In a previous blog post, we talkedabout some of the different entrepreneurial paths one could choose. Today, we are going to give you a brief overview of Government Contracting and whether this path might suit you. As we explore the different paths we will start with some of the reasons why a particular path might suit you in regards to your military experience and the advantages that come with being a veteran.
**Veteran Tip—Military Experience and Veterans Advantage for Federal Contracting
Case for Veterans -As a veteran you have already worked for or with many federal contractors. You understand how the government works and likely have the skills to build a profitable business based on the needs of the government.
Veterans Benefits - There are many federal agencies that want to contract their work to veterans, but finding and verifying these veteran-owned businesses can be difficult. To help solve this challenge veteran business owners can take advantage of the VA’s “Vets First Contracting Program” (http://www.va.gov/osdbu/verification/index.asp). Along with training on how to work with the federal government, this program helps Service Disabled Veteran-Owned Small Businesses (SDVOSB) and Veteran-Owned Small Businesses (VOSB) become “verified” as a veteran-owned business. As a verified SDVOSB/VOSB your business can be listed in the VA’s Vendor Information pages, called VETBiz/VIP (https://www.vip.vetbiz.gov/), a database that federal agencies and private businesses use to find and work with veteran-owned businesses.
**Special Note: Verification is not a simple process. In 2012, approximately 58% of applications have been denied, mostly because of misunderstanding about the verification process. If you choose this path, be sure to check out the Verification Assistance Program at http://www.va.gov/osdbu/verification/assistance/.
If you are brand new to the concept of government contracting, then I suggest you check out these two posts written by Bill Gormely, the president and CEO of Washington Management Group:
• "Your First Five Steps in Government Contracting": http://www.sba.gov/community/blogs/guest-blogs/industry-word/your-first-five-steps-government-contracting
• "Government Contracting: Explaining the Process in 5 Steps": http://www.sba.gov/community/blogs/guest-blogs/industry-word/government-contracting-explaining-process-5-steps
As a veteran, you probably remember the logistical nightmare of trying to get a project contracted out while serving in the military. Most likely that experience has left you with the thought that doing business with the government is too complicated. However, as a veteran, there are many advantages to becoming a government contractor.To get started, visit the VA’s Veteran Entrepreneur Portal at http://www.va.gov/osdbu/veteran/vep.asp.
The rest of this blog will cover a high-level view of government contracting to help you decide if it's right for you. In future posts we will dive into more detail, but as a veteran, there are plenty of special training opportunities you can take advantage of.
Myths about Government Contracting
Government contracts can provide significant revenue. But some think it is too hard to accomplish, so let's first dispel some of the biggest myths about doing business with the government:
Myth: Doing business with the government is too complicated, involves too much red tape, and it takes forever to get paid.
Reality: The government uses many commercial and business-friendly practices, such as buying off-the-shelf items and paying by credit card. Payments are generally received within 30 days after submitting an invoice.
Myth: There's no one I can turn to in trying to obtain government contracts.
Reality: SBA and its network of resource partners have programs and hands-on assistance for small businesses contemplating selling to the federal marketplace.
Myth: I must compete head-to-head against large businesses and multinational corporations to win contracts.
Reality: The government has many categories of contract opportunities reserved exclusively for small businesses to level the playing field.
Myth: All I need to do is register in the Central Contractor Registration (CCR) system and the contracts will come rolling in.
Reality: Although CCR is the primary way federal agencies learn about prospective vendors, it's up to you to aggressively market your firm to those agencies that buy your products and services. Remember, agencies don't buy, people do.
Myth: The low offer always wins the contract.
Reality: While price is always a consideration, the government increasingly awards contracts for goods and services based on "best value," in which both technical and cost factors are weighed in the final assessment.
Even understanding the reality, you will need to determine if government contracting is right for your business. Here are some basic issues you need to consider:
Are you positive your business can financially support the execution of a government contract that may involve significant start-up costs?
Your company's financial situation is very important in your decision to pursue doing business with the government. Your business must be stable and financially sound, and you cannot have any major cash flow issues. If you have minor issