Many commercial enterprises are already considering offering their services to federal government agencies. If you’re looking to expand your business, becoming a government contractor is a viable choice, no matter what field you work in.
Including government agencies in your client list can be a powerful tool for attracting new customers. And for any reason, you might be wondering about the most accessible government contracts to win. In this article, we provide a complete guide to winning government contracts.
What is a government contract?
A government contract is an arrangement where a contracting agency and a person or company agree to purchase, sell, or use personal property or nonpersonal services. The government contract excludes all contracts in which the parties are in an employment or governmental connection.
A contract’s primary function is to define the numerous legal duties that each party owes to the other party and create new connections. However, these contracts are helpful not only for government agencies. It also opens federal business opportunities for small businesses.
As a government contractor, you have the chance to attract new clients by securing these contracts. You may also gain credibility and new business by including government bodies in your customer list.
Different types of government contracts
There are many distinct types of government contracts, each of which has a particular set of requirements and a varied level of risk for the contractor.
There are two main categories for government contracts: prime contract and subcontract.
A prime contract is established between a client and a contractor who manages the whole supply chain on their behalf. While the prime contract is direct with the federal government, subcontracts do not. The prime contractor is in charge of overseeing and bridging any subcontracts to the government agencies.
Having a clear idea of the different government contracts you’re bidding on can help you know what to expect, what risks you’re taking, and how to create a more compelling and competitive proposal.
Here are the other common types of contracts you’ll ever come across:
The fixed-price contract provides products or services for a set price that isn’t susceptible to change based on the contractor’s actual expenditures on the project. The administrative burden associated with this form of contract is minimal.
Fixed-price federal contracts require sellers to take on more risk. Thus they may give a price range instead of a single dollar number.
Cost reimbursement contract
Cost reimbursement is a contract between the owner and the contractor in a construction project that assures the contractor will be reimbursed for whatever costs they incur while working on the project.
All rates and percentages and all authorized expenses and incurred costs are specified in a cost-plus contract. Also, the agreement may put a limit on the selling price. Any expenditure in excess of that threshold necessitates the consent of the buyer.
Time and materials contract
As part of a time and materials agreement, a buyer pays a contractor for the time and resources to execute a project. This contract is applicable when estimating the scope or duration of the task or anticipating the price, which is impossible at the time of contracting.
Unilateral contracts are contracts in which one party commits to pay another for a specific action are known as unilateral contracts. When the offeror has an open request that someone can react to, fulfill the act, and then collect the cash, these contracts are most commonly used.
In a unilateral contract, the offeror agrees to pay for defined acts that can be open requests, random or optional for other parties involved.
Labor hour contract
This contract is a variation of the time and materials. The contractor does not provide materials to differentiate this form of payment from traditional Time and Materials contracts.
Labor hour contracts are beneficial when it is impossible to determine the scope or length of the job or anticipate costs with any acceptable degree of certainty when placing the contract.
Indefinite Delivery and Indefinite Quantity contract
Indefinite delivery and indefinite quantity contracts provide a limitless supply of services. These arrangements are applicable when GSA cannot predict the exact quantities of products or services that the government will demand throughout a contract.
GSA Schedule contract
With the GSA Schedule, the government has access to millions of commercial items and services at reasonable prices. GSA contract is also known as the Federal Supply Schedule and the Multiple Award Schedule (MAS).
Government contracting quick FAQs
There are a lot of questions about federal contracting opportunities and the industry as a whole, which is why some people have them.
What is the best way to find open government contracts?
Since we are in a digital era, government activities are now available online. Visit SAM.gov to search for the federal contracts you need.
Are government contracts profitable?
If you wonder if government contracting is profitable, the answer is yes. In fact, it is also lucrative for small businesses.
Spending money on products and services is a massive problem for the United States government, one of the largest in the world. It only means that contracting is very in demand in the US.
Is government contracting easy?
The process depends on what type of contract you need. You must also expect a lot of paper works during the government process. However, here are some valuable tips to make government contracting easier:
- Become well-versed in your municipality’s procurement procedures.
