Government contracts are a great way to expand your small business and introduce a new source of income. As a client, you can’t find many better ones than the US government; you know they’ll always be in business, they always have the funds to pay your invoices, and they tend to spend more. The tradeoff to this is that breaking into the game can be quite difficult. If you’re looking to get started as a government contractor, keep reading to get a few tips.
Registering with SAM
In order to start working for Uncle Sam, you need to register with SAM–that is, the System for Award Management. All government contractors must be registered in this database if you want to be able to bid on and fulfill government contracts. Registering on SAM is free; but it’s free in the same way that filing your own taxes is free. In other words, you should really pay a professional to help you with your SAM registration.
You’ll need to understand all of the required information for your registration, how to properly format the mandatory notarized letter, and ensure that every detail is accurate. Any errors on your SAM registration could result in rejection, delays, and/or fines. Investing in professional guidance can save you a lot of headaches and end up being a more cost-effective solution. You’ll avoid unnecessary fines and get launched in your government contracting career even faster.
Finding Opportunities to Bid On
Once you’re fully registered in SAM, you’re ready to start bidding on contracts. Being able to find and place bids on government contracts is arguably one of your most valuable skills as a contractor, but there is certainly a learning curve to using the government’s bidding system. The federal government uses their own bidding system known as Beta SAM. This works as a search portal for government contractors to find opportunities they want to bid on.
If you’ve ever worked on contracting websites like Fiverr and Upwork, Beta SAM has a similar purpose, but is exclusively for US government contracts. You’ll want to get familiar with searching and bidding in Beta SAM so that you can begin finding appropriate contracts for your business as soon as possible.
Subcontracting with Other Businesses
Getting your foot in the door for general contracting with the government is quite difficult. Beta SAM assigns you a past performance rating, which is like a report card. Your past performance is a serious consideration when agencies are looking at bids; typically, they won’t hire someone without a performance history, but you can’t get a performance history without getting a contract. The best way to overcome this Catch 22 is to start out with subcontracting opportunities.
The government has what are known as “small business set-asides,” which is effectively a portion of their contracting budget that they commit to working with small businesses. One of the ways that they fulfill these set-asides is by setting small business subcontracting goals on larger contracts.
This means that the primary contractors on a government contract has an incentive to subcontract out some of their work to smaller businesses; if they can help the government meet their small business set-asides, that’s appealing to the agency reviewing their bid.
As a new government contractor, subcontracting with a prime contractor can be your best introduction into the industry. For one thing, it will count towards your past performance rating on Beta SAM, making you eligible for larger contracts in the future. And for another, there are fewer administrative duties that you have to worry about, allowing you to ease into the world of government contracting.
Building Relationships with Officers
Networking is a key skill for any business owner, and that doesn’t change when stepping into the government sector. It’s critical that you make efforts to build lines of trust and familiarity with contracting officers of various government agencies, as well as prime contractors that can provide you with those vital subcontracting opportunities as you get started. Look into relevant meetings and conventions that could benefit you and help you grow your business in the realm of government contracting.
Ensuring Compliance with Accounting
Finally, it’s extremely important to know that government agencies have strict compliance requirements pertaining to how their contractors maintain their books and file financial reports. You should become intimately familiar with DCAA and FAR requirements for accounting practices and ensure that you’re compliant before you even begin to bid on government contracts.
If you’re unsure how to get started with your first government contract, or need DCAA-compliant accounting services, contact Peter Witts CPA today. We specialize in working with government contractors and have the knowledge and experience you need to begin a successful career in government contracting.