Government contracting presents a world of potential for ambitious business owners seeking high-paying and consistent contract work. With federal and local governments serving as major buyers of goods and services, contractors who establish strong relationships and deliver exceptional services have the opportunity to thrive. However, breaking into government contracting can be challenging. In this blog, we’ll provide valuable insights and guidance on how to become a successful government contractor.
Understanding the Two Types of Government Contracting
As a new or aspiring government contractor, it’s crucial to grasp the two primary categories of government contracting. The first category involves directly applying for and winning contracts from government agencies, earning you the title of a “prime contractor.” While this option provides greater control, it is typically more challenging for newcomers to navigate.
Alternatively, subcontracting offers an effective pathway for newer businesses to enter the government contracting arena. By joining a prime contractor’s team and providing specialized services, you can gain hands-on experience working on government contracts. Subcontracting allows you to bypass complex bidding processes and establish essential knowledge that can pave the way for future prime contracting opportunities.
Qualifying and Registering as a Contractor
To be considered for prime contracting or subcontracting positions, you must meet legal requirements as a small business and register as a government contractor. It’s important to note that even subcontractors must be registered to be considered for a prime contractor’s team, even if they do not perceive themselves as contracting directly with the federal government.
To register as a government contractor, you’ll need to join the federal government’s System for Award Management (SAM) database. This comprehensive database is utilized by all government agencies to find contractors. Upon registration, you will receive a Unique Entity Identifier (UEI), which will be crucial for future contract applications. Additionally, you’ll need to identify your North American Industry Classification System (NAICS) code, which corresponds to the products or services your business provides. The U.S. Census Bureau can assist you in determining the appropriate code.
Empowering Small and Disadvantaged Businesses
If you operate a small business, there’s good news: the federal government prioritizes awarding a significant portion of their contracting dollars to small businesses. To be eligible for these reserved funds, you must meet specific size standards that vary based on your NAICS code. Meeting these requirements substantially increases your chances of securing federal contracts set aside for small businesses.
Furthermore, the government aims to allocate a certain percentage of contracts to businesses owned by women, minorities, service-disabled veterans, and participants in the HUBZone program. If your business falls into any of these categories, be sure to specify this information during registration through the SAM database. Doing so will enhance your opportunities to receive government contracts.
Navigating Federal Contracting Rules and Compliance
Contracting with the government involves adhering to numerous regulations and requirements, which can be one of the most challenging aspects of this field. While the specific rules vary depending on the type of contract, the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) standards apply to most federal agencies. It’s essential to understand these regulations, as well as any additional rules imposed by individual government organizations.
Maintaining compliance with federal contracting rules demands meticulous attention to detail. Your business operations, from timekeeping to accounting practices and more, will be subject to scrutiny. You may also need to sign a nondisclosure agreement regarding your work for the government. If you’re not prepared to dedicate the necessary time and effort to learn and adhere to these regulations, government contracting may not be the right choice for your business.
Fortunately, you can seek professional assistance to ensure ongoing compliance with accounting practices that meet FAR and Defense Contract Audit Agency (DCAA) requirements.
Partnering with an experienced accountant, such as Peter Witts CPA, who specializes in working with government contractors, can provide you with the confidence and peace of mind you need to navigate compliant accounting practices effectively. Contact us today to learn how we can support your journey into government contracting and streamline your accounting processes, leaving you free to focus on securing lucrative government contracts.