Small Business Government Contracts

The Simplified Guide

A simple, easy to use small business guide to winning government contracts and sustaining growth in the marketplace!

In today’s government market obtaining new opportunity is more difficult than it has ever been. Small businesses can no longer afford to sit back passively and hope the government comes a knocking.

Consequently, with the recent panel recommendations to Congress, it will prove even harder for the small business to participate and obtain a government contract. And let’s face it, the information that is currently available only confuses a person more than it helps.

This small business guide provides the seller’s perspective to government contracting success. More importantly, it contains Tips, Tricks & Techniques proven to improve productivity and increase exposure for potential government contracts.

From profiles, increasing productivity, to limiting contract competition – we’ve got you covered! Regardless of your experience level this 16 page guide has something for you!

Browse over the guide first to explore what’s inside. If you like it, you can download the PDF for reference or to read it at a later date. Simply browse and jump to different guide chapters using the table of contents listed below.

Chapter 1

Chapter 1: Getting Prepared for Government Contracts

The Right Way to Prepare for the Government

Experience Level: Novice - Intermediate

Understanding classification systems is a big part of being prepared for government contracts. It is with classifications that a small business gains exposure to potential buyers.

Unfortunately, a lack of knowledge, and a lack of understanding of these classification systems cost many small businesses time, money, situational awareness and visibility.

Contracting Codes and Classification Systems tend to be very broad in terms of industry types. Because of this it is possible to find yourself adding more and more codes. 

Therefore it is important to discuss these codes in laymen’s terms. That is to say, how a seller views and uses them.

Government Contracting Codes and Classifications

NAICS Codes

The Government’s way of grouping industries through the North American Industry Classification System tends to be very broad in nature. Thereby thinking in terms of capabilities will serve the small business better.

As an example; A machine shop’s primary NAICS is 332710. But they may want to include 332721, or 332722 if they do precision turning.

Federal Supply Codes

Next we have Federal Supply codes. These are made up of two components; a Federal Supply Group (the first two digits), and a Federal Supply Class (the second two digits). 

As a result, the FSC is a 4 digit number and is used heavily throughout the Defense Logistics Agency (DLA). Out of all the codes and classifications, FSC best describes what you make or sell.

On the other hand, FBOwill use Classification Codes as a means to search for government contracts. Essentially, this is nothing more than a search using the Federal Supply Group (the first 2 digits of the FSC.) Although this type of search it is a bit broader, it is still more accurate than using NAICS.

Product Service Codes (PSC)

Product Service Codes cover three categories; R&D, services, and products. Although products appear as a category of the PSC, they are usually supplied by the Government. A good example of this would be motor rewinding. The motors are supplied by the Government for services to be performed.

NAICS codes describe “HOW” something is being used, whereas PSC’s describe “WHAT” is being purchased.

Small Business Certifications for Government Contracts

Small Business certifications are more critical today than ever before. Gone are the days of simply self certifying in the System for Award Management (SAM). 

Currently only a Small Business designation can self-certify using SAM. Although that too could change in the future. 

Consequently, no certification means no participation in Small Business Contracting Programs. Therefore we have included this section on proper certification.

Women Owned Small Business (WOSB) Contracts

There was a time when a Women Owned Small Business (WOSB) could simply register in SAM. Nevertheless, that is no longer the case. Nowadays, to participate in the Women Owned Small Business Program you must self-certify through the Small Business Administration (SBA) SBA.

Soon the SBA will require  certification using third-party authorization. (Watch for these changes in News & Alerts)

Veteran Owned Small Business (VOSB / DVOSB) Contracts

Veteran-Owned Small Business programs were created to expand the Veteran contracting program for the Veterans Administration (VA) procurements, and is obtain through the Vets First Program

Upon approval, the Program Participant has documented proof of eligibility. This gives confidence to VA that set-asides are being awarded to legitimate firms owned and controlled by Veterans or Service-Connected Disabled Veterans.

