Three Killer Mistakes in Government Contracting

Owners of small businesses from all over the U.S. sold over 83 billion dollars of services and products to the U.S. federal government in just the last federal fiscal year. Of that total, those businesses that are certified as 8(a) sold $10.3 billion in services and products.* If you are not as successful in the market as you want to be, you may be asking yourself: “What do they know that I don’t?”

Even successful contractors will tell you that they have made many mistakes learning the ropes in this market. After all, it is a tough, complicated and rigorous market that demands expertise, dedication and perseverance before success is achieved.

While all contractors have made mistakes when trying to enter or become more successful in the government market, successful business owners have learned from their mistakes, make the necessary changes and move forward to greater business opportunities and larger contracts.

As you read through the top three killer mistakes listed here, note those that you recognize and make the changes now. You will start to see benefits and the doors that were slammed tight will start to open for your business.

Killer Mistake #1

Does Your Business Look Like a Risky Business?

This is a core issue with government contracting. Often we are talking about not just thousands or hundreds of thousands, but millions of dollars in contracts. Contracting officers and other decision-makers have been trained to choose the least risky of options. As tax-payers, this is a good thing. And a business people who want to win contracts, once you know and understand this, you can take the steps needed to make your business stable, secure and as capable as possible.

What Exactly Does a Risky Business Look Like?

A risky business has no track record. It has no customers that could be asked for a reference. It has no bank account. It has no credit history. It has no web site. The owners use AOL, Gmail, Yahoo and other free email services for government communications. The business has not been registered in CCR. There is no commercial phone number, just a cell phone. It has no employees and no record of making tax payments.

Since all government contracting officers are, by the nature of their jobs and their legal responsibilities, risk-adverse, the more steps you can take to mitigate the risks the better your chances are of being successful.

Take These Steps to Mitigate Risk

There are specific steps you can take to make your business be as stable and secure as possible. First, know the requirements of being a government contractor. For instance, all federal contractors must be registered in the Central Contractor Registry (CCR), a federal government web site. When you successfully register at CCR (or with your state or local government if you choose to target them first), you show that you understand and have the legal basics required (company name, bank accounts, etc.)

If you have sold products or services to anyone else, you will want to ask three to five of your customers to be a reference for you. Contracting officers will check references and if your references are good, and are willing to say so, this makes you much less risky that those businesses that have no references (or ever worse, have negative references!)

Other Steps That Will Build Your Credibility

Create a professional web site describing your services and products and clearly define how you fit into the government market. You can use the Capability Statement format described in the previous issue of MEA if you need help with the recommended content. Use an email address containing your website name. Never use AOL, Gmail, Yahoo or other free email services for government contracting communications as they make you appear fly-by-night and unprofessional.

Use a commercial phone number listed in the name of your business. This phone number would be used as the main, or corporate, contact number. Government also wants a separate fax number as well. It is fine to use your cell phone as your direct line, but not as a main business number.

Killer Mistake #2

You Do Not Understand the Language

Whether you are starting at the local city level, the state level or even the federal government level, every segment has its own language, processes and procedures. If you do not understand the conversations, the acronyms or procedures, you make it much more difficult on yourself.

Learn the Lingo

You will hear new terms and acronyms at every meeting, outreach session and conference. If you are unsure of what they mean, it is appropriate to ask. People involved in government contracting get very used to speaking in acronyms, technical terms and buzz-words and often do not remember that even they had to learn the terms at one point. If you prefer to research first and therefore feel more comfortable conversing with contracting officers, you can use resources such as sba.gov for study materials.

Example of Lingo: Purchase Vehicle

Government entities most often do not buy products and services the same way consumers or other businesses may buy. In the private sector, when we sell something to a consumer, we often write up a receipt after they give us the money. If we sell in the business-to-business market, when we propose a complicated or high-cost service or product to another business we often use a contract that both parties will sign which includes all of the required information and payment process.

Government entities have a more complicated purchase process (with one exception). Most often, they will use something called a purchase vehicle. This vehicle is not something one would drive, but rather it is a tool or method used to buy something.

The good news is a vehicle may be as simple as a credit card. The bad news is that a vehicle may be as complicated as writing a two hundred page response to a formal proposal.

If you have heard of a GSA Schedule, that is a common purchase vehicle used by the federal government. Essentially it is a pre-approved contract where your pricing structure, your legal business entity and your services and products are all analyzed and final prices negotiated until you and the government agree. A GSA Schedule is a five-year contract, and it is renewable for three more five year periods making it a total of a twenty year-long contract.

Once you have an approved GSA Schedule, you have not made a sale, but you do have a license to hunt; and an easy tool or vehicle for the government to use when they want to buy something from you. There are other types of purchase vehicles called Government-Wide Acquisition Contracts (GWACs), Blanket Purchase Agreements (BPAs) or Indefinite Delivery Indefinite Quantity (IDIQ) contracts. These are also good examples of why acronyms are used so much in government contracting.

Accept Credit Cards

One of the best and simplest method or contract vehicle used is a government credit card. The government will make billions of dollars in purchases every year for all types of products and services simply by using a VISA or MasterCard credit card. If you accept these cards in your business, you can make many more sales. Check with your local bank for the steps needed to accept credit cards in your business.

Killer Mistake #3

The third biggest mistake that business people make in government contracting is to not be prepared before asking for and meeting with decision-makers. Most government entities, and definitely the federal government, give you all the background information you need, however, you must do the research and homework first.

Do Your Homework…First!

If you want to find out what opportunities the federal government has available right now, you would look at the web site: fedbizopps.gov. While every opportunity is not listed, most over $25,000 are shown and it is well worth your time and effort to use this site as a mandatory stop in your research process.

If you wish to learn what the federal agencies are projecting to buy during the rest of the fiscal year, but for which they have not yet created actual contracts, you can find each agency’s Forecast of Contract Opportunities at their own web site, usually by searching for the “Small Business Office.” This forecast is a “wish list” of what they want to buy, and a great place for you to determine if it is worth your time to pursue an agency as a target.

Another extensive resource available through the federal government is the Federal Procurement Data System-Next Generation. This is a secure web site available to everyone at: fpds.gov. This is a database of all of the recent past government contract information. It is good for you to use to find the agencies that have already purchased what you sell. If they purchased it last year, there is an excellent chance they will need it again this year and next year too.

Eliminating these killer-mistakes will help you turn the corner to success in the government contracting market. Use these tips to build a healthy, stable and secure government contracting business.

* Source: FPDS.gov

Gloria Berthold Larkin is President of TargetGov, a national company providing government procurement, business development, and marketing services. She authored “The Veterans Business Guide: How to Build a Successful Government Contracting Business” and created a series of Government Business Development Audio CDs and Toolkits focusing on successful business development processes for federal contractors.

By Gloria Berthold Larkin
Mrs. Larkin has received numerous accolades including: Enterprising Women magazine’s 2010 Enterprising Women of the Year honoree, Women Impacting Public Policy National Member of the Year 2007, the Bravo Business Achievement Award 2007, a Maryland’s Top 100 Minority Business Enterprises in 2008 and 2006, and she was recognized by Maryland’s Governor’s Office of Minority Affairs as one of the top Women Entrepreneurs.