“HIGHERGOV.COM”
“Federal government contracts can be extremely valuable for small businesses. The average value of contracts awarded to businesses successfully able to navigate the contracting process has increased significantly.
The average small business received $2.7 million in 2022. Moreover, many federal government contracts are three to five years in length, providing long-term stability to growing businesses.”
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“Additionally, despite the occasional government shutdown or budget cut, the credit quality and the spending of the federal government is generally very strong and predictable, including during times of economic uncertainty. With a rapidly aging federal workforce, the demand for private business to support federal activity is unlikely to wane any time soon.
There are several steps that small businesses can take to win more federal government work, rather they are a dedicated government contractor, are currently solely private-sector focused, or are a sole proprietor.
Build Partnerships with Established Contractors
We estimate that more than $100 billion was awarded to small business subcontractors on government contracts in 2022, approximately two-thirds of what was awarded directly by the government. Many government contracts awarded to large contractors have subcontracting plans that require a certain percentage of work be subcontracted out to small businesses with certain size and socioeconomic characteristics.
Finding and building partnerships with experienced prime government contractors can help to build the experience needed to win government contracts directly while earning predictable revenue. The government also offers a number of programs including the Small Business Administration and Department of Defense Mentor Protégé programs that can formally pair small businesses with more experienced contractors.
Target Easier Agencies and Services
There are significant differences in how easy it is for small businesses to win awards at certain federal agencies and with certain types of work. While obviously some of the differences come down to the types of work it is feasible for small businesses to perform (it is easier for a small business to provide computer programming services than to manufacture guided missiles), it is generally easier to win contracts in areas where the government is more accustomed to working with small businesses.
Additionally, some agencies such as the National Park Service and the National Oceanic and Atmospheric Administration are typically significantly easier to enter as a first-time contractor than others like the Veterans Health Administration or Drug Enforcement Agency.
Take Full-Advantage of Available Set-Asides and Programs
Many small businesses do not take full advantage of the contract set-asides available to them. For example, there are currently 6,400 companies registered in the government’s 8(a) program, which provides training and technical assistance and access to special set-aside contracts for companies owned by “socially and economically disadvantaged individuals”.
However, we estimate that there are at least 60,000 companies actively registered as contractors with the federal government self-certifying as one of the socially disadvantaged groups eligible for the 8(a) program, that if registered would have access to more than $21 billion that was awarded specifically to 8(a) program members in 2022.
Likewise, while there are nearly 9,000 Women-Owned Small Businesses certified with the SBA, there are more than 70,000 actively registered small businesses self-certifying as women-owned, meaning that most did not have access to $1.5 billion in contracts that were limited in competition to women-owned small businesses in 2022.
Bid Early and Bid Often
While bidding on government contracts can be time consuming and intimidating for small businesses with limited resources, average win rates on new contracts are high. The average government solicitation receives only 4.5 bids and approximately 40% of all competitive solicitations receive fewer than three qualified bids. Monitoring agency contract forecasts can provide notice of when bids will be released months or years before they are officially published by the government on its official procurement website sam.gov, giving time to prepare for upcoming solicitations.”
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