When you think of government contracting, you may think of agencies supplying items such as construction projects, airplanes, missiles and uniforms to the government. But new opportunities in this economy have created a need for a wide variety of products and services.
“This is a unique opportunity to sell your goods and services to government agencies,” says Michael Caputo, chair of the government affairs practice group at McDonald Hopkins LLC. “This has resulted from a combination of a reduction in business-to-business opportunities and an increase in government funding available for businesses through the American Recovery and Reinvestment Act.”
“There needs to be a strong commitment by your company to be a government contractor,” adds Michelle Kantor, member of the construction law practice group at McDonald Hopkins LLC. “That means committing personnel and resources to perform a variety of tasks.”
While government contracting can offer you new business opportunities and clients, it is not easy work and you are subjected to more intense scrutiny. You should not enter into it unless you are prepared to invest the time and energy to fully understand the rules and regulations involved with it.
Smart Business spoke with Caputo and Kantor about government contracting and the benefits and risks involved with it.
What is involved in government contracting?
There are a variety of tasks that must be performed and requirements that must be understood by government contractors. These include looking for opportunities and bidding on solicitations, complying with insurance and bonding requirements, understanding the required regulations, and developing relationships with subcontractors or suppliers to provide responsive and responsible bids to the government.
A crucial element is understanding the regulations and obligations required of a government contractor. You need to go into that relationship with eyes wide open.
Once you have made the commitment, you need to formally register as a government contractor and market yourself appropriately. We recommend that you position your company to maximize the opportunities available through government contracts. You also should make sure you have the capacity and capability within your business to perform this type of work.
What types of regulations are involved?
Regulations vary depending on the public agency and by the type of purchase. There are terms and conditions that both parties are bound to, just like in any contract. The requirements are broad and might include how the work is bid, price evaluations and preferences, qualifications of your staff, number of years your company has been in service, set aside and sole source contracts, and rules on joint venturing work.
What is the typical time span?
It depends on the type of contract. Every contract has some type of limitation, but depending on the type and scope of work involved in the solicitation, the contract can often be renewed. The length can range from a multi-year agreement if it is an ongoing need, or a shorter time period if it is a more specific task. Contracts might even be for one-time purchases, such as new office furniture.
What risk factors are involved?
If you are not a seasoned Federal Contractor, we recommend that you seek assistance from legal and business consultants that are familiar with the government process. The contracts can be several hundred pages that all contain risks and liabilities to which you will be held accountable. There can be serious consequences for failure to comply with a government contract, from losing the right to bid on work to severe penalties including potential criminal prosecution.
You need to understand the issues, such as bidding regulations, ethics policy mandates, payment requirements, utilization of women and minority businesses, export control laws, purchasing laws and regulations that must be followed regarding the performance of your work.
How does teaming with minority and diversity contractors come into play?
Women, minority, disadvantaged, veterans, persons with disabilities, SBA 8(a) and HUBZone contractors bring a lot to the table both in innovation, commitment of local employment and competitive pricing. The Small Business Administration is required to set aside a percentage of work for veteran, women and minority-owned and SBA 8(a) small businesses. There are also numerous government programs that take small business concerns into account and allow them to team with larger businesses to perform contracts. These opportunities include the mentor protégée program, teaming agreements, joint venture agreements and subcontracting arrangements.
Teaming also provides larger companies that have no government work the ability to gain experience on the government level. There are strict legal requirements that must be met in order for these arrangements to be accepted by the government. You need to consult with an expert before teaming with these diversity contractors to make sure the regulations for any particular solicitation allow for that type of teaming agreement.
Businesses are also seeing a greater value by becoming certified as a women, minority and/or disadvantaged business enterprise. HUBZone, SBA 8(a), disabled, or veteran -owned businesses, even those who never thought about public contracting in the past, can take advantage of their designation through a variety of set aside programs both in the government and private sector. These certifications offer tremendous opportunities to contractors in the form of sole source, set-aside, mentor-protégé joint venture and other teaming arrangements.
Teaming with these types of suppliers and contractors can also give you the opportunity to present a new competency, while cutting costs and adding value to your customers.