Today’s economy has created significant challenges for companies around the world. The tough business environment has companies facing decreased revenues, the prospect of employee layoffs, increased lending standards and fewer business opportunities. With all the present uncertainty, businesses are well-advised to expand their horizons with new or unconventional opportunities. One such opportunity every business can consider is doing business with the U.S. Government. In a recession, the Government can be a very attractive business partner for many companies as spending is increased by the Government to pull the economy out of recession. With the recently enacted American Recovery and Reinvestment Act of 2009, the Government plans on increasing spending by hundreds of billions of dollars, and will do so mostly through the issuance of government contracts. Businesses in all sectors of the economy stand to profit from this increase in spending if they are well-positioned to win these contracts. The question then remains: how does a company get started in government contracts?
Before any company can bid on a government contract, it must first register with the Central Contractor Registration (CCR), the primary registrant database for the U.S. Government and its agencies. In order to register, the company is required to have a DUNS number, which is provided by Dun & Bradstreet, Inc. for free by visiting their website. Once registered with the CCR, a company can bid on most government contracts issued by the Government.
The primary portal for finding government contracts is FedBizOpps.gov, otherwise known as FBO. FBO is used by both agencies and vendors to post and bid on contracts. Although registration with the FBO website is not necessary to search for opportunities, it’s recommended that companies do so if they plan on eventually bidding on contracts. There are thousands of opportunities on the FBO website and sifting through them can be a daunting task, and new solicitations are posted daily. Therefore, every company that desires to do business with the federal government will find it most helpful to develop a plan of action: (i) determine the good or service the company can provide to the Government, and (ii) determine the department or agency that needs this good or service. Given the extensive opportunities, many new government contractors find it useful to focus on a small number of government agencies or departments that could most benefit from their product or services. Though the FBO website is beneficial for finding posted solicitations, it is not the only route for doing business with the Government.
Another option is the GSA Schedules (also referred to as the Multiple Award Schedules or the Federal Supply Schedules), the Government’s method of providing long-term government-wide contracts on over 11 million commercial products and services. The GSA negotiates with contractors for the lowest possible price so that contracts procured through the GSA Schedules comply with all laws and regulations. Government agencies or departments can search and purchase from these Schedules without the hassle of issuing a solicitation. Therefore, the GSA Schedules acts as a convenient link between agencies and contractors. The GSA Schedules can provide incredible opportunities for a contractor and is a highly recommended route for any company aspiring to do business with the Government. Another advantage of becoming a GSA Schedule contractor is that state and local governments also have access to the GSA Schedules, providing additional potential customers for contractors.
Small & Disadvantaged Business Set-Asides
Another major entry-point for many companies is through one of the many set-asides established for small businesses or socially and economically disadvantaged businesses. The definition of "small business" varies depending on the industry sector. The Government utilizes the North American Industry Classification System (NAICS) to identify and establish the industry sectors. Every company will be required to provide the NAICS industry classification codes that apply to their company. Government contract solicitations will designate the applicable size standard for a contract, based on the industry classification of the goods or services being procured. Therefore, it’s important for a company aspiring to compete for these small business set-aside contracts to know their applicable industry codes and size standard. Small businesses will find many useful tools and resources on the Small Business Administration’s (SBA) website.
The most important set-aside program for socially and economically disadvantaged businesses is known as the Section 8(a) Business Development program, managed by the SBA. In order to be eligible for the program, the business owners must be U.S. citizens and meet certain other requirements related to ownership, size, character, and most importantly, social and economic disadvantage. Certain racial groups are classified as socially disadvantaged: Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. Otherwise, if not a member of a designated group, the business owner must provide evidence of social disadvantage. Applying to the 8(a) program first requires registering with the CCR and with the SBA’s General Log-in System (GLS). The application to the 8(a) program is accessible at the GLS and once submitted is reviewed for certification by the SBA.
Aspiring government contractors that are also small businesses may find it easier and more practical to pursue subcontracting for a prime government contractor. Prime contractors with contracts exceeding certain thresholds are required by law to provide subcontracting opportunities to small businesses. Would-be subcontractors should identify potential prime contractors of a particular business opportunity and develop contacts and relationships with these contractors. This can be a great way for many small companies to get their foot in the door and develop good reputations in the procurement community.
Doing business with the Government can provide companies of all sizes and in all industries important economic opportunities. With the economy in a deep recession, these opportunities may prove critically important to many companies’ survival. Learning the keys and skills to developing a business relationship with the Government can be challenging and will take some time. However, positioning your company to do business with the Government is time well spent.
For more information please contact Christopher Noon. Mr. Noon is an associate in the Government Contracts & Regulated Industries Practice Group in the firm’s Washington, D.C. office. Please visit our Government Contracts Law Blog at www.governmentcontractslawblog.com.