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How to Win Government Contracts for Small Businesses

Get a competitive edge by partnering with others.

It pays to do business with Uncle Sam — especially if you’re a small business owner. Case in point: The U.S. government awarded $91.7 billion to small businesses in 2014.

For companies of all sizes, the federal government offers tremendous business opportunities.

“The federal government is the largest procurer of products and services in the world,” says Lourdes Martin-Rosa, president of Government Business Solutions, a project management firm in Miami.

Turning the government into one of your customers may seem daunting at first. But many small businesses like yours are successful when they partner with other businesses. We talked to our panel of experts, who provided the following advice and insights to help you win lucrative government contracts through collaboration.

Identify the right partners. Martin-Rosa’s company partnered with Teya Technologies LLC, an Alaskan IT company, to win an $8 million annual federal contract from the Food and Drug Administration for event planning and back-end technology services. Martin-Rosa recommends that you check out potential partners on the Federal Procurement Data System, then review the types of contracts they’ve had, how much those contracts were worth, and whether or not a contract was ever lost. Martin-Rosa offers this caveat, though: “I will not work with anyone whom I haven’t met personally,” she says. “They can say anything over the phone, but until you sit down and iron out the responsibilities and discern if they are as ambitious as you are about growing, tread lightly.”

Engage both small and large companies. Joshua Frank, founder and managing partner of the business consulting firm RSM Federal in St. Louis, Mo., recommends that small businesses have three to five different types of companies they can partner with if the right opportunity comes along. The government’s 8(a) Business Development Program sets aside contracts for small disadvantaged businesses such as those owned by minorities, women, and veterans, so it’s a good idea to have a diverse mix of firms to call on. “Doing that opens up your company for opportunities,” says Frank.

Prepare for your first meeting with a federal agency. Martin-Rosa emphasizes the importance of knowing your audience well in advance before you make your pitch. “Go to the agency’s site, study [its] mission, and review [its] procurement forecast — a wish list of products and services that government agencies plan to purchase for that fiscal year,” she says.

Structure a solid agreement. The prime contractor is the lead company in the collaboration. “In general, the prime contractor is responsible for the entire process,” says Frank. “Typically, the parties sign a nondisclosure, then a teaming agreement. That spells out whether the subcontractor is allowed to be on another team (usually not), what you’re responsible for, what you need to provide, and your role during the process.” Above all, make sure you require a teaming agreement. This is a crucial step small businesses often overlook. “Teaming agreements must be signed before the request for proposal (RFP) or the request for quotation (RFQ) hits the streets,” he says.

Keep the lines of communication open. Entrepreneurs often forget to keep in touch with prime contractors once a proposal is submitted. Not only should you keep in touch during every phase, but as a teaming partner, you should be building upon the relationship by letting the prime contractor know about other opportunities, Frank says.

“Being successful in the federal market is no different than being successful in the commercial market,” says Frank. “It’s not what you learn, it’s how you apply it.”

Want to learn more savvy business strategies? Take a look at our business resource center. And, one of the smartest business decisions you can make is being proactive about protection. Connect with an agent today to learn about customized coverage for your business.

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Related Topics: Business Growth