By Diane Calabrese / Published December 2023
Is it time well spent or time wasted? There’s no way of knowing in advance. That’s true of every business venture, but the magnitude of an investment for naught weighs heaviest when government contracts are in the picture.
With sufficient opportunities across the residential, commercial, and industrial sectors, perhaps there’s no reason to even procure a government contract. And we spoke to some in the industry who concluded after one or two unsuccessful tries that competing for a government contract was not a good use of time.
Even so, the amount of money federal, state, and local governments award should not be overlooked by any business. In 2020 the federal government spent $665 billion on contracts.
Some federal money goes to state and local governments via pass-through mechanisms. But state and local entities also have their own sources of revenue, so the sum available via government contracts becomes enormous.
Moreover, the often-held notion that such contracts are only available to large companies is not true. The federal government reserves a certain number of contracts (contract dollars) for small businesses.
The U.S. Small Business Administration (SBA) defines a small business as a manufacturing company with fewer than 500 employees or a nonmanufacturing company with average annual receipts under $7.5 million. Consequently, whether large or small, a business may participate.
The process of competing is a rigorous one. Anyone thinking of getting started can get an idea of what it’s like by registering with the System for Award Management (SAM) at SAM.gov.
Any business competing for federal contracts must be registered with SAM. A completed registration enters the database that contracting officials use to search for businesses that are eligible to compete for contracts.
SAM also identifies businesses that are categorized as disadvantaged, woman owned, veteran owned, or located in an underutilized area. The identification correlates with contracting dollars set aside for those categories.
In addition to consolidating documentation of industry-specific certification and general certifications required by the federal government, SAM registrants will be expected to demonstrate specially required certification. For instance, the U.S. Department of Defense requires a company to have a cybersecurity maturity model certification (CMMC) in order to bid on any work. The CMMC verifies that a company can safeguard its systems and data.
Does it get complicated? Yes.
But it is possible to win a contract. Recall the $665 billion. Of that amount, the top 10 vendors in the civilian pool received a total of $38.1 billion, and the top 10 vendors in the defense pool that won contracts received a total of $154.8 billion. Thus, collectively the top 10 in each pool received $192.9 billion.
That means more than two-thirds of the $665 billion was dispersed widely. To get a snapshot of how dollars are being spent across states, visit the website of the Government Accountability Office at GAO.gov. The short of it is there’s opportunity everywhere.
A company that registers with SAM can provide a description of its capabilities and experience. The information will be used as federal contracting officials search for vendors that may want to bid. Obviously, descriptions should be accurate, succinct, and as illustrative as possible.
Never overstate. That’s advice that applies at all levels of government contracting (and contracting bids in general).
State and local governments distribute dollars to projects taxpayers are more likely to see. The last thing officials want to do is to award a contract to a company that will produce imperfect results.
Jim Gamble, owner of Crystal Cleaning Company in Antioch, CA, explains that knowledge sells. It often sells best at the local or state government contract level.
There’s a fundamental question those awarding local and state contracts want answered, says Gamble. “What are you going to do for us?”
The better a prospective bidder can answer the question, the better the contracting officials will be able to respond to taxpayers who ask where tax money goes.
“A bidder must know what the customer is looking for and respond with precision,” says Gamble. His decades-long experience in the industry has demonstrated that local and state governments will pay more to get exactly what they want. That means the correct equipment, procedures, schedule, etc.
Competition for contracts often involves not only response to a request for proposals (RFP) and a pre-qualifying point system pre-RFP (RFP-P) to assess the match of a company—i.e., whether it could do the job—but also an interview. The interview gets to the essence of a project.
Gamble has been asked about substrates—their composition and how such a composition is best cleaned—and about how equipment works. He is ready for anything.
With wastewater capture and filtration becoming the norm in many communities, Gamble persuaded one panel of interviewers that his company should be the choice by going a step further. “On filtration, we showed them the lab results.”
Giving interviewers a boiler plate response on procedures will not win contracts in a competitive environment, explains Gamble. Expect incisive final-phase interviews for qualifying bidders.
Gamble says that responses such as “we’re going to discharge into the sanitary sewer” will not be sufficient. A bidder must be ready to run through both the “what and how” of equipment, as well as both the “which and why” of permits.
Certifications will not substitute for demonstrating acute knowledge when interviewed, says Gamble. He adds that savvy officials will query about everything right down to how oil is removed by the filtration system.
An arduous process, often, but state and local governments also have the option to hold over a contractor. After winning a six-figure award in a competition with 14 bidders and completing the project, Gamble was asked to stay on and do more work for another six figures.
“Before going into government contracting, the company should be performing similar projects in scale for commercial clients,” says Henry Bockman, president of PowerWashCompany.com in Germantown, MD. “The company needs to be financially stable so they can cover expenses and overhead for 60 days before they get paid. They need to have enough equipment to perform the project quickly in order to be profitable.”
Bockman shares his expertise in government contracting with other industry members by offering free classes that encompass SAM logistics, set-asides, and much more. (The next class will be at ResponsiCon, January 25–27, 2024, Phoenix, AZ).
“I teach the classes for free because if more power washing companies were bidding on government contracts, then it would be easier for the government to put out contracts specifically for power washing,” explains Bockman.
Currently, general contractors typically win contracts that have power washing combined with non-related services. Then, they subcontract to power washers at lower prices.
Bockman’s company has considerable expertise in government contracting (and commercial projects). Yet even he is sometimes surprised by the bidding process, such as competing bidders who ignore the parameters.
“I won a contract for $569,000 to clean the exterior of a limestone building and clean the exteriors of 900-plus windows,” says Bockman. “But the project had to be completed within 25 days from contract award. We completed the entire project in 23 days, but other bids specified that it would take at least two months to perform the project.”
The specifics in a request for proposal (RFP) are not points for negotiation. They are expectations to be met.
“The requirements are one of the most important details of any RFP, because they are the key to winning profitable contracts,” says Bockman. “They will vary depending on the type of facility and the knowledge of the person requesting the bids.”
Responding to the RFP is work and takes time. “Some of the most profitable contracts that I’ve won were 140 pages of requirements and specifications on how the job is to be performed and paperwork including payroll,” says Bockman.
The specifications may include the types of equipment, size of water tanks, and even the fan angle to be used. Coordination with on-site managers and the conduct of team members on-site may also be spelled out in requirements.
“Federal contracts are more difficult due to more competition,” says Bockman. “City, county, and state contracts can be easier to win, depending on the size of the project and how many general contractors are bidding on the job.” (The general contractors may be subbing out bids and then aggregating to bid.)
“In my opinion, the best thing to focus on are any government facilities that need pressure washing services that are under their bidding threshold, so they don’t have to put the job out for competitive bidding,” says Bockman. “Most facilities’ bidding thresholds vary from $3,500 up to $25,000, and some are up to $150,000.” When under threshold, a government can simply call and get prices from a couple of companies and then hire one.
Pre-qualification requirements, slow payments, bonding/insurance, equipment must-haves, payroll audits, prevailing wage requirements (under Davis-Bacon)—and more—are part of government contracts. Like everything in business, each company must weigh the investment against the potential return on competing.