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Monday, April 11, 2011

Working with Uncle Sam:

Federal Contracts for Small Businesses

It's not as if Charlene Turczyn is outiftted in an Uncle Sam costume, hut her affinity for the federal government is undeniable: Her Springfield, Illinois-based firm, CMW and Associates, derives all of its revenues from Uncle Sam.

The federal governemnt- the world's largest purchaser of goods and services, buying everything from food to military weapons parts to management services- offers a potentially super-size outlet for small businesses. Small firms won a record $96.8 billion in federal prime contracts in fiscal 2009, representing almost 22 percent of all federal spending.

"The federal government can be a good avenue for increasing small business revenues," says Margot Dorfman, vice president of the National Association of Small Business Contractors (NASBC). The NASBC is a 200,000-member Washington, D.C., trade association that helps small firms do business with the federal governemnt and prime contractors.

It can be challenging though. For many small businesses, it may require considerable capital and effort- and patience. A recent survey by American Express' small business division, reports that it took an average of 1.7 years for "active" small companies to land their first prime contract with the federal government.

Still, for amny businesses, it is worth the effort, especially during a downturned economy. Fortunately, help with federal government procurement comes from many quarters, including agencies that sport small business outreach offices (www.osdbu.gov/offices.html). Another key source is the U.S. Small Business Administration and free online training courses on how to do contracting work. Here are some recommendations that are valueable tips for securing government contracts.

  1. Know yourself. Understand your core competencies and offer products and services that you know you can deliver.

  2. Register your interests. Any firm doing business with the government has to follow certain set procedures. The company should first obtain an "identifier," such as a Data Universal Numbering System, or DUNS, number, a unique nine-character number that the government uses to identify the organization. Companies must also be registered in the Central Contractor Registration (http://www.ccr.gov/) database. This online portal creates a formal record for companies while also enabling federal agencies and prime contractors to find small-business contractors.

  3. Know Uncle Sam. Research what types of goods and services are purchased by the hundreds of federal agencies at www.usa.spending.gov. Initially, selct one or two agencies and study their operations and needs. Since the federal government is so big, it helps to focus. Agencies periodically ask small companies to respons to bid solicitations. Even if you don't win a bid, responding to these "Sources Sought" notifications is a good way to market your goods/services. Through "Sources Sought," you get your name out there to decision makers.

  4. Start small. Successful contractors advise starting with smaller contracts, which may lead to larger opportunities. Perharps test the waters with so-called "micro-purchases." For purchases between $3,000 and $150,000, the government can use cimplified procedures for soliciting and evaluating bids. In fact, federal rules require these "simplified purchases" be reservedfor small business unless the contracting official cannot obtain offers from two or more small firms that are competitive on price, quality and delivery. Again, check with individual agencies for these and other small-procurement opportunities. A good way to learn about becoming a prime contractor is to start out by being a subcontractor because it provides you with past-performance information that you can use to pursue your own prime contract. For subcontracting opportunities, check www.sba.gov/subnet.

  5. Read the fine print. Many contracts reference the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation, both of which post rules dictating how federal contacts are executed. Read the fine print carefully in EVERY contract and follow instructions.

  6. Build relationships. As gargantuan as the federal government is, securing a contract is often tied to personal relationships. That means attending PTAC, federal agency, NASBC or other outreach events and becoming acquainted with federal small-business representatives, prime contractors and small companies that sucessfully secured contracts. If you have built up a good relationship with somebody, you have a better chance of getting a contract.

  7. Get debriefed. Whether you win or lose a contract, ask for a debriefing, where a contracting official must discuss why a business did or did not win a contract. This will help you learn how to do it better, and it will also make you familiar with a contacting official's preferences.

Ultimately, getting a contract requires time, patience, money and commitment. Don't be discouraged if you don't get the first contract that you apply for. We hope these tips help!

Citing Meyer, Harvey. "Working with Uncle Sam: Federal contracts are out there for small businesses." The Costco Connection. April 2011: 23-24. Print.

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