The government works towards the ends of making selling to it as simple as possible while maintaining a system that promotes competition to achieve fair market buying for federal agencies by the use of FAR, Federal Acquisitions Regulations. With that said, there are 137 independent executive agencies with over 430 departments within the federal government. This size can make obtaining federal sales a convoluted process for most small businesses.
Within the subcategory of Small Business Federal Sales, there are two major markets, those being Prime Contract Awards and Sub Contract Awards. Below is the federal sales volumes for each of these two categories:
|Prime Contract Awards||$120 billion annually|
|Sub Contract Awards||$75 billion annually|
|Total||$195 billion annually|
Each of these two markets has its unique challenges and opportunities. To break in as a Prime Contractor a small business must first determine what agency and departments within those agencies buy their products. This process can be a challenge because no two federal agencies are set up the same. In some cases, the buyer is located in the field, and in other cases, the buyer is a large purchasing department. So achieving federal sales for a Prime Contractor starts with figuring out who the specific likely Contracting Officers are that are likely to buy your product.
Once you determine who is buying your product, the next step is determining if there is a specific contracting vehicle the contracting officer is likely to utilize. A contracting vehicle is a way in which a federal buyer can purchase a product or service while complying with FAR. A GSA Schedule is known as a Governmentwide Acquisition Contract, GWAC, often utilized by small businesses however there are many other GWACs as well as single or multiple agency Indefinite Delivery Indefinite Quantity, IDIQ, contracts. Other avenues are RFPs that governmental agencies often put out as well as a sole source, or set-aside contract.
The GSA Schedule system, the largest of the GWACS that allow for federal sales, has open enrollment, meaning a firm can almost always apply. Most other GWAC and IDIQ contracts have short enrollment periods where firms must compete for spots on the contracting vehicle. Missing a key GWAC or IDIQ contract can cause a firm to wait multiple years until the enrollment period occurs again. Therefore all firms wishing to compete in the federal marketplace should routinely check agency sources for the opening of these contracts. There are many instances where placement on one of these contracts for a small business can mean hundreds of thousands or potentially millions of dollars in federal sales.
Federal sales through subcontracting are one of the most widely missed marketplaces in the United States. This opportunity exists because Large Prime Contractors need small businesses that have government sales acumen to be good partners, but in reality, all of these small businesses focus on their prime contracts. This narrow focus leaves the small business Sub-Contracting business up for grabs.
First, let’s take a look at why large prime contractors need small businesses to them complete projects. The SBA has an annual scorecard system for agencies and their ability to utilize small businesses. There is a goal for both the Prime Contract Awards and Sub-Contract Awards.
The goals the SBA has laid out for each agency are weighted in the following way:
|Achievement Category||Weight of Category toward Overall Grade|
|Comparison of the Number of SB Prime Contractors in each of the Five Small Business Categories in the Agency’s Top 100 Small Business NAICS Codes for the two most recent years.||10%|
|OSDBU Peer Review on the 18 requirements in 15 U.S.C. 644(k)||20%|
So even though the weight of the Subcontracting for small business goals is only 20%, it is virtually impossible for an Agency to obtain an “A” rating from the SBA without actively managing this goal. The goal for the amount of Subcontracting that Prime Contractors are required to do ranges from 30-33% depending upon the year. This figure adds up to $75 Billion annually, and we have had many clients double and triple the size of their businesses by taking the first step in registering with the Large Federal Prime Contractors and demonstrating a strong desire to work with these large businesses entities.