First in a three-part series.
An oft-ignored avenue to give your business a boost is to do work for the government. Just like any business, government departments and agencies have to purchase products and services for all sorts of needs.
According to James Gambarbella, deputy area director for government contracting for the Small Business Administration in San Francisco, the federal government spends about $415 billion a year on procurements. Small businesses are supposed to get about 23 percent of that. Moreover, if you own a business that provides a service, take note: Gambarbella said that 60 percent of the federal government spending in procurements over the last six years has been in the service area. In short, it can be a lucrative source of income if you do your homework.
In order to get involved with doing business with the government there are certain procedures you need to follow. Moreover, you need to register your company, provide information about it, and obtain certain certifications and/or classifications, etc.
What follows is a primer on how to evaluate your company to determine:
-- If you can do government work;
-- How to go about classifying your company: registering it, determining what classification you are, and what categories of set aside businesses you may engage in;
-- How to find out what contracts are open for bidding,
-- How to bid for contracts; and
-- Basically, what to expect as you work through the maze of doing business for the government.
To tell the story we have enlisted the help of James Gambarbella of the Small Business Administration as well as Michael Balsam, vice president product and services for Onvia, a private-sector company that assists clients in getting government contracts. Balsam has been with Onvia, which he says has 9,500 clients, since June 2001.
James Gambarbella has been in the San Francisco office of the SBA since 1999. Prior to that he was program manager in the office of government contracts for a variety of programs for the SBA in Washington, D.C. Before joining the SBA, Gambarbella was a contract officer and contract specialist for NASA and the Department of Defense. The San Francisco office of the SBA oversees SBA programs in 11 western states.
The first thing you need to do is evaluate your business. What service and/or products set do you offer and is it something that a government department or agency would need? This is important because you will need to include the North American Industry Classification System (NAICS) and the Federal Supply Classification (FSC) codes for your product or service when you bid for a contract.
What certifications do you have that are needed for you to perform your business? Is the majority owner of the business a woman, a minority, a veteran? These are important points, as government contract bidding process includes set-asides that are meant to encourage companies that are minority, women or veteran-owned to participate in bidding.
Moreover, the selection process on bids that call for set-asides have been enhanced to provide a level playing field for these companies as they compete for contracts with larger companies. Usually, if 51 percent or more of the company is owned by a woman or women, minority or minorities, a veteran or veterans, then that would satisfy the requirement of being classification as a minority-owned or women-owned or veteran-owned business.
It should be noted, however, that there are some definitions that are exclusive to particular agencies. Michael Balsam, of Onvia, noted that there are tens of thousands of agencies associated with the federal government.
"All have their own nuances and their programs can be a little different." This means that the percentage of ownership some agencies require may be different. If you think you fall into this category, find out when you bid how the agency you are dealing with defines ownership.
How big is your company? There are size standards involved in the classification of a small business. According to Gambarbella, the industry in which you do your business influences the size standards, i.e., there are different standards for on your industry than others. This is one reason why you need to determine your NAICS code. There are corresponding size standards for each code, and the SBA can tell you if the size of your business fits into these standards.
Is your business located in a HUBZone or is it a "disadvantage business?" Neighborhoods around the country have been designated as economic development zones or also referred to as Historically Unutilized Business Zone or HUBZones. It is the desire of the federal government to provide assistance to these neighborhoods and this includes encouraging businesses that are in these zones to participate in doing business with the federal government. Some times procurements are set aside for businesses that fall into this category. And there is the 8a Business Development Program. Although this is not a contracting program per se, Gambarbella noted that there are some elements of the program that do concern government contracts.
"The program has categories of contracts that can be awarded to a small business on a sole-source basis or on a competitive basis," said Gambarbella. The SBA can help you determine if your business falls under this program.
Next, you will have to obtain a business identification number and register with a number of databases and certifications groups. If you do not already have a DUN number you need to obtain one from Dun & Bradstreet (phone number: 866-705-5711). A DUN number is a business identification number that is used like a person's social security number. There is no charge for getting a DUN number.
You will also need a Marketing Partner ID (MPIN) and a Trading Partner Identification Number (TPIN). The MPIN is a personal code that you create and register with the Centralized Contractor Registration System (CCR). This code also allows you to access other government applications such as the Past Performance Information Retrieval System (PPIRS), FedBizOpps and FedTeDS. In short, the MPIN is your personal password. You make up the code and register it in the CCR. The TPIN is a confidential number provided to you on activation in CCR. It, along with your DUN number gives you access to your entire registration, including Electronic Fund Transfer (EFT). The TPIN is mailed to you via the post office to the person listed as the "CCR Point of Contact" under the "point of contact" tab in the CCR. You use the TPIN to update and/or renew your registration.
