The United States Government Is A Very Powerful Client With Deep Pockets
The Federal government usually spends around 500 billion dollars a year on goods and services. This makes the U.S. government an extremely attractive client. There are few other organizations with this type of spending power and clout.
The government also tends to buy goods and services in bulk. If your business has the infrastructure to handle large orders, then the government can help you grow substantially at an accelerated pace.
Government agencies also buy goods and services in large quantities. Large orders can be a double-edged sword for small businesses. However, if managed correctly, they can help you grow substantially and rapidly.
Small Businesses Are Given Special Consideration When It Comes To Government Contracts
In many markets, small businesses are often outcompeted by larger organizations that often have access to almost unlimited resources. This set aside actually might increase a small business’s chances of winning a lucrative bid.
The federal government is required to set aside at least 23 percent of its total spending specifically for small businesses. Several small businesses have made a fortune just on federal government contract awards.
Important Laws
Section 8(d) of the Small Business Act and, in most cases, FAR 19.7 incorporate several laws regarding small business subcontracting. These laws require prime contractors to provide subcontracting opportunities to small businesses. This includes
- HUBZone small business
- Small disadvantaged business
- Women-owned small business
- Veteran-owned small business (VOSB)
- Service-disabled VOSB
So the government requires that on contract over $500,000 or a million when constructing a public facility, large prime contractors must turn in plans for subcontracting percentage goals for small business, HUBZone small business, small disadvantaged business, women-owned small business, VOSB, and service-disabled VOSB. These plans must describe the methods used to ensure that small businesses have a fair chance to compete for government contracts. This is required to be submitted for review before the award of any government contract that meets this threshold. If a prime contractor fails to comply with this regulation, then they might be subject to liquidated damages or termination for default.
This rule does not apply to contracts that are under the prescribed dollar amount, contracts that are going to be completed fully outside the United States of America, contracts that have no subcontractor opportunities, and small businesses.
What Qualifies As A Small Business?
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 nationally.
- The first thing a small business must do to qualify for government contracts is to register with the SAM Directory.
The Federal Government Offers Great Opportunities For Many Types Of Businesses
The government designates a portion of the contracts for women-owned small businesses, small disadvantaged businesses, companies within historically underutilized business zones (HUBZone), and service-disabled, veteran-owned small organizations. This allows for underserved groups to have a real chance to get awarded lucrative government contracts.
The Government Is Fantastic For New Businesses
The government has a lot of demand, but it goes out of its way to ensure all competition is open and fair. It will need to work with almost any business for products and services with competitive pricing.
The United States government is known for running with high levels of precision and accuracy. Making sure the government contracts are fulfilled is a great way for a new small business to streamline its process and delivery methods.
Government Contracts Offer Security In These Uncertain Times.
Covid-19 has halted a lot of different industries. However, the government must continue to move forward for the health and welfare of its people. Government contracting can be a shining light in the pandemic darkness and provide a lifeline to many struggling businesses who are trying to survive this unprecedented situation.
You should remember that government agencies are in need of goods and services in a year-round capacity. This makes them one of the few consumers that are actually recession-proof and a great source of steady, reliable income.
Are There Any Other Advantages For A New Business To Registering For The SAM Directory Besides Government Contracting Opportunities?
A business has to be registered with SAM before it can begin to apply for valuable federal grants.
What Is A Federal Grant?
A grant may be a way the government funds your ideas and projects to provide public services and stimulate the economy. Grants support critical recovery initiatives, innovative research, and many other programs within the Catalog of Federal Domestic Assistance (CFDA).
The following steps to apply for a grant:
- Step 1: Obtain a DUNS Number
- Step 2: Register with SAM
- Step 3: Register with Grants.gov
CAGE Code (Commercial and Government Entity)
This code is five characters and unique to your business. It’s your ID code, and government agencies will identify your business using it. It is a bit like a social security number for your business. If your business includes more than one facility, then you will need multiple CAGE codes. Each location must have its own unique code, and each location must be registered separately with SAM.
How Do You Get Started Working With The Government?
SAM stands for System Award Management.
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.