Tuesday, May 17, 2016

Contracting Corner: Are You Ready for Government Contracting?

This is the second post in our "Contracting Corner" series from Judy Wolf, Government Contracting Coordinator, Mohawk Valley SBDC & NY SBDC Procurement Assistance Center
If you’re like most small business owners, you’re drawn to the idea of government contracting, but don’t necessarily know where to start. Perhaps you’ve heard talk of small business set asides or minority-, women-, and service-disabled veteran-owned business utilization requirements, which can make it sound as if winning government contracts is a given for companies owned by individuals who are eligible for certification.

Don’t be fooled. While there can be some benefit to being a small business, particularly one owned by members of certain historically under-represented groups, government contracting is not an easy row to hoe. The following questions cover some cornerstones you’ll want to make sure form a solid part of your foundation before you start building your business in this competitive arena. 

Are you an established business? 

Government entities are risk averse. They want to know that your company is viable, responsible, and capable before awarding you any publicly funded work.

We’ll discuss the capability part shortly, but to start with the basics, this means your company should be licensed to do business in the state where the government entity you’re soliciting resides. Your staff will need to have any necessary licenses or certifications to perform the work you’re proposing to do. You should have all proper insurances in place, including liability, workers’ compensation, and automobile. If required in your field of practice, you may need to acquire surety bonding, so would need to have that relationship already established.

You’ll also need to have the infrastructure in place, such as a good computer system, the proper software to handle any documents or reporting that might be asked of you, and a high-speed internet connection. You will be expected to meet cyber security requirements as well – an increasingly important concern – so will want to make sure you have the proper resources available to comply. You will also want to make sure you have a professional-looking web site, as this is the first place government buyers will look for information about your company, products, and services – and to gauge your legitimacy and capacity. 

Are you capable of doing the work? 

There is typically a section in any request for proposal (RFP) that asks for your company’s capabilities and past performance. Sometimes this can be based on individual team member resumes; other times the company itself must have performed comparable work for entities (not necessarily government) of similar size and scope. You will typically be asked to provide project descriptions and details along with contact information for a reference at the agency or organization where you performed the work. The better your track record of delivering effective, on-time, under-budget results, the stronger your position when it comes to winning government contracts. 

Can you afford to operate in the government market? 

Two factors come into play here. The first is whether you can afford the inevitable investment in business development staff, time, and resources that is required to successfully pursue government contracts. The development cycle can be long: up to two years before winning your first contract.

The second factor comes into consideration after you’ve won a contract: Despite all the government’s best intentions (prompt payment acts, for example), delays in payment inevitably occur. How long can your company foot the bill for ongoing payroll and overhead expenses before your “lucrative” government contracting opportunity threatens to put you out of business? Or how about projects where you are expected to order and provide materials up front, prior to payment?

Here is where a strong relationship with your bank, an established line of credit, and a working knowledge of gap funding sources becomes essential. Before moving into government contracting, you may also want to make sure you have finance staff who understand the agency’s invoicing system – or at the very least dedicate someone to learning it ASAP to help ensure proper documentation and efficiency in your billing cycle.

 How are you going to actually perform the work? 

It is an incredible feeling to win a government contract. It is also terrifying – because now you must perform. There is no room to fail once you’ve stepped into this arena – at least not if you want to stay in it. 

Having a well-thought-out plan of approach, a proven methodology for delivering similar services, a strong team of experienced staff, and the flexibility to problem-solve your way through the challenges that will inevitably arise can make or break your project performance. 

Help is available 

All of these factors work together to set you up for success or failure in government contracting.
For assistance in thinking through these challenges as they apply to your specific business, you can reach out to your local Small Business Development Center (SBDC). The NY SBDC network has 24 regional centers throughout New York State, plus satellite offices, each staffed by advisors who specialize in government contracting and procurement, as well as general business advisors who can help you strengthen your company’s foundation to make sure you’re ready to build your government contracting business.

The SBDC’s business advisement services are free and confidential, funded by taxpayer dollars to help small businesses thrive and grow. Schedule an appointment today!

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