Editor's Note: This post was originally published in April 2021 and has been updated for accuracy and comprehensiveness.
Federal contracting is an excellent way for businesses to open up a new stream of revenue. That's because as a customer, the federal government is one who:
- Actively looks to work with small businesses
- Is guaranteed to have the funds to pay you
- Spends more in times of recession
- Wants to build long-term working relationships with reliable vendors
So how do you even approach working with the largest buyer of goods and services in the world?
That's what this blog post is going to cover.
Here, we'll go over:
- Registration in SAM
- Small Business Set-Asides
- Opportunity Research
- Past Performance
- Building Relationships
Plus, at the end of this post is a FREE downloadable guide that will teach you the fast and easy way to get started in federal contracting.
Registration in SAM
Federal contracts are funded by the American taxpayer. With that in mind, there's a lot of accountability needed for how this money is spent and on whom it's being spent.
To keep track of all of its vendors, all federal contractors are required to register in the System for Award Management, commonly known as SAM.
SAM is a database containing information on all businesses working with the federal government with information such as location, small business status, business type (determined by their North American Industry Classification System or NAICS code), and much more.
The important thing you need to know now is that without a registration in SAM, you cannot bid on and perform government contracts.
It's as simple as that.
So how does one get registered in SAM?
There are two main ways you can get your business in compliance for federal contracts:
- Registering yourself in SAM
- Outsourcing the process to a third-party
Registering Yourself in SAM
Registering your own business in SAM is free... in the same way that doing your own taxes is free. Before proceeding, it's best to read up on the required information that you need to submit for the registration, how to properly format the mandatory notarized letter, and make sure every detail is accurate.
That's because, if there are any errors on your SAM registration, you may face:
- Rejection, resulting in costly delays
- Delays in payments on work that you have already performed
- Fines for misrepresenting your company (even if it was unintentional)
If you do take the DIY route for registering in SAM, make sure you do your homework and you know what you're doing.
Outsourcing the Process to a Third-Party
As mentioned earlier, you can either handle your own business's taxes or just hire a professional to take care of it for you.
The same principle applies to getting registered in SAM.
When you work with a third-party registration firm, such as US Federal Contractor Registration (USFCR), you're guaranteed fast and accurate compliance for government contracts.
USFCR's SAM Registration Service provides benefits such as:
- Professional and timely registration in SAM
- Registration maintenance (in case changes in compliance requirements or changes in your business occur)
- Set-aside qualification
- Dynamic Small Business Search (DSBS) optimization
- Yearlong case manager support
Small Business Set-Asides
Another important factor to consider when looking to work with the federal government is small business set-asides.
What is a small business?
This might seem like a basic question with an arbitrary answer. However, before we get into small business set-asides, we need to cover who the federal government considers being a small business.
Luckily, for federal contractors, the government's answer has specific requirements.
First, your small business status is decided by your industry which is determined by your primary North American Industry Classification System (NAICS) code.
There's a NAICS code for everything, ranging from tortilla manufacturing (311830) to uranium mining (212291).
Then depending on your NAICS code, your small business status is determined by either your:
- Employee headcount
- Yearly revenue
To get started on determining your small business status, you can check out this chart created by the Small Business Administration (SBA).
What are small business set-asides?
Every year, the federal government spends over $600 billion on contracts. By law (the Federal Acquisition Regulation or FAR), they have to try to spend at least 23% of that sum on small businesses.
Then, there are spending goals for specific types of small businesses which include:
- Women-Owned Small Businesses (WOSBs)
- Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)
- Historically Underutilized Business Zone (HUBZone) Small businesses
- Small Businesses enrolled in the 8(a) Program
What are the benefits of these set-asides?
In the most basic sense, being registered as a small business and specifically, one of the groups above boosts your chances of winning a federal contract.
To make sure their annual contracting budget gets distributed to small businesses and various set-asides, the government employs three methods.
- Creating exclusive bidding opportunities (for example an HVAC contract that can only be bid on by SDVOSBs)
- An increased incentive for agencies to hire set-aside designated businesses to reach their spending goals
- Increase incentives for prime contractors to work with small business subcontractors
A SAM registration will get you in compliance for federal contracts, but registering for a federal set-aside can greatly improve your chances of winning.
Finding opportunities to bid on is arguably the most important skill you can have as a federal contractor. Without knowing how to use existing systems to find a job that your business can perform, and perform well on, you won't go anywhere in this sector.
As mentioned earlier, acting as a database for all federal contractors is just one of the many functions of SAM.
It also works as a search portal for government contractors to find opportunities.
To find out how you can use SAM.gov to find contracts, you can use this helpful guide we made.
The Advanced Procurement Portal (APP)
USFCR offers its own contract search platform that can also help you gather data on potential buyers, competitors, and manage your contacts called the Advanced Procurement Portal (APP).
For the past few years, SAM has been integrating several government procurement-related database into one platform. APP already has these databases synced into it, plus it was designed for maximum ease of use.
Plus, with APP comes with a learning center with contracting templates to help you learn the federal sector from the ground up.
Past performance is one of the most important factors that can make or break your endeavor in federal contracting.
So what exactly is it?
In short, your past performance rating is like your report card for how well you did on a government contract. Like a report card, the better grades (or rating) you get, the more opportunities will open up down the line.
The government does this so that they can keep track of reliable vendors, but also avoid vendors who are likely to fail on a contract.
One of the paradoxes of past performance is that in order to boost your chances of winning a contract, you need past performance; however, in order to get past performance, you need to win a contract.
How does one work their way around this predicament?
One of the most common routes, especially for small businesses, is subcontracting.
As mentioned before, the government sets out to spend a predetermined sum of its contracting budget on small businesses. One of the methods they employ is setting small business subcontracting goals for larger contracts.
This means that prime contractors, much like federal agencies themselves, have an incentive/requirement to work with small businesses.
Besides getting work for your business, one of the benefits of subcontracting is that it counts toward your past performance rating with the federal government.
Plus, there are fewer administrative responsibilities since these matters are handled between you and the prime contractor, instead of a federal agency.
Federal agencies want to build long-lasting working relationships with reliable vendors. As a new vendor, it is critical that you are proactive with building lines of trust and familiarity with contracting officers.
Being timely, knowledgeable, and building your network is just as important in the federal space as they are in working with the public sector.
What's also worth noting is that much like the private sector, the federal government will host events to engage with potential business partners. USFCR client Pacific Continental Textiles Inc. for example, attended a Defense Logistics Agency (DLA) Joint Advanced Planning Brief for Industry meeting to meet potential buyers.
Several months later, they won their first contract valued at $166,000.
Technical aspects such as registrations and searching through databases are important for government contractors.
However, it is important to never overlook the power of building relationships with potential buyers and prime contractors.
FREE Guide to Getting Started in Government Contracting
In this blog post, we took a general overview of how you can get the best possible start in government contracting.
However, if you want to take it a step further, and get a more detailed, step-by-step guide for getting started, we have a FREE guide for you.
Most government contracting guides will give you just the basics such as filling out the paperwork and submitting bids.
USFCR's Practical Guide to Getting Started in Government Contracting covers the basics but also gives you actionable strategies for building a new and reliable source of revenue.
Originally published Apr 23, 2021 10:35:04 AM, updated August 23, 2022