- Your local PTAC can help you navigate the contracting process.
- Always search for potential contract chances with your local government.
How to find small business contractors?
To identify federal contracts to bid on, you can use a variety of databases. Finding contractors for government entities commonly relies on these four databases:
A. Subcontracting opportunities
The SubNet is a directory of subcontracting possibilities provided by large contractors for small enterprises. Prime contractors listed in the listing must have plans and goals to work with small businesses on subcontracting.
B. Dynamic Small Business Search
Searching for small company contractors for upcoming contracts can be done quickly and easily with the help of the Dynamic Small Business Search (DSBS). DSBS can also be used by small businesses to discover other small firms with which they can collaborate.
C. Contract Opportunities
SAM.gov created a list of available federal contracting opportunities for small businesses. The national government system mandated that all contracts exceeding $25,000 be advertised through SAM.
D. GSA Schedules
US General Services Administration (GSA) is a federal organization that serves as a channel between government buyers and contractors. If you want to sell to the government, winning federal contracts with GSA is an excellent place to begin.
Who are the prime contractors?
Prime contractors are those who interact directly with the government. They manage and oversee subcontractors and ensure that the work is executed following specifications.
What are the pros and cons of federal government contracts?
Just like any other business, government contracting has its benefits and drawbacks. Here are some of them:
Advantages of government contracting:
- Government contracting has the potential to make massive profits.
- If you meet or surpass the expectations of the government agency for which you are working, there is a potential for a contract extension.
- More accessible to small businesses.
Disadvantages of government contracting:
- To become a government contractor, you’ll need to fill out many papers.
- Large profits mean increased accountability and demands.
- The government can decide to terminate collaborating with your company at any time.
Federal contracting and small business administrations
Founded in 1953, the Small Business Administration (SBA) is one government agency that serves as an independent federal agency. SBA offers help, counsel, and assist the interests of small businesses and the general economy of the United States.
Because of the long-term nature of federal government contracts, small businesses find them to be a valuable source of long-term revenue. A small firm that secures a government contract might expect to receive a lot of income.
Easiest government contracts to win
The most straightforward government contract to win is a GSA Schedule contract. This contract is a long-term government-wide contract that connects federal agencies to government contractors who offer goods and services.
Getting on the GSA, or securing a contract with the GSA, signifies that you’ve been granted permission to conduct commercial business with the government.
Best practices to win government contracts
There are a lot of practices to win a contract proposal. However, you may only need a few practical approaches to complete contract requirements and win it. Here are the best helpful tips for winning government contracts:
Create a winning proposal
A correct and professional proposal is what the government thinks of your group when they see it for the first time.
A winning proposal must outline how you intend to accomplish the project and the extent of your services. Exhibiting excellent past performance should be a priority. Do not hesitate to share your past experience working for a government agency.
When creating a contract proposal, demonstrate that you are well-versed in the project’s milestones. Do not submit a proposal full of mistakes, typos, and grammatical flaws. Having a proposal writer familiar with the agency’s evaluation process is also necessary.
Let the government know that you and your organization are confident in accomplishing the project milestones on time.
Do not bid on jobs you can’t finish
Small business owners can be tempted to bid on as many jobs as possible. As a result, your company’s reputation will boost if you bid on work that you can’t finish. You may not be able to secure new agreements in the future if you don’t complete your job on time.
When you find a job, you don’t have to put in a bid on it immediately. Winning projects that your organization is ill-equipped to handle can be as expensive as losing them.
At first, bid on smaller jobs that are within your capabilities. When you already have a track record of success from your past performance and are confident that you can manage more, that’s the time to bid on larger projects.
Look into opportunities for subcontracting
Subcontractors are helpful for any huge and small business administration. Subcontractors provide resources if a business needs additional expertise.
Having a solid reputation, consistent work history, and contacts that can lead to new chances are advantages of working with contractors who have already established themselves in government employment.
Additionally, working with an established firm can teach you about government contracting and give you insider information that can help you secure your federal contracts in the future.
Hiring subcontractors for your specified short-term projects may also increase your company’s productivity and efficiency.