In fiscal year 2020, the federal government spent more than $668 billion on contracts. Contract spending rose $83 billion from the previous year. That also marked the fifth straight year of spending growth. Clearly, it pays to know how to bid on government contracts.
Medical contract spending saw the biggest growth — a stunning 50 percent, due to the COVID-19 pandemic. Several other categories saw big increases, including aircraft, ships, and land combat vehicles (41 percent); clothing, textiles and subsistence supplies and equipment (32%); research and development (26%); industrial products and services (16%); weapons and ammunition (13%); information technology (10%); and professional services (7%).
Those are big numbers, but it’s not all about big businesses. Each year the federal government sets aside roughly a quarter of its contracting budget for small business. During that same fiscal year, the federal government awarded more than $145 billion in contracts to small businesses.
Businesses, both large and small, must put forth a good deal of effort to get a slice of the federal contracting pie. In this article, we’ll provide an overview of how to bid on government contracts and some tips on getting ahead of the competition.
Get ready: Registering a business
To win a government contract, a business must submit a near-perfect bid. The very process of bidding seems designed to weed out companies that are not on the ball. Long before a business can get a bid in front of a contract officer, it must register in several places. To win a federal government contract, a business has to enter itself into the system. Here is a roundup of the preliminary steps:
Obtain a DUNS number
A DUNS number is a nine-character identification number specific to a business entity. A business can register at no charge by visiting Dun & Bradstreet at fedgov.dnb.com.
Obtain an EIN, employer identification number
An EIN, also called a Federal Tax Identification Number, serves as an employer ID number. To be eligible, a principal business must be in the United States or its territories. The person applying for the business must have a valid taxpayer ID number, such as an SSN, ITIN or EIN. Applications can be made online at irs.gov.
Register in SAM, System for Award Management
SAM is a government-wide portal that connects systems used by the federal government for buying goods and services, managing grants and cooperative agreements, and conducting other affairs.
To do business with the federal government, businesses must register at www.sam.gov. Click on “Get Started,” and follow the prompts on screen. A DUNS number is required.
Obtain a CAGE (Commercial and Government Entity) code
Any business that wants to supply the Department of Defense must have a CAGE code. This ID number allows the department to track suppliers and materials. The government takes about five days to approve an application, so this should be done ahead of time. Businesses can obtain a CAGE code when they register in SAM. If they are not registering in SAM, but need a CAGE code, they can apply at cage.dla.mil/request.
Determine the NAICS number
Federal statistical agencies use the North American Industry Classification System to classify businesses – according to the work they do – for the collection, analysis and publication of economic data. To determine its code, a business must use the NAICS search tool at census.gov/naics.
Going for the win
To really get primed to win government contracts, a company should consider the following:
- Prepare for the competition and hoop-jumping by taking “Pathways to Success” training and the “Readiness Assessment.” The training shows businesses how to work in the GSA MAS Program.
- Register for the MAS (Multiple Award Schedule) Group on Interact.
- Use free online tools to check the government’s contract spending habits, such as usaspending.gov.
Get set: Looking for contracts
Once you register your business, it’s time to start looking for federal contracts. Here are places to look for federal contracting activity.
GSA Schedules
Often, government agencies will establish government-wide contracts to acquire myriad products and services directly from commercial suppliers. The largest contracts are established by the General Services Administration under the schedule program. State and local governments also use GSA schedules to buy goods and services. The GSA provides many resources and training guides at gsa.gov, as well as information about “getting on schedule.”
Contract Opportunities Search
The Contract Opportunities Search Tool on beta.SAM.gov publishes procurement notices from federal contracting offices. Businesses can find pre-solicitation notices, solicitation notices, award notices, and sole source notices. The data is searchable by keyword, industry, and other categories.
The Dynamic Small Business Search (DSBS)
The Small Business Administration maintains this system. When you register in SAM, you can fill out a small business profile that automatically populates in the DSBS system. This is how government offices identify small businesses available for contracting opportunities.
