Government Contracts: A Lot of Work but Worth the Effort

Government Contracts: A Lot of Work but Worth the Effort

By Diane M. Calabrese / Published August 2016

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The good, the less-than-good, and the opportunities somewhere between the two make government contracts attractive. Let’s take a closer look at plusses and procedures. “Surety of payments, surety of continual work, peace of mind, and no quoting required” are the best reasons for pursuing government contracts, says John Rose, founder and developer of World’s Best Products (known for graffiti removal) in Brompton, a suburb of Adelaide, South Australia. Rose’s Urban Restoration Group operates out of Australia and Glendale, CA.

Yet with the good, there are complexities. “Competing with companies that have no experience and undercut and devalue the market” is a challenge, says Rose. Then, there is the issue of “dealing with bureaucracies”—and that means navigating through many rules that can slow down the process of getting work done.

“Not fulfilling all the tender or bid requirements” is the most common mistake those seeking government contracts make, says Rose. A corollary of sorts, though, is that it’s okay to offer suggestions. “Offering a different option to governments than what they tendered,” says Rose, is always a possibility. Pointing out a solution that would work well for a government entity can be a way to win more work down the road. Solutions offered are knowledge shared. Make the government entity aware of a novel approach. When the next bid cycle opens, that approach is the one that might be sought.

Owners and companies are drawn to government contracts for different reasons. “I would say the biggest attraction to government contracts is their size,” says DJ Carroll, president and founder of EasyPro Property Services, which serves the greater Louisville, KY, area, and a sales-training coach.

The size can also be a negative, however. “I think people fail to see the risk in a big contract,” says Carroll. “It’s that old saying of putting all of your eggs in one basket.” Government contracts are typically awarded on the basis of the lowest bidder who meets all the specifications set in the request for proposals. It’s not a part of the process Carroll enjoys, especially when there is so much time invested in seeking the contract.

Each government agency is likely to have its own requirements, and Carroll’s company has been awarded contracts across government from local municipalities and schools to state contracts and federal contracts. The U.S. Army Corps of Engineers required Carroll’s team to create several documents it had not used before, including Safety Site Walk-Through Analysis Procedures and Quality Control Systems. All doable, but also vexing, too.

“It truly was a 30-day process just to be allowed on site to work after we received the contract,” says Carroll. That followed the six months of extensive paperwork to get the contract. Because government contracts are awarded almost always on lowest bid, a bidder must be realistic. “I would say the biggest mistake is not knowing your numbers through and through,” says Carroll. “Being the lowest bid doesn’t mean that you will be profitable.”

Have a clear understanding of the contract. Not doing so could “cause issues down the line,” says Carroll. “One contract that we bid out about four years ago had a clause that the state could select any number of quantity, but nothing was guaranteed. It’s very difficult to bid based on 30 cycles of service when you may very well get only one.”

Take The Hoops In Stride

“One of the main reasons that pressure washing contractors should pursue government contracts is because most of them are annual contracts with annual extensions, and there are also long-term contracts and change orders,” says Henry Bockman, president of Commercial Restorations in Germantown, MD. 

The federal government spends a great deal of money on services and equipment, explains Bockman. It makes sense to be part of that market. Bockman cites the President’s FY 2017 budget for the U.S. Department of Housing and Urban Development (HUD) to illustrate how huge the expenditures are. With HUD’s mandated and discretionary spending slated to be greater than $60 billion across the next ten years, that’s about six billion per year in opportunities just from a single agency that will go in part to contractors.

One of the big challenges in getting a contract is identifying the opportunities, which may take some detective work. “Most of the pressure washing work is usually bundled with completely unrelated services that fall into facility maintenance, or in some cases, landscaping,” says Bockman. “That’s because there are so few pressure washing contractors that attempt to bid on contracts for pressure washing, so it makes it very easy for a large facility maintenance company to include pressure washing in their contract and then subcontract out the work.”

The paperwork to obtain and maintain a government contract is another challenge, but it is worth completing. Even small companies can be part of a government contract by teaming up, explains Bockman. That’s often a better strategy for a small company, which might otherwise win a contract it would find difficult to complete with its present employee roster and tools.

“The biggest mistakes that I’ve seen people make when bidding contracts are bidding too low just to get the contract, or bidding jobs that they can’t handle alone,” says Bockman. “If you’re interested in government contracts, consider teaming up with other contractors or becoming a subcontractor for a prime contractor. It will make it a lot easier to work your way into future government contracts.”

SAM

There are many entryways to take to reach government contracting opportunities. Local, state, and federal governments provide them, as do agencies within each level of government.

To bring coherence to the bidding process at the federal level, the System for Award Management (SAM) was instituted. See www.sam.gov/portal/SAM/##11.

SAM is now the official registration system for entities that wish to seek federal contracts. There is no fee to register. (There are private, fee-based concerns/consultants that will assist companies with meeting the requirements of registration and bidding.)

“Just pulling all of the information together to register for SAM can take some time,” says Bockman. “SAM registration is just the beginning, though.” Among the follow-up tasks are creating a capabilities statement, finding out who the purchasing agents are, ascertaining and meeting insurance requirements, and demonstrating relevant work experience.

Getting queued up to bid on federal contracts will immerse a business in a swirl of acronyms, explains Bockman. A business will need to know its identifier in NAICS (North American Industry Classification System), as well as already hold or obtain necessary codes such as CAGE (commercial and government entity) and D&B DUNS® (data universal number system). CAGE is intended to allow federal entities, especially defense-related ones, to quickly assess who is working at a facility. DUNS aims to organize and maintain accurate information on the more than 250 million global businesses.

Completing the preliminaries to be ready to bid consumes many hours. “But I think the biggest challenge is finding bidding opportunities,” says Bockman. And, again, he advocates teaming up as one approach for small businesses. (Area offices of the Small Business Administration have commercial market representatives who can help businesses identify prime contractors with which they can join.)

Whether independently or as a subcontractor, small firms should consider bidding on federal contracts. According to the SBA, the federal government buys $100 billion of goods and services from small businesses each year. The SBA offers a Government Contracting Classroom (link via www.sba.gov) with courses ranging from qualifying and applying for specific programs (e.g., Women Owned Small Business, HUBZone) to a course in winning federal contracts and preparing government contract proposals.

“To military veterans, I would highly recommend taking a special training program that is free for veterans called the VIP program—the Veterans Institute for Procurement,” says Bockman. “I took the class myself a couple of years ago, and the amount of information you can learn in this class is incredible.”

Take advantage of programs to learn about government contracting if considering a first move into the sphere, advises Bockman. An opportunity to learn directly from government officials will take place at the PWRA [Pressure Washing Resource Association] convention at National Harbor, MD, August 12 to 13, 2016.

Follow every avenue to find contracts to bid on, says Bockman. “If you think the government is going to contact you just because you’re listed in SAM, you’re in for a long wait. You need to meet with procurement officers, go to their open houses, and build a relationship with them so when an opportunity comes up, they know who to call. It’s a lot of work sometimes, but it’s worth the effort. Some agencies can just sign a work order for jobs under $3,000, $5,000, or $10,000 without even requesting other bids on the job. In most cases, they will just contact a company and ask for a price. If your bid is under their threshold, they will ask you to schedule the job.”

Be positive as well as proactive. Government contracting is fair and open. Every business has a good chance of succeeding as a bidder if it can do the job at a competitive price.