The Hidden Costs of Government Contracting (And How to Avoid Them)

Sep 22, 2020 12:00:00 PM / by Hayden Johnson

Hidden Costs

As a business owner, you know that it takes money to make money. The same applies to government contracting. On paper, all it takes is a registration in the System for Award Management (SAM) and you're ready to submit bids. In reality, it's a lot more complex than that.

In this blog post, we're going to cover the true costs for effectively getting started in the federal marketplace. 

We're going to cover: 

Plus, at the end, we'll show you a simple solution to avoid these hidden costs and wasted time, as well as optimize your business for government contracting. 

Let's begin.

SAM Registration 

Registration in the System for Award Management (SAM) is the first requirement to contract with the federal government. On the website itself, they'll tell you that getting registered in SAM is free. 

Which it is...in the same sense that doing your own taxes is free. You can do your taxes yourself, but there are consequences if they are submitted incorrectly.

There are several ways that doing a SAM registration yourself can cost you.

Delays in Registration

This is the first way that trying to register your business in SAM can cost you. If you don't fill out all the forms correctly, you might not even reach compliance for government contracting. 

Just as in the commercial sector, time is money. Having your shoes tied together with all the paperwork it takes to get registered can mean missing opportunities for your business. It's as simple as that.

Fines

When it comes to registering in SAM, delays might be the least of your problems. As surprising as this may sound, government contracting is the most heavily regulated sector in the U.S. economy. 

Errors in your SAM registration might leave you susceptible to various fines and penalties. If handling bureaucratic paperwork isn't your speciality, then you might want to tread lightly and triple check everything you submit for this registration.

Policy Changes

So maybe you get registered in SAM with no errors, delays, or fines. That's great. However, what you should be aware of is that if there's anything consistent in government contracting, it's change. 

In 2018, there was a massive overhaul for the requirements to remain compliant for SAM. Due to concerns of fraud, the General Services Administration (GSA) added a notarized letter requirement for all active SAM registrations. 

Businesses had the rug pulled out from under them overnight. Imagine working on a job, everything going fine, and then, all of a sudden, your client stops paying you. 

Then they tell you that you need to submit a notarized letter to keep getting paid, only to find out that hundreds of thousands of businesses are doing this at the same time with this client. 

When you decide to take the DIY approach with your SAM registration, this is something that you need to consider.

Small Business Set-Aside Certifications 

The federal government loves to work with small businesses. So much so, that by law, they are required to try to spend at least 23% of their total contracting budget on small businesses. 

Then there are more goals for specific types of small businesses such as: 

  • Women-Owned
  • Veteran-Owned
  • Disadvantaged 
  • Entities located in Historically Underutilized Business Zones (HUBZones)

Having these certifications is a great asset for any business entering the federal marketplace. However, again, you will come across a lot of time-consuming red tape trying to get officially certified as one of these entities.

The risk of delays, fines, and changes in policy apply to these certifications because the government is dead serious about not getting defrauded in their procurement process. 

B2G Marketing Materials

Marketing materials are just as essential in the federal marketplace as they are in the commercial sector.

For one thing, they provide contracting officers with extra assurance that your company does have the capabilities to fulfill the contract. Contracting officers will also actively look for small businesses to work with for simplified acquisition contracts and micro purchases. 

However, marketing to the government isn't the same as marketing in the commercial sector. You need to proper B2G marketing assets such as:

  • A capabilities statement
  • Dynamic Small Business Search (DSBS) Profile
  • Website

All of which, unless you have the skills to develop printed materials and websites, is going to cost you. Even then, if you are going to hire someone else to put together these assets, they need to be well versed in B2G marketing.

How many marketing agencies out there do you think have proven experience working with government contractors? 

Plus, it's not enough to just get registered in SAM, have a website and related marketing materials. You then have to learn how the whole process of federal procurement works, which takes us to our next topic.

Contracting Education

The next step, which is going to cost you in time (and money) is learning how to work with the federal government. The government doesn't post anywhere online for "here are the steps to get registered, submit a proper bid and conduct business with contracting officers."

That's up to you to do your own digging across the web. As far as publicly available resources for learning how to navigate the federal marketplace, there are Procurement Technical Assistance Centers. 

However, as with most "free" and publicly available options you might not get the one-on-one attention your business needs. 

As a government entity they need to remain as impartial as possible. They're here to help you get started, but they're not directly invested in your success as a business.

Avoiding Hidden Costs 

You can go into government contracting on your own, have these hidden costs sneak up on you, or just get out all these obstacles with US Federal Contractor Registration's Simplified Acquisition Program

In one convenient package, you get: 

If you're interested in government contracting, save yourself time and money to find out if there's a market for your business with a free qualification with a USFCR Registration & Contracting Specialist today. 

Schedule Your Contracting Qualification Now

Tags: Simplified Acquisition Program (SAP), Information for New Vendors

Hayden Johnson

Written by Hayden Johnson

Hayden is USFCR's Creative Copywriter. His goal is to help businesses navigate the federal marketplace with quick and simple guides.

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