Contract Opportunities
Once you’re ready to bid, submit a business profile through SAM. This will allow government agencies to search and find your business. You can also use SAM to search for contracts.
SubNet
Think of SubNet, the Small Business Administration Subcontracting Network, as the bridge between small businesses and government contracts. It’s a searchable directory of federal business opportunities specifically slated for small businesses.
The federal government requires many of its contractors to subcontract with small businesses. The small businesses can browse that directory anytime at sba.gov.
Going for the win
Here are some additional resources for finding federal government contracts:
- See if your company qualifies for any set-aside programs at sba.gov.
- Use the GSA forecasting tool at gsa.gov.
- The U.S. Department of Defense (DoD) operates a directory of large prime contractors that small businesses can use to find subcontracting opportunities. Search the contracts at business.defense.gov.
- Use a government contract bidding service like BidNet.com or FindRFP.com. These businesses do the legwork of finding contracts for small business contractors. They search for RFPs daily and share the results with their clients.
Go: Making a bid
This is where the fun truly begins – if you consider extreme attention to detail to be fun. Businesses that win at government contracting know how to write bids that explain why they are the ideal match for a specific government contract. Let’s look at a few tactics that can help make that happen.
Master the ins and outs of RFPs
The government has a few ways of asking for bids and proposals. Companies that want to win contracts must know the specifics involved with each type. Three of the most common types are RFPs, RFQs, and ITBs.
An RFP – request for proposals – is a solicitation for goods and services from public contractors. A government agency uses them to find the most cost-effective solution for a problem. This document will specify any requirements. It’s gives a business the opportunity to showcase how its products or services can address the RFP’s specific need. It’s important to be as clear and concise as possible so that a submission stands out from the competition.
An RFQ – request for quotes – asks vendors to provide a price quote in response to the entity’s needs and requirements. Please note, these requests are often informal and can change without notice. It will be up to the business to submit revised price quotes as necessary to stay up to date.
An ITB – invitation for bid – asks contractors to submit their proposal for a certain project, product, or service, generally costing over $100,000. These requests can consist of sealed or open bids. This type of request is more centered around the cost of a product than the process behind it, and as such, is often rewarded to the contractor who can submit the lowest bid.
Every word counts
In fact, every letter counts when it comes to reading RFPs and ITBs and writing the bids. Even typos and misspellings can count against a company.
A business owner must always take the time necessary to thoroughly read all guidelines. If a bid is missing key information or leaves the contracting officer with more questions than answers, the bid will likely be tossed to the side. It could be worse, however, if a company wins a contract that doesn’t quite align with the service or products it can provide.
Research past activity
Government contacts that have already been awarded can provide helpful information and give insights into what government agencies are looking for. A business owner can find out what vendors previously charged for goods or services and learn about what competitors can offer.
Use government contract bid templates
Templates for bids of various kinds are easy to find on the internet. They make the process easier, but business owners still need to make sure the template covers all the necessary bases. Also, sticking too closely to a template puts a company at risk of looking exactly like all the competition.
Check and double-check
A business owner must take extra time to review any proposal before submitting it. Once it’s filed, it can’t be undone. Read through line by line. Also, ask a friend or colleague to read over it as well.
Track the bid
It’s important for businesses to keep track of bids, even though it can take weeks, months, or sometimes a year to win a contracting opportunity. In some instances, a government agency will ask a business to complete a pre-award survey. That means the company must demonstrate that it can successfully accomplish what the proposal states.
After the bid is awarded …
Once the bid is awarded, the contractor’s name and contract price could become public information. Even for the competitors who didn’t win, the information is always helpful. It can include price details and other information that will help with the next bid.
A difficult but rewarding process
A successful government contractor that has mastered the art of bidding might decide that a good time to sell the business is after landing a big contract. GovCon Wealth, a division of Cope Corrales, focuses on advising successful government contractors, and aligning the owner’s personal, company and financial objectives.
