Thursday, January 3, 2008

Getting Started with Government Contracting

It is important to have realistic expectations when starting to pursue government contracts for your business.

Some factors to consider:

*Is the government buying what I sell?
*How much of my product is the government buying?
While it is true government buys just about everything, it may not be in sufficient quantities to make it a significant portion of your business. Or, it may be such large scale that it would be difficult for you, as a small business, to complete the order/task.

*How long have I been in this business?
Past performance is a crucial component in evaluation of government contracts, especially at the Federal level. You need to be in business at least two years for most government contracts, and your company's past performance needs to be closely related to the industry in which you are submitting a bid. While there are always exceptions to the rule, if you are currently selling automotive spare parts, it is unlikely you will get a contract for selling computer software to the government.

*How much time am I willing to devote to pursuing government business?
Ideally, you could employ a full-time staffer for government sales. This is not always possible, and is unrealistic in a firm of five or fewer employees. So, often you will end up doing a lot of the legwork yourself, as the business owner. Also, even if you are not the one making all the marketing contacts, you will be the one signing off on the bids, so you want to make sure whatever you propose is something you can really do. After all, if you win a bid but fail to perform on the contract, you will probably lose not only that contract, but any future possibilities to get contracts from that agency and quite possibly from any Federal agency.

*Am I willing to provide information about my business to the government?
Depending on the size and type of contract, various Federal labor laws apply to Federal contractors that may not apply to other businesses. Sometimes this requires you to submit detailed information about who works for you and how much they are paid. Also, if you pursue a Federal certification such as 8(a)/SDB, the Small Business Administration may ask you for detailed information about the financial status of your business. State and local Minority-Business Enterprise and Women-Business Enterprise certifications typically require a site visit to ensure the business is legitimately owned and operated by a minority individual or by a woman.

*Am I current on my tax obligations to the government?
If you fall behind on payments to the IRS, those payments can be garnished from your contract. Similarly, if you fall behind on State tax payments such as unemployment insurance, State contracts may pay you less as a result of similar garnishment structures. It is especially important for government contractors to keep a close watch on your accounting practices and timely payment of taxes and other government obligations.

If you have further questions about these and other government contracting related issues, please contact us.

1 comment:

susanna said...

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