A recent American Express OPEN survey showed that 57 percent of businesses noted a significant increase in revenue when engaged in government contracting. In fact, those businesses saw their revenue grow at a rate of 61percent. Our focus will be on the largest source of doing business with the government, federal government contracting. (The National Law Review May 9, 2022)
Each year the federal government contract spending is in the billions of dollars. The United States government is the single largest procurer of goods and services in the world. Vendors sell anything from paper clips to fighter jets for the Department of Defense. In order to take advantage of this business, at any level, vendors must complete several required steps. (ibid)
Completion of Regulatory Basics
Businesses wishing to work with the federal government must complete specific regulatory requirements. All potential contractors are required to obtain a Unique Entity Identifier (UEI). Your business is assigned a UEI when you register on SAM.gov. Click here to learn more about obtaining a UEI. (ibid)
For a contract to be awarded by the federal government, approval must be obtained by a Contracting Officer (CO). COs only approve responsible contractors. The government will not enter into a contract with a vendor who:
- owes back taxes
- has a current or pending legal judgment with the government
- does not have a checking account
- is on the government’s excluded parties list
- has not completed the basic regulatory requirement for doing business with the government
Before moving on, potential contractors should verify all required registrations are completed and a UEI is assigned. (ibid)
Looking for opportunities within the federal government is similar to private industry. One must determine which agency has a need for a particular good or service.
There are many sources to help locate opportunities suited to a specific business. The main portals for entry into the federal government contracting are:
General Services Administration (GSA) Schedule
This is the most common form of a federal government contract. GSA is the “acquisition arm” of the federal government. Vendors who wish to be included on the primary contract vehicle, a GSA Schedule, can find additional information here. (ibid)
To be eligible for a GSA Schedule contract, a potential GSA vendor must show proof of at least two years of measurable past performance and provide two years of financial statements. References from the Federal arena may be used in lieu of experience. (ibid)
Federal Business Opportunities (FedBizOpps) contains government contracting opportunities with values over $25,000. (ibid)
This is a government-wide acquisition contract (GWAC) in which multiple government agencies align their needs and purchase a contract for goods or services. Government-wide acquisition contracts (GWACs) allow for economies of scale, which usually reduce per-unit costs.
Vendors may also act as a subcontractor to prime contractors. There are several sites to research for subcontracting opportunities. GSA and the Small Business Administration (SBA) both maintain subcontracting databases. Additionally, the SAM website, as well as the Federal Procurement Data System (FPDS), contain sources of information including trade and business publications.
There are two types of government contract offers – bids and proposals. Bids are made in sealed bidding purchases, proposals generally involve contract awards following a negotiation process. The three offer types are:
- Request for Quotation (RFQ): Used for proposed contracts with a value of less than $150,000.
- Request for Proposal (RFP): Used for acquisitions with higher values than an RFQ.
- Invitation for Bid (IFB): Similar to an RFP, with values over $100,000. Contractors submit a sealed bid for government procurement. Generally, negotiation follows. (ibid)
It is extremely important that all information provided in an offer be factually sound and contain all information necessary for a CO to make an evaluation. Vendors should note that responses to technical specifications will become part of the contract, so it is wise not to overpromise. (ibid)
Once all requirements are satisfied the offer is ready for submission. Note, that the lowest-priced offer does not necessarily ensure a win. More often than not, experience and service excellence are deemed more important. (ibid)
The evaluation of offers begins when the government agency receives es the bids. Patience is key as acceptance of bids can take up to several months. The key is knowing and staying up-to-date with your Contracting Officer. (ibid)
Have questions about contracting with the federal government? Give us a call.