DC Doing Business Guide

Federal Government Contracting

Initial Considerations

The U.S. federal government is the largest buyer in the world. The general aims of the rules and regulations governing federal contracts are to ensure that:

  • Competition is fair and open: The process of requesting proposals, evaluating bids, and making awards should take place on a level playing field with full visibility. Any business that is qualified to bid should be considered.
  • Products and services are competitively priced: The government seeks pricing that is commensurate with its formidable buying power.
  • The government gets what it pays for: The government protects itself by carefully defining requirements, terms and conditions for all purchases. Contractors must document that they have fulfilled all requirements and met all terms in order to be paid.
  • Both the government and contractors comply with the law: Different rules and regulations apply to different types of purchases. The Federal Acquisition Regulation or Defense Acquisition Regulation Supplement apply to most federal agencies. Individual organizations often have their own rules as well.
  • Research your intended buyer. Know the buyer’s budget.
  • Develop a customer/agency specific strategy.
  • Start with a small order and work from there.
  • Allot sufficient time, resources, and knowledgeable personnel when seeking a contract

Types of Government Contractors

There are two broad categories of government contractors:

  • PRIME CONTRACTORS bid on and win contracts directly from government agencies. After award, the prime contractor company is the entity that is legally responsible for all aspects of fulfilling the contract, such as interacting with the government customer, recruiting staff, organizing and managing teams of subcontractors, and meeting all delivery requirements. Both large and small businesses can serve as prime contractors.
  • SUBCONTRACTORS join prime contractors’ teams, usually to provide a specific capability or product. Subcontracting is an excellent way to enter the government contracting market and to participate in large-scale opportunities. The advantage of being a “sub” is that you’ll be responsible only for your area of expertise, not managing the entire contract. You can gain valuable experience (called “past performance”) that will qualify you for future contracts. But note that you’ll be serving two customers: the prime contractor and the government. Your prime contractor will determine what percentage of the work (called “workshare”) and which assignments (called “tasks”) you will receive. You may or may not work directly with the government, at the discretion of your prime.

New! Visit the GSA Forecast of Contracting Opportunities tool at gsaforecast.gsa.gov to see upcoming contracting opportunities, filtering by agency, contract award status, location, NAICS code, and contract value

Set-Asides

Most government agencies “set aside” a percentage of their acquisitions (what they buy) for small and disadvantaged businesses. In some cases, these set-asides might consist of certain types of tasks on larger contracts. In other cases, entire contracts may be designated for small businesses. In fact, every federal government purchase valued from $2,500 to $100,000 is automatically set aside for small businesses as long as there are at least two companies that can provide the product or service.

The government is particularly concerned to include small businesses as it buys goods and services for several reasons, including:

  • To ensure that large businesses don’t “muscle out” small businesses
  • To gain access to the new ideas small businesses are great at providing
  • To support small businesses as engines of economic development and job creation
  • To offer opportunities to disadvantaged socio-ethnic groups

The Federal government has specified annual prime contracting goals for designated small businesses. The current, government-wide procurement goal stipulates that at least 23% of all federal government contracting dollars should be awarded to small businesses. In addition, targeted sub-goals are established for the following small business categories:

  • Women Owned Small Business – 5%
  • Small Disadvantaged Business – 5%
  • Service Disabled Veteran Owned Small Business – 3%
  • HUBZone – 3% Visit gsa.gov/setasides to learn more about set-asides and special interest groups.

Steps to Registering as a Federal Contractor and Certifying Your Business as “Small”

  1. Obtain a D-U-N-S number. This is a unique nine-digit identification number for each physical location of your business. The assignment of a D-U-N-S number is quick and free for all businesses required to register with the federal government for contracts or grants. Visit fedgov.dnb.com/webform to register.
  2. Register your business with the System of Award Management (SAM). SAM.gov is the primary database of vendors doing business with the federal government and is required prior to the award of a contract. SAM is also a marketing tool for businesses, allowing government agencies and contractors to search for your company based on your ability, size, location, experience, and ownership.
  3. Find the NAICS codes for your company. You may also find that you need a North American Industry Classification System (NAICS) code for administrative, contracting and tax purposes. The code classifies the economic sector, industry, and country of your business. For federal contracting purposes, you will need to identify in SAM all the NAICS codes (industries) applicable to your business. Read Identifying Industry Codes for more information.
  4. Obtain Past Performance Evaluations. Businesses interested in getting on the US General Services Administration (GSA) Schedule for contracts should obtain a Dun & Bradstreet Past Performance Evaluation at bit.ly/ppeval. This tool conducts an independent audit of customer references and calculates a rating based upon a statistical analysis of various performance data and survey responses.

Below are some of the items that you will need in order to complete registration processes.

  • Your NAICS codes
  • Your Data Universal Numbering System (D-U-N-S)
  • Your Federal Tax Identification Number (TIN or EIN)
  • Your Standard Industrial Classification (SIC) codes
  • Your Product Service codes (optional but useful)
  • Your Federal Supply Classification codes (optional but useful)

Seeking Contracting Opportunities

  • Visit FedBizOpps.gov often, and register there to be notified of newly posted opportunities. FedBizOpps.gov lists all open contracting opportunities over $25,000 across the federal government.
  • Consider partnering with a prime contractor. Working with a prime contractor is the fastest way to begin. Subcontracting is the most popular partnering tool. It is an excellent way to test the waters of federal business without suffering undue risk.
  • Browse the GSA Subcontracting Directory at www.gsa.gov/subdirectory for opportunities to subcontract with existing GSA prime contractors.
  • Visit “Explore Government Contracting” at business.usa.gov to browse open federal government contracting opportunities and to help figure out which are right for your business.

New, Streamlined System

SAM.gov has combined federal procurement systems and the Catalog of Federal Domestic Assistance into one new streamlined system that includes the Central Contractor Registry, Federal Agency Registration, Online Representations and Certifications Application, and Excluded Parties List System.