Annually, this Department spends over $3 Billion with eligible Veteran-Owned Small Businesses. That’s a lot of opportunity.

Hub Zone Small Business Contracts

Being perhaps one of our favorite small business designations, the Historically Underutilized Business Zone (Hub Zone) helps small businesses in urban and rural communities gain preferential access to government contracts.

Essentially what this means is that a HubZone company enjoys a 10% price preference. But only if competing in the open market or against a total small business concern.

As an example; A Hub Zone’s quoted price is $100 per unit, the Government considers it to be $90 per unit. Used correctly this small business certification can be a great advantage.

The JCP Certification

The most overlooked certification in government has to be the JCP (Joint Certification Program), or DD Form 2345. As much as 85% of the part and product markets require it. 

Yet those selling parts, products and/or equipment through government contracts, the need is often not known. So what is the JCP?

For clarification, the JCP certification is a simple form you fill out that will grant you access to technical dataSo if you are seeing the phrase ‘export controlled data’ it is crucial that you obtain your JCP.

Without this certification you can only view what the government deems a public distribution data. Consequently causing many small businesses to miss out on a lot of government contracts.

Government Website Registrations

Now you need to register on the various government websites to participate in these contracts. Being armed with your NAICS and FSC, you can begin with SAM. Paying special attention when registering for a place that references the JCP.

FedBizOpps (FBO) is a government website for Federal and Military bid opportunities, as well as access to the Federal Procurement Data System (FPDS). The FPDS contains government data information on procurement activities.

Defense Logistics Agency’s (DLA) bid board, the Defense Internet Bid Board System (DIBBS) is the next site to register for. It too, has an award system called Federal Logistics Information System (FLIS).

DIBBS requires two website registrations; one being for the site called vendor registration, allowing you to access site features. The second site registration is for c-Folders; allowing access to our technical data – it is important to enter the JCP number here.

(More on Government Contracting for the Small Business)

Chapter 2

Chapter 1: Getting Prepared for Government Contracts

The Right Way to Prepare for the Government

Experience Level: Novice - Intermediate

Understanding classification systems is a big part of being prepared for government contracts. It is with classifications that a small business gains exposure to potential buyers.

Unfortunately, a lack of knowledge, and a lack of understanding of these classification systems cost many small businesses time, money, situational awareness and visibility.

Contracting Codes and Classification Systems tend to be very broad in terms of industry types. Because of this it is possible to find yourself adding more and more codes. 

Therefore it is important to discuss these codes in laymen’s terms. That is to say, how a seller views and uses them.

Government Contracting Codes and Classifications

NAICS Codes

The Government’s way of grouping industries through the North American Industry Classification System tends to be very broad in nature. Thereby thinking in terms of capabilities will serve the small business better.

As an example; A machine shop’s primary NAICS is 332710. But they may want to include 332721, or 332722 if they do precision turning.

Federal Supply Codes

Next we have Federal Supply codes. These are made up of two components; a Federal Supply Group (the first two digits), and a Federal Supply Class (the second two digits). 

As a result, the FSC is a 4 digit number and is used heavily throughout the Defense Logistics Agency (DLA). Out of all the codes and classifications, FSC best describes what you make or sell.

On the other hand, FBOwill use Classification Codes as a means to search for government contracts. Essentially, this is nothing more than a search using the Federal Supply Group (the first 2 digits of the FSC.) Although this type of search it is a bit broader, it is still more accurate than using NAICS.

Product Service Codes (PSC)

Product Service Codes cover three categories; R&D, services, and products. Although products appear as a category of the PSC, they are usually supplied by the Government. A good example of this would be motor rewinding. The motors are supplied by the Government for services to be performed.

NAICS codes describe “HOW” something is being used, whereas PSC’s describe “WHAT” is being purchased.

Small Business Certifications for Government Contracts

Small Business certifications are more critical today than ever before. Gone are the days of simply self certifying in the System for Award Management (SAM). 

Currently only a Small Business designation can self-certify using SAM. Although that too could change in the future. 