Rules And Regs
Now that you have evaluated your business, you need to get acquainted with the regulations and procedures of doing business with the government. Knowing and understanding the procedures is imperative to determine if you indeed want to get involved in doing business with the federal government. According to Gambarbella, the Federal Acquisition Regulation is the overall guide of rules that govern the process.
"Businesses really need to become familiar with the rules and regulations," said Gambarbella. "You have to be certain that you understand and can deal with them. I've seen more businesses getting in trouble by getting contracts they had no right to bid on than businesses that did not get contracts. You need to get into this with your eyes wide open and do your homework to avoid getting into trouble."
Gambarbella also counseled that you know your customers' priorities. "Businesses that do their homework understand the regulations, understand the rules, and know how the process works will be successful," he said.
Now that you have gathered all this information you can start registering with a variety of groups. One of the most important is the Centralized Contractor Registration System. You must be registered with this group to be awarded a contract from any Federal Civilian or Military Agency. The CCR serves as a database. It holds information on potential contractors that is required to obtain federal contracts and to participate in financial transactions. You need to also register in the Online Representations and Certifications Application (ORCA). This is a federal government repository for all of your company's required representations and certifications you need to do your business. This information can be easily accessed by the federal procuring agencies.
You may also want to consider registering with the "Getting on the GSA Schedule." There are Government-wide Acquisition Contracts (GWACs) and General Services Administration's (GSA) Federal Supply Service (FSS) contracts through which federal agencies make purchases. Basically, these are pre-approved contracts that are used to buy commonly used products, services and solutions needed to perform day-to-day operations. These opportunities for business are normally competed among pre-qualified vendors who are already under contract. These pre-qualified businesses appear on this database, which is accessible by procuring agencies. Agencies can select a number of vendors that provide the product or service that they need and then shop the vendors for the best price or other criteria.
Then you can do a little research to prepare yourself for entry into the government contract market. For example, you can familiarize yourself with the Federal Civilian and Department of Defense contracting legal procedures. This provides you with information on the legal requirements and regulations involved in seeking federal contracts.
Next, you can seek information that will assist you in deciding whether you would want to bid for a particular contract. Knowing an agency's procurement forecasts can help you target that agency early on. Each federal agency offers an annual procurement forecast. You can contact the agency's Office of Small and Disadvantaged Business Utilization (OSDBU) or an equivalent office to obtain the forecasts.
Michael Balsam of Onvia suggests researching past contracts. He explained that term contracts and service contracts may be set for a year with perhaps an option for another year. By studying these types of contracts, you can determine when the contract runs out and when a new solicitation will be created. By studying these types of contracts, you can get an early jump on a bid. "You know early on who your prospects are, what they are buying, who to call and familiarize yourself with and allow them to familiarize them with you, and who your competition is," said Balsam.
Perhaps your business is more suited for subcontracting, or perhaps you can use it as a means to get yourself known by the decision makers.
"If you have difficulty winning contracts on your own, then partnering with or subcontracting for a larger company gives you an opportunity for getting government personnel familiar with you," said Gambarbella.
You can consult with the Small Business Administration (SBA) on whether subcontracting is the way to go for your business and you can get information on subcontracting opportunities from prime contractors, the government, commercial and educational entities from the SBA SUB-Net. You can also seek subcontract opportunities from the Department of Defense Office of Small Business Programs. This group lists all major Department of Defense prime contractors by state and provides contact information for each contractor.
In addition, the Department of Defense has a host of programs that may assist you in getting contracts. These programs include the Mentor-Protege Program, the Small Business Innovation Research Program, Historically Black Colleges and Universities and Minority Institutions Program.
Finally, the Small Business Administration has a number of programs including the 8(a) Business Development Mentor-Protege Program, the Small Business Innovation Research Program, the Small Business Technology Transfer Research Program and the Technology Resources Network.
Balsam added that you need to know your customers.
"Research the last three, six, 18 months to find out who buys what you sell and who is the person doing the buying," he said. "If you sell commodities like office supplies, laptop computers, and similar, it will not call for a command and control decision. So people further down the procurement chain will be making the decisions. However, if you are selling more sophisticated goods you will deal with people further up the organization. Once you know who you will be dealing with, you can familiarize yourself with them and them with you."
Gambarbella concluded, You need to know what you can do and what you can't do; you need to know your customer and competition and you need to know yourself."
Digest part one, and be back next week for part two, where we'll discuss the bidding process.
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