This article has been updated with the most recent information as of July 2023
Small businesses have a unique edge in federal spending requirements thanks to their size and socioeconomic status. Daily, the government turns to small businesses to redistribute products instead of large manufacturers.
The reason behind this trend is the small business programs contained in Part 19 of the Federal Acquisition Regulations (FAR). It allows individuals to venture into business as sole proprietors, with the role of redistributing products to the government at an acceptable price point. This process is referred to as brokering.
Brokering on federal contracts can be a lucrative opportunity for small businesses but not without complexities. It demands a keen understanding of numerous rules, regulations, government contracting, and business trends.
Brokering is not a loophole within the FAR. Instead, it's a unique scenario in government contracting that demands in-depth expertise to capitalize on the opportunity and shield oneself from exploitation.
Main Points:
Why is brokering on federal contracts possible? The Federal Acquisition Regulations (FAR) contain specific clauses that favor small businesses and sole proprietors. Because of these regulations, small businesses have the opportunity to redistribute products to the government, effectively bypassing more prominent manufacturers.
The government promotes such initiatives because it fosters economic diversity, support small businesses, and often lead to more competitive pricing.
Where can brokers find contract opportunities? Contract opportunities are frequently published on federal government platforms such as the System for Award Management (SAM) and The Advanced Procurement Portal, where procurement notices are listed.
Moreover, networking events and industry conferences can serve as platforms to connect with government procurement officers.
Networking within the industry, joining relevant business associations, and using industry-specific tools, like contracting opportunity databases, can also be a powerful way to find these opportunities.
The baseline requirements for being a broker to the federal government.
Proper licensing: Certain licensing or certifications may be required depending on the product or service you're looking to broker. For instance, you might need specific healthcare-related licenses if you're brokering medical supplies.
Understanding of FAR: Knowledge of federal acquisition regulations is crucial. This includes understanding the regulations in Part 19 pertaining to small businesses and other applicable sections of the FAR.
Providing products at a fair and reasonable price: Government contracts are awarded based on a "best value" assessment, meaning you must provide high-quality products at competitive pricing. Understanding market rates for your products and demonstrating the value you can provide is critical.
Registration in SAM: All vendors wanting to do business with the federal government must be registered in the System for Award Management (SAM).
Capability to fulfill contract requirements: Brokers must have the logistical and financial capability to fulfill contract requirements. This might include establishing relationships with manufacturers or suppliers, sufficient warehousing facilities, and reliable delivery methods.
Remember, successfully brokering federal contracts requires diligence and careful planning. Therefore, securing your business qualification with a Registration & Contracting Specialist is recommended. This will help ensure your business is correctly set up, and that you have the tools and knowledge to succeed in federal contracting.
As a sole proprietor, brokering can be a good start in the federal market. But as your business grows, exploring other strategies, such as teaming agreements and joint ventures, can further expand your opportunities and profitability.
To speak with a Registration & Contracting Specialist about becoming a broker, Call: (866)216-5343
Read Part 2: Go Solo or Team: Part 2 - Federal Contracting Business Partnerships and Teaming
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