Building Up the Government

Government contracting has long been a positive revenue opportunity for small businesses eager to grow, and the construction industry continues to be one of the federal government’s top five spending categories.

With the GSA Public Buildings Service announcement that every federal building in the nation – roughly 9,000 – must meet LEED Silver standards by 2017 as well as the new Executive Order 13514 requiring at least 95 percent of the government’s future acquisitions to be green and sustainable, there are now tre­mendous government contracting opportunities for construction companies.

In today’s economy, the federal government is one of the few organizations spending large amounts of money – more than $500 billion was spent last year in procurement. Of those funds, 23 percent of federal contracts are earmarked for small businesses. This means more than $96 Billion was awarded to small business federal government contractors in 2009.  Federal contracting, as a result, is an important avenue of growth for many construction firms to consider. However, too few small businesses actually take advantage of this opportunity despite a significant percentage of money being allocated for construction projects through federal or state procurement.

According to active construction contractors who participated in a recent American Express OPEN survey, they take an average of 1.6 years to win their first federal contract, submit an average of more than seven federal prime contracting bids and win almost four contracts per year. The returns are encouraging – 64 percent of construction firms earned more than $1 million in sales in 2009 (43 percent earning more than $5 million), and federal contracts accounted for 36 percent of their revenues.

Here’s what business owners in construction need to know to take advantage of the growth opportunities in government contracting.

Get ‘Contract Ready’

When dealing with the government, a handful of numbers and industry codes are critical to identifying a company. A good starting point is the Data Universal Numbering System number, which the government uses to identify all contractors.

A federal tax ID number – known as an Employer Identification Number or Taxpayer Identification Number – also is needed. One can be acquired through the Internal Revenue Service using Form SS-4.

To classify potential contractors by their line of business, the government relies on both the North American Industry Classification System and Standard Industrial Classification codes.

Finally, contractors should ensure they have accurate company financial routing information for their businesses, as the government prefers to pay invoices by electronic funds transfer. With these basics, companies have everything they need to create a profile on the Central Contractor Registration (CCR) database, www.ccr.gov.

The CCR database is where all government agencies and prime contractors go when they’re looking for potential vendors. While entering data, contractors should keep in mind that their profile is their company’s introduction to potential clients, so message clarity is important. Also it’s important to understand that the federal government relies on your point of contact (POC) information for viable communication with your firm. Many small businesses make the mistake of having their marketing representative or executive assistant as the primary POC. Make sure you, the business owner, are the primary POC.

Certify Your Business 

The Small Business Act authorizes contracting officers to set aside certain requirements for competition solely amongst certain small business groups. The federal government is obligated to award a certain percentage of its contracts to various underrepresented and disadvantaged groups.

Visit the Small Business Administration (SBA) web site, www.sba.gov, to see if your business qualifies for any of its small business certifications. The SBA has two certification programs – the 8(a) Business Development program and the HUB-Zone Program. The 8(a) program is a nine-year business development program designed to help socially and economically disadvantaged firms secure federal contracts. HUB-Zone is designed to help firms located in historically underutilized business zones or areas that are impoverished obtain federal contracting opportunities. Both programs help small businesses stand out from competitors.

Veteran-owned businesses, service-disabled veteran-owned businesses and women-owned businesses also have an edge in government contracting. Among these groups, women business owners particularly stand out, as they won only 3.68 percent of all federal contracts in 2009 despite the government’s procurement goal to award 5 percent of all contracts to women-owned businesses. The new Women’s Procurement Program went into effect on Feb. 4, 2011, to expand federal contracting opportunities for women-owned small businesses and to assist agencies in achieving their women-owned small business goals. More information can be found at www.sba.gov/wosb.

Consider Subcontracts

The government often relies on established relationships when selecting general contractors so first-time bidders can sometimes be at a disadvantage. Fortunately, large construction projects often depend on a host of subcontractors, which could be a small company’s ticket in. The experience gained as a subcontractor will serve companies well as they compete for prime contracts in the future. In some cases, 8(a) certified firms may obtain an 8(a) set aside construction contract and are able to subcontract up to 85 percent of the bid to a viable teaming partner or a larger firm. This gives the 8(a) firm an advantage in subcontracting opportunities and allows them to enter the federal market easier, thus building past performance for the small firm.

To learn about potential subcontracting opportunities with larger firms who have already won contracts, keep an eye out when perusing Federal Business Opportunities (www.fbo.gov). Contracts awarded to large firms for more than $550,000 in products and services and $1 million in construction should have a small business subcontracting plan.

Team Up with Others

Teaming up with other business owners to jointly bid on federal contracts can lead to greater contracting success and help drive revenue. According to American Express OPEN’s survey of active small business contractors, two-thirds (68 percent) have pursued teaming opportunities have exceeded $1 million in lifetime federal contracts, and 38 percent have exceeded $10 million. The study also found that compared to active contractors overall, small business owners who employ teaming or subcontracting strategies win 50 percent more contracts.

Business owners can search for potential teaming partners based on industry, geography and other specific attributes by registering on www.TeamingUSA.com.

Many small business owners believe that landing government contracts is too daunting, or somehow out of their reach. By tackling the process with a straightforward approach, they will find the skills they’ve developed to grow their businesses in the commercial sector —commitment, hard work and strategic networking — are just as valid in the government sector. Companies should put their strengths to work and take advantage of the sector that can weather any economic downturn.

Current Issue

Check out our latest Edition!

 

alan jim blog ct

Contact Us

Construction Today Magazine
150 N. Michigan Ave., Suite 900
Chicago, IL 60601

  312.676.1100
  312.676.1101

Click here for a full list of contacts.

Latest Edition

Spread The Love

Back To Top