Consequently, no certification means no participation in Small Business Contracting Programs. Therefore we have included this section on proper certification.

Women Owned Small Business (WOSB) Contracts

There was a time when a Women Owned Small Business (WOSB) could simply register in SAM. Nevertheless, that is no longer the case. Nowadays, to participate in the Women Owned Small Business Program you must self-certify through the Small Business Administration (SBA) SBA.

Soon the SBA will require  certification using third-party authorization. (Watch for these changes in News & Alerts)

Veteran Owned Small Business (VOSB / DVOSB) Contracts

Veteran-Owned Small Business programs were created to expand the Veteran contracting program for the Veterans Administration (VA) procurements, and is obtain through the Vets First Program

Upon approval, the Program Participant has documented proof of eligibility. This gives confidence to VA that set-asides are being awarded to legitimate firms owned and controlled by Veterans or Service-Connected Disabled Veterans.

Annually, this Department spends over $3 Billion with eligible Veteran-Owned Small Businesses. That’s a lot of opportunity.

Hub Zone Small Business Contracts

Being perhaps one of our favorite small business designations, the Historically Underutilized Business Zone (Hub Zone) helps small businesses in urban and rural communities gain preferential access to government contracts.

Essentially what this means is that a HubZone company enjoys a 10% price preference. But only if competing in the open market or against a total small business concern.

As an example; A Hub Zone’s quoted price is $100 per unit, the Government considers it to be $90 per unit. Used correctly this small business certification can be a great advantage.

The JCP Certification

The most overlooked certification in government has to be the JCP (Joint Certification Program), or DD Form 2345. As much as 85% of the part and product markets require it. 

Yet those selling parts, products and/or equipment through government contracts, the need is often not known. So what is the JCP?

For clarification, the JCP certification is a simple form you fill out that will grant you access to technical dataSo if you are seeing the phrase ‘export controlled data’ it is crucial that you obtain your JCP.

Without this certification you can only view what the government deems a public distribution data. Consequently causing many small businesses to miss out on a lot of government contracts.

Government Website Registrations

Now you need to register on the various government websites to participate in these contracts. Being armed with your NAICS and FSC, you can begin with SAM. Paying special attention when registering for a place that references the JCP.

FedBizOpps (FBO) is a government website for Federal and Military bid opportunities, as well as access to the Federal Procurement Data System (FPDS). The FPDS contains government data information on procurement activities.

Defense Logistics Agency’s (DLA) bid board, the Defense Internet Bid Board System (DIBBS) is the next site to register for. It too, has an award system called Federal Logistics Information System (FLIS).

DIBBS requires two website registrations; one being for the site called vendor registration, allowing you to access site features. The second site registration is for c-Folders; allowing access to our technical data – it is important to enter the JCP number here.

(More on Government Contracting for the Small Business)

Chapter 3

Chapter 3: Managing a Government Contract

Effective Contract Management

Experience Level: Intermediate

Having a contract production schedule is the perfect way to see to it that we make delivery, especially when we have multiple contracts that we are managing. By setting up a simple Excel spreadsheet, your contract manager can easily track status updates, total contract values, priority status and much more!
 
Think about the areas that are important to you and what type of reporting information you want. 
 
•       Contract #
•       Work order #
•       Description
•       Part #
•       Value
•       Priority level
•       Due Date
•       Ship By
•       Status (shipped – billed- in progress – closed)
•       Last contact
•       Vendor w/ phone#

Priority Rated Defense Contracts

If you are awarded priority rated contracts from the government what does it mean to you? Simply put, if there is a conflict between your commercial delivery and a government priority rated contract, the priority contract comes first. 

A defense contract can be assigned a priority rating and is usually indicated on the request reading something like; this is a rated order certified for National Defense use, and you are required to follow all the provisions of the Defense Priorities and Allocations System regulation.

The Defense Priorities and Allocations System (DPAS) is used to prioritize national defense related contracts throughout the U.S. supply chain in order to support military, energy, homeland security, emergency preparedness, and critical infrastructure requirements.

