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Government Contracting for Small Businesses: Get Started with 3 Steps

All politics aside, the enormity of the federal government provides a wealth of opportunities for small businesses to supply goods and services.  It’s estimated that the U.S. government buys over $600 billion worth of goods and services every year, ranging from extremely complex circuitry and programming to cleaning supplies and janitorial services. What’s more, under federal law, 23% of government contracts are supposed to be awarded to small businesses—that’s $138 billion set aside for small businesses to claim. Yet, the idea of breaking into government contracting seems so daunting that many business owners don’t pursue the opportunity.

Here are the steps to take in order to help land your first government contract:

  1. Determine if you are a small business. The first step is to determine if you qualify as a small business. The Small Business Administration defines “small business” for the purposes of determining eligibility for government contracts set aside for small business. These standards are stated either as the number of employers or the average annual sales of the business.  They are based on North American Industry Classification System (NAICS) codes—so what is “small” for one industry might not be small for another. As an example, a heating and air-conditioning contractor might not be able to have more than $15 million in annual receipts, but a local courier service may outgrow the small business classification until its annual receipts top $27.5 million. 
  2. Obtain your D-U-N-S number.  Your D-U-N-S number uniquely identifies each of your business locations and is required to register with the government contracting system. Maintained by Dun & Bradstreet, you obtain the number by completing an online application. This service if free, and you generally can get a number by the next business day.
  3. Register with SAM. No SAM is not a person, or even Uncle Sam – it is the System for Award Management, the central registration system for all potential government vendors. SAM serves two purposes. It allows you to provide the necessary information and certification required by all government agents. And, equally important from your point of view, it is a marketing tool that you should exploit to the fullest to make your business stand out from hundreds of others in your category. (The Help tab on the SAM homepage has a number of FAQs and User Guides to help you work through the process.)

Of course, these three steps are simply the starting point in the process, but they are necessary if you want your share of more than half a trillion dollars.

Still feels like too much red-tape?  Before you slam the door on the idea, explore what the upside could be for your business.

Find Your Opportunities

Even before you complete the registration process—or decide you want to tackle the process at all—you can start familiarizing yourself with the opportunities available for businesses in your industry and location.  Here are some avenues to explore.

  • One way to determine what’s available—and to make sure you are competitively positioned—is to search the SAM database for companies that have the same NAICS codes as your business.  Learn from how they present themselves, and ferret out ways that you can distinguish yourself.
  • Set aside time to explore FedBizOpps: Federal Business Opportunities. Federal agencies must use this website to announce their available procurement opportunities and vendor requirements to the public and interested potential vendors for all contracts valued over $25,000.
  • Consider joining one or more trade groups that provide information and services to small businesses seeking government contracts, such as the American Small Business Chamber of Commerce or The American Small Business Coalition.

You can find other resources on the Small Business Administration web page, “Contracting Resources for Small Businesses .” While federal contracting might not be a fit for every business, it is an option that is worth investigating.

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