Everything You Need to Know About Being a Government Contractor

The business landscape has changed dramatically in the last decade. One thing that has always remained constant, the United States Federal Government is one the largest and most powerful consumers of goods and services in the whole world. Being a government contractor is a highly desired position for any business.

What does this mean for small businesses who want to be government contractors?

The Federal government is also required to set aside a certain amount of contracts for small businesses. At least 23 percent of government contracts will be awarded to small businesses this year.

What qualifies as a small business for government contracting purposes?

In order to be considered a small business, a company has to meet the following requirements:

  • A business must meet small business size standards.
  • Part of a business must be within the U.S.
  • A business must operate mainly within the U.S. or make a significant contribution to the U.S. economy through the payment of taxes or the use of American products, materials, or labor.
  • A business must be independently owned and operated.
  • A business cannot be dominant in its field on a national basis.

How do I know that being a government contractor is right for my company?

There is very little certainty in business. Having a powerful client that is known for paying its bills on time, like our Federal Government, is a great asset.

Also, many of your competitors might be dismissing the idea of being a government contractor as being too much trouble. This means that there could be surprisingly little competition in some spaces. Their shortsightedness can be your company’s advantage.

Are you a disadvantaged or a minority business owner and are interested in government contracting?

There were certain groups that have experienced discrimination in the past that were not related to their individual qualifications. This discrimination kept them from participating in the free market because they did not have access to capital.

In response, the Federal government tries to award contracts to businesses that are at least fifty one percent owned by those from disadvantaged groups.

Competitive 8(a)

The 8(a) Business Development Program reserves federal contracts for competition among small businesses owned by socially and economically disadvantaged person(s).

To qualify a business must meet the following criteria:

To be eligible for the Competitive 8(a) program:

  • A business must meet small business size standards.
  • At least 51 percent of a business must be owned by U.S. citizens.
  • The business officers must show good character.
  • The business must demonstrate the potential for success.
  • There are separate eligibility requirements for businesses owned by American Indians, Native Alaskans, Native Hawaiians or Certified Development Companies. 
  • At least 51 percent of a business must be owned, controlled, and managed by one or more person(s) who meet the SBA requirements for being socially disadvantaged and economically disadvantaged.

The federal government reserves contracts for competition among small businesses owned by economically disadvantaged women. The contracts must be in industries where women-owned businesses are underrepresented. Businesses certify for EDWOSB status through the SBA. To be eligible for EDWOSB status:

Economically Disadvantaged Woman-Owned Small Business (EDWOSB)

  • A business must meet small business size standards.
  • Women must manage day-to-day operations and make long-term decisions.
  • A woman must hold the highest officer position and work at the business full-time during normal working hours.
  • At least 51 percent of your business must be owned by one or more economically disadvantaged women who are U.S. citizens. To qualify as economically disadvantaged through the EDWOSB program, a woman must meet these requirements:
    • Have a personal net worth of $750,000 or less.
    • The fair market value of all assets must be $6 million or less.
    • Have an adjusted gross yearly income (averaged over the three years prior to the certification) less than $350,000. 

There are also programs for veterans, Native Americans, and other disadvantaged groups.

What is the SAM Directory?

SAM stands for System Award Management.

In order to do any business with the federal government, you must register your business in the System for Award Management. The government will not hire any type of business that has not registered in the SAM directory.

We have an article on our site, Everything You Need to Know About SAM for Small Businesses, that gives you important information about this process.

As a smart entrepreneur, you have already used our site to register in the SAM directory. Congratulations on taking this important first step to become a government contractor.

Now that I am in the SAM directory, where do I find Federal government contracting jobs?

The following are some places where you can find federal contracting opportunities:

Make sure your NAICS number is up to date and correct.

What is a NAICS number?

NAICS is a six-digit code that stands for the North American Industry Classification System. Many federal agencies post contracting opportunities using the NAICS codes. The NAICS is used as an internal reference that quickly describes what a business does. You want to make sure you have the correct NAICS number to qualify for as many contracting opportunities as possible.

The Bidding Process for government contracting.

Now that you met the needed requirements for being a Federal contractor, you are ready to submit bids.

Make sure you are responding to solicitations and not pre solicitations. Pre solicitations are only requests for information and might not lead to an actual job.

Carefully go through all the paperwork and follow directions. You want to make sure your bid is not thrown out for inaccuracy or failing to provide important data.

Now that you understand government contracting, your business is ready to make the most of these lucrative opportunities. Take the bull by the horns and help your business acquire this amazingly beneficial client.