It is a four-digit number always beginning with either DX or DO. The DX rated contracts being of the highest national urgency, and DO rated contracts being critical to national defense.

Here’s the breakdown of priorities as they relate to sellers.

• DX rated contracts above all

• DO rated contracts above commercial

• Commercial market

Don’t let contract priority ratings scare you. Generally speaking this does not hinder us in our commitments to our commercial customers.

Contract File Management

It is important that you manage each government contract in its own contracting file. The file should be divided into sections for easy access of information.

Some basic sections of this file would include;

• Contract Award and anything related like modifications, exemptions, billing, shipping etc.

• Communications with the government (print out any email conversations

• POs, bill of materials etc.

• FAA bulletins (if in aerospace)

• Vendor communications (if outsourcing)

• Copy of tech data with highlights of important stuff

It is best to put the most recent document on top to represent the current state. This method will allow you to easily track specific details of the job, from cradle to grave. 

Although by law we are to keep our government related records for a minimum of 3 years, it is recommended to keep them up to 5 years for audit purposes.

Government Management Portals

The government has a couple of contract management systems that we will be accessing through portals (websites). These portals have been designed to simplify the procurement process for both, government and their suppliers.

First Destination Transportation and Packaging Initiative (FDTPI)

The First Destination Transportation and Packaging Initiative (FDTPI) by DLA Land and Marine was designed to reduce acquisition costs, this program un-bundles the cost of packaging and transportation from the total acquisition cost. The FDTPI is utilized on any DoD contract with FOB origin freight terms.

Vendor Shipment Module (VSM)

As a result of this initiative the Vendor Shipment Module (VSM) was created. What does this mean to you? Simply put, you no longer have to worry about shipping arrangements and costs.

When ready for shipping, you now enter your government contract details and the government arranges for shipment through contracted shipping vendors.

Wide Area Workflow (WAWF)

Wide Area Workflow is a secure, web-based system for electronic invoicing, receipt and acceptance. WAWF allows government vendors to submit and track invoices and receipt/acceptance documents over the web, and allows government personnel to process those invoices in a real-time, paperless environment.

Chapter 4

Chapter 4: Small Business Marketing for Government

Target Marketing Government

Experience Level: Advanced

Before you can market the Government and DoD, you need  specific market knowledge. Having this will ensure that any and all of your efforts will be effective.
 

So where do we find this market knowledge? For the parts and products market, it is found in two government procurement systems. Theses systems are the Federal Procurement Data System (FPDS), and Federal Logistics Information Service (FLIS). 

Before diving into these databases, first think about the areas that are important to you, and what type of reporting information you need. Once this has been accomplished you can extract data specific to your goals and begin building a more targeted marketing plan. 

Industry Market Data Needed

The basic information required to effectively market the government is not much different than that of your commercial market. In your commercial market you know the following;

• Who’s buying?

• When are they buying?

• Who are they buying from?

• Do they have a buying preference?

• What are your advantages?

While gathering up this information remember, the deeper you get into the data, the closer to the end user you can get. Ultimately this is where we want to be, however it is not always possible. 

The important thing is not to identify a prospect at just Agency level, go deeper and drill down into the Facility that initiated the buying activity. This is the definition of target marketing the government, and is more precise than trying to reach every buyer throughout a given Agency.

You can gain a lot of insight through historical data  – if you know how to use it correctly. Historical data by far, has all the information a small business needs in order to gain an advantage and is the most valuable asset we have as a small business.

These are the additional questions you should be asking yourself, in order to get to the Facility level; 

• What facility is responsible for the buying activity? 

• Who is the contracting officer at that facility?

• How frequently are they buying?

Some of these questions can be answered by looking at current bid opportunities. By paying attention to who and where current bids come out of, you may begin to see a pattern. 

When you start to notice that you are seeing the same facility or the same buyer over and over, this Facility could be of benefit to you. By looking further into the activity at that location, you could find that they are buying other things you offer as well.

