 893-8922 or email us at email@example.com for more information.