The US government is one of the world’s largest buyers of goods and services. This is why being part of the government contracting industry is a very sought out deal. There are numerous ways to get your foot in the world of Government Contracting. You can start either as a main contractor or a sub-contractor for one. What is important is that this industry requires you to do your research and your diligence and follow myriad rules and regulations.

To help you out, here are five mistakes you should avoid.

① Not Understanding the Correct Codes

When you want to be a part of government contracting, you have to remember that you are the ones trying to make a sale to the government agency. This means you have to know how to make yourself available and visible.

Knowing the use of the Product Service Code (PSC) and the  North American Industry Classification System (NAICS) is key for new players in government contracting. Government agencies use these as a taxonomy to help them sort through companies.

Determining the correct and most appropriate one for you will increase your visibility to government agencies.

You can always head on to the NAICS website and the PSC website they have tools to help with your classification and codes.

② Immediately Setting Up as a Prime Contractor

Do you know the regulations and rules you must comply with before and during the contract? Have you researched what your target government agency wants? Do you have enough people and resources to meet their needs? Is your IT infrastructure prepared for scrutiny? Is your accounting ready? If you have even a bit of doubt on any of these questions, you may want to consider being a subcontractor first.

Start small and learn from your prime contractor. Be the best you can be in your specialty. This way, you can use your past job experiences to negotiate with a prime contractor. Once you’ve done with your subcontract, you now have the experience you can flaunt to be a prime contractor. 

Always look out for these in your contract with a prime contractor:

➡️  Direct Customer Relations. Are you getting some contact with the government agency when you go into this subcontract? Will it be through email, calls, or personal meetings, and how frequent would it be? Your aim here is to build your own network as you build your reputation.

➡️  Intellectual Property Ownership. If the contract involves new creations– objects, software, business, platforms, etc.- always discuss the IP ownership before you start a contract.

③ Thinking That The Industry is a Winner-Take-All Deal.

We all want excellence in our field. Of course, you want your business to be the best in your niche. But when starting in federal contracting, especially as a subcontractor, it would be best to collaborate and partner up with your competitors. 

The goal here is to increase your network. The more teams you work with, the more connections you gain. Connections that can lead to better and more contracts in the future. Be friendly, offer your best, and work with others. Because in the future, you want to be the prime contractor too.

④ Neglecting to Plan Your Long-Term Goals

It’s tempting to simply jump right into government contracting when you think you’re ready– you have your vision, your skills, and your niche. But stop to think about your pipeline to ensure continued success. 

Strategize, make decisions toward your long-term goals and make your business stronger. Continue to research and learn from your past work. Choose your objectives and ensure that they are attainable and realistic. There are tools that you can use to analyze where your company is. Conducting a SOAR, SWOT, or even a NOISE analysis can help you know where you are, where you want to go, and if and when you will get there.

⑤ Handling Every Aspect On Your Own

Federal Contracting is very different from doing business with the public or with private companies. The rules, regulations, the security, and complexity are different. 

Consider the accounting process. On one side, you deal with your people’s benefits, pay, taxes, etc. While here in government contracting, the main concern will be costs and their differences. The accounting part of government contracting can be very complex and daunting, even for experienced accountants. 

Here’s where Peter Witts CPA PC can help. We’ve been in the government contract accounting industry for more than 20 years. We keep our tools and knowledge up to date. Letting us help you with your government contract accounting allows you to focus on the work and lets us maximize your efficiency to get the most out of your government contract.