Why you Should Bid on Government Contracts
Government contracting presents an incredible opportunity for entrepreneurs. The U.S. government spent more than $500 billion in 2019 on procurement, and the government bought services from the public pertaining to:
Construction,
Janitorial services,
Professional services and consulting,
Renewable Energy,
IT services and products, and much more.
The U.S. government historically does not purchase most products nor perform most services directly itself. The government instead prefers to enter into contractual relationships with companies to have services done and products purchased on its behalf. The government then pays the company.
Entrepreneurs should explore the world of government contracts as a practical path to increase revenue for their businesses.
I. What are the Types of Government Contracts?
Companies can win contracts in the local, state, federal, and international arena. While each city and state have their local process for applying and winning contracts, most of the federal and U.S. international contracts can be found on https://beta.sam.gov/.
A company will bid to win a government contract typically by responding to a Request for Proposal (RFP) or Request for Quotation (RFQ). An RFP allows the government to issue a solicitation when the government wants to buy a product or service. In an RFP, many factors such as price, company experience, and the ability to complete the project are some of the main determining factors to winning a government contract. An RFQ is typically when the government wants to buy a particular product (e.g. computers, gloves, or pens) based only on the lowest price.
A business can increase its chances of winning by either having a certification or partnering with a company with a certification.
II. What are the Types of Government Contract Certifications for Businesses?
Government Contracts allows entrepreneurs to sell their products and services to the US government.
The U.S. government allows companies with certifications to bid on certain government contracts that have been set aside for that particular certification. Many of these certifications include the:
Veterans and Disabled Veterans certifications,
Small Business Administration's 8a certification - for individuals who have been socially and economically disadvantaged, and
Women-owned business certification.
Companies that qualify for these certifications should obtain them and companies that do not, can partner with a certified business to win government contracts.
III. What are the Partnerships to use for Winning Government Contracts?
Government Contracts offer additional streams of revenue for businesses.
It is often advantageous for businesses to work together and the world of government contracts is no exception. Millions can be made when companies work together because each company can now leverage the other’s ability, experience, and certifications to create win-win situations for everyone.
Working together to win government contracts often takes the role of:
Serving as a subcontractor to the prime contractor that won the government contract,
Partnering with a company with a set-aside certification,
Creating a joint venture, and many other ways.
IV. Conclusion
Government contracts offer a tremendous path for entrepreneurs to generate additional revenue for their companies. Companies can even find the business forecast of a government department before the bidding process is active. This can allow optimal team building and strategy to increase a company’s chances of winning the government contract when it becomes active.
If you are interested in expanding into government contracts, Geremy Johnson, Esq. is a lawyer that offers consultation on government contracts and legal services. Please contact him with your legal needs.