 This technique is called target marketing, and is the most effective way to get a quicker return on our investment.

Capability Statements

Your Biggest Marketing Asset
First we will talk about the Standard Capability Statement, because this is the most common of the statements and typically your shot at a first impression.
 
A standard capability can be used for a number of reasons.
• To set you apart from competitors
• A door-opener to new agencies
• Proof of qualifications
• Proof of past performance
 
There are 4 key elements that every good capability statement has. If you omit any one of these it could have a negative effect on your efforts.
 
1. Core competencies
2. Past performance
3. Differentiators
4. Contact information
 
To establish your differentiators ask yourself the following;
 
What is it about your people that give you the advantage over your competitors?
Why are your products better solutions than the others that are available?
What is it about your services that make you stand out from the rest?
How is your company best suited for the needs of this agency?
 
If these benefits cannot be clearly communicated, it is impossible for a decision-maker to make a clear recommendation for your company over one of your competitors.
Avoid the 'One-Size' fits all Capability Statements

To many of us try to show a wide variety of what we do, in hopes that we appeal to them. We think this shows diversity – they say who cares what all you do.

An effective capability statement is specific to a buyer’s needs; meaning they are customized based on a buyer’s needs. Too many contractors submit a “one-size-fits-all” statement thinking they will still be seen. 

Think about it, if you buy widgets do you want to see something about tires? They have enough on their plate; there’s no time for viewing something non-related to the task at hand.

A properly written and designed Capability Statement sets your company head and shoulders above the competition.

The Technical Capability Statement

The second type of capability statement used is  a Technical Capability StatementA Technical Capability document is the key to building a relationship with important decision-makers in government contracting. It provides them with a concise description of the goods and your approach to a specific complex situation that an Agency has.

This statement is used to respond to the following government requests;

·   Sources Sought Notice

·   Request for Information

·   Broad Agency Announcements 

This document is the key to building a relationship with important decision-makers in government contracting. It provides them with a concise description of the goods and your approach to a specific complex situation that an Agency has.

In addition to the sections outlined in the capability statement, you will want to address the following in your technical statement:

1- Address each task or element specifically and with detail, task by task

2- Explain your capability level

3- Subcontractor functions

4- Relate

5- Understanding of the Scope of work

6- Past performance

7- Identify contract experience

8- Identify any regulations, certifications

9- State your intentions to team or subcontract

10- Key personnel

11- Address any need for new personnel

12- Management Skill

13- Financial Capability

14- Transition Plan

Read over the request to be sure you have addressed all questions and concerns in your technical response. Read over it again to be sure you are submitting all requested documentation, and the format required.

Remember instructions are meant to weed out responses. After all, if you cannot follow directions it is not likely that you can perform on a government contract.

Chapter 5

Chapter 5: Limit Contract Competition

Limit Those Bidding Against You

Experience Level: Advanced

Source Approvals and Federal Supply Schedule (FSS) are just a few of the many ways the Government can limit contract competition. Used properly, we as sellers benefit because it limits the number of competitors bidding against us. 

Obtaining approval is a process and some can be quite lengthy and costly. Some approvals may also require the process to be started only during an open requirement. 

In some markets without being a qualified supplier you are denied the right to participate in the bid process. A good example of this is the metals and metal services sector. 

In order to sell precious metals (or raw goods) to the government, these businesses must have already gone through a special approval process and been placed on the QSLD for their proper Agency and Facility.

The most common source approvals seen in the parts and product markets are;

• QSLD (Qualified Supplier List of Distributors)

• QSLM (Qualified Supplier List of Manufacturers)

• FSS (Federal Supply Schedule)

• GSA schedules (for some products & supplies)

Knowing which approval and from where it is needed can get confusing, but the information and process is posted on the specific Agency’s website. Only opportunities that have steady buying activity, with 50K or more being spent are candidates for source approvals. 

