Selling to the government can be a lucrative route for contractors, with government agencies at the federal, state, and local levels constantly procuring goods and services. However, entering the government contracting world can be daunting, with its unique regulations, requirements and procedures not found in the commercial marketplace. In order to succeed as a government contractor, you’ll want to make sure your business is adequately prepared to begin government contracting. In this blog, we’ll discuss steps you can take to ensure that you’re ready to compete for government contracting opportunities.
Assess Your Business’s Eligibility
Before you start preparing for government contracting, it’s worth taking a moment to assess whether your business is eligible to become a government contractor. First, confirm that your business is in good standing. For instance, you shouldn’t be on the government’s excluded parties list or have a pending legal judgement with the government.
Make sure that you can also demonstrate successful past performance. Government agencies generally want to see that you have at least two years of past performance as a contractor, whether in the public or private sector. Your past performance doesn’t have to be as a prime contractor — subcontracting experience can be used to demonstrate successful past performance. Businesses seeking to become government contractors should also have strong financials, including positive cash flow and year-over-year increases in revenue.
Have Effective Business Systems and Procedures in Place
Next, you’ll want to make sure that your business has effective systems and procedures established, so that you’re ready to succeed in government contracting. As a government contractor, you’re required to have an approved accounting system. As part of your accounting system, you should be able to demonstrate that your accounting procedures and controls comply with generally accepted accounting principles.
You should have established Standard Operating Procedures, in written form, to ensure a standardized framework for your business activities. You should also have a quality assurance or quality control plan, especially if you’ll be manufacturing products. And make sure that you have an organized filing system in place to keep all of your government documents, financial statements, receipts, employee records, and entity formation documents accessible and secure.
Review Government Contracting Terminology
Knowing some key terminology will help prepare you for government contracting. In addition to the many acronyms and abbreviations you’ll come across, the government contracting world is full of codes, databases, and regulations. When you know a bit of “government speak,” you’ll be better positioned to win contracting opportunities and comply with regulations once you have a contract. Below you’ll find a sampling of helpful government contracting terms:
- Federal Acquisition Regulation (FAR): the set of rules regarding government procurement.
- North American Industrial Classification Standard (NAICS) Codes: a standard used by federal statistical agencies to classify business establishments for the purpose of collecting, analyzing, and publishing statistical data. These codes are used to help you identify relevant government opportunities and determine your business size.
- Request For Proposal (RFP): A document that solicits a proposal by an agency interested in procurement. Not to be confused with RFIs or RFQs, RFPs outline the requirements, capabilities, and solutions that agencies need a contractor to fill. Once an RFP is released, contractors can bid and submit a response for a chance to win the contract.
- Small Business: An independently owned for-profit firm that meets the Small Business Administration (SBA) qualifications and size requirements.
- System for Award Management (SAM): an official website of the U.S. government for people who make, receive, and manage federal awards. Contractors can use this site to register and renew their SAM profile, search for contract opportunities, research contract data, and look up wage determinations.
Register your Entity in SAM
As discussed, the System for Award Management (SAM) is where you can find contract opportunities, contract resources, data reports, contract information, and exclusion records. Registration in SAM.gov is required for all contractors doing business with the federal government, and contractors will need to renew their registration annually.
To register in SAM.gov, you will need to provide the following information:
- Your entity’s Taxpayer Identification Number (TIN), which is usually your Employee Identification Number (EIN) assigned by the Internal Revenue Service (IRS)
- Your entity’s financial information (i.e. U.S. bank Electronic Funds Transfer information) for federal government payment purposes — EFT information is not required for foreign entities
- Executive compensation information
- At least one NAICS Code that fits your company’s capabilities
- Your entity’s size metrics
- The contact information for at least one company POC that can serve as the Electronic Business POC and the Government Business POC
When you register in SAM, you’ll be assigned a Unique Entity Identifier (UEI), which has replaced the DUNS number as the official business identifier. You’ll also be assigned a CAGE code or NCAGE code during registration. Your CAGE code represents your company’s physical address for GSA’s mailings, payments, and administrative records. This physical address should be the same one you have registered with your Secretary of State. NCAGE codes serve the same purpose as CAGE codes but for international companies.
Research Government Customers and Opportunities
Before you can succeed in government contracting, it’s important to research where your business fits into the government marketplace. By researching the types of goods and services that different federal, state, and local agencies procure, you’ll have a better understanding of which customers to target. Acquisition Gateway and the Federal Procurement Data System (FPDS) are two good places to start.
Acquisition Gateway's Forecast Tool displays upcoming contracting opportunities from different agencies. Similarly, the FPDS collects data on federal procurement spending and allows you to view the agencies who are purchasing under your NAICS code.
SAM.gov is a great tool for researching active government contracting opportunities, with thousands of opportunities posted from federal contracting offices. You can easily search for the opportunities most relevant to your business by using the advanced search tool to filter by NAICS Code, keyword, or small business set-aside.
For small businesses entering the government marketplace, the Dynamic Small Business Search (DSBS) can be a helpful tool as well. You’ll want to register for the DSBS after you’ve finished registering in SAM, as your SAM registration data will populate your DSBS profile. Prime contractors in search of subcontractors can find your business profile on the DSBS, and you can use the DSBS to find other small businesses to partner with.
Consider Getting on the GSA Multiple Award Schedule (MAS)
The steps we’ve shared above are only the initial stages of your path into government contracting. As you continue preparing to become a government contractor, you may want to consider contracting with the government through the General Services Administration (GSA) Multiple Award Schedule (MAS). One of the largest government contracting vehicles, the Multiple Award Schedule streamlines the government procurement process for both government buyers and contractors selling through the MAS program. MAS contractors benefit from expanded access to contracting opportunities, among other advantages. If you’re interested in becoming a GSA contractor, we recommend reviewing our guide to the Schedule acquisition process and reaching out to our team with any questions.