An important thing to mention is that some of these source approvals may state an ISO standard. As long as you have a quality program equal or higher than the ISO called out, you do not have to go through the expense of being certified.

Using Set-Asides to Limit Contract Competition

Simple Technique to Limits Competitors

If you understand how to use your set aside effectively, you can make a simple set aside request. Using this type of request can only be accomplished if you are ahead of the bid request. In order to get ahead of the request, you must become more of a proactive seller and not wait for the opportunity.

Bid opportunities that make a great target for this type of strategy would be any of those multiple year contracts. With these types of contracting vehicles, we know they will be re-competed upon expiring. 

Regulations state that on the open market, if the government gets two requests for the same set aside it is to be pulled from the unrestricted market; providing these requests are made by a truly capable business. Some will tell you this is crap and it does not work. While it does not always work, it does give you a chance to begin establishing name recognition with a specific buyer. 

Anytime we have an opportunity to speak with a buyer we have the potential to gain name recognition, and start the beginning stage for developing relationships.

So a set aside request not only gives us a reason to call the buyer, but it can have the open bid contract pulled thereby limiting those who can bid. So making such a request seems like a win-win to me.

Eliminate Contract Competition through Unsolicited Proposals

A Little Known Secret to No-Compete Contracts
An unsolicited proposal is a written proposal for a new or innovative idea that is submitted to an agency on the initiative of the offerer for the purpose of obtaining a contract with the Government, and that is not in response to a request. 
 
These proposals, if they become a recurring requirement, can be used to limit the contract competition to only one capable source, the one who submitted the proposal. 
 
An unsolicited proposal is a process and not a magic back door to government success. You need to do your research, and then begin cultivating relationships; this can be as simple as a phone call or an email. 
 
By knowing your market in detail,  you are able to identify a buyer’s unmet needs and provide them with a solution they did not know was available to them.
 
If you provide parts, fabrication, electronics or even systems design, this could be a good avenue to pursue. A bit of caution though, you must really know your Government Agency’s mission and what Facilities support it’s initiative.  

Proactive Selling to Limit Competition

A Competitive Advantage

Proactive selling is a great way to not only limit competition on a government contract, but it can assist you in gaining an advantage.

According to vocabulary.com: If you are proactive, you make things happen, instead of waiting for them to happen. Active means “doing something.” The prefix pro- means “before.” So if you are proactive, you are ready before something happens. The opposite is being reactive, or waiting for things to unfold before responding. 

That being said, you are probably wondering how to get ahead of the bid request. As mentioned earlier, if you’re already checking on those multiple year contracts for a set aside request, take it one step further.

The proactive seller will look at what Government Facility issued the original request, and then identify who the Freedom of Information Officer(s) is at that specific Facility. 

Under the Freedom of Information Act (FOIA) you have the right to request the documents from the original request, including any technical data that was available – in some cases there could be a fee to obtain the technical data packages. 

Be advised that a freedom of information request is best initiated at least 90 days out of the original contract expiration date. This request is always made to the FOIA Officer, not to the buyer. 

The Government does not have a set time length to return the documents being requested, but usually you can get a response within 20-30 days. 

By getting this information you can see word for word how the prior winner got his/her price. This is especially nice when working in the FBO market; putting in a better position to respond to the next request. It also allows you to exploit a competitor’s weakness and potentially gain an advantage.

Another of benefit of proactive selling is that, if done correctly it develops relationships. So proactive selling leads to relationship selling, and for you that means little to no competition. 

Relationship sales are a great way to target buyers using the Government Purchase Card (GPC) to make micro purchases, often called “low hanging fruit”. Because the government’s fiscal year begins on October 1st, we see a huge spike in micro purchases being made in the month September.

In order to gain any kind of an advantage in government contracting it is critical that you are proactive, otherwise you are reactive and at a disadvantage. This can only be accomplished by having the correct government data at your fingertips. 

Although the government’s logistical databases are free, accessing information can be very labor intensive. A good data provider can assist you in being more efficient and productive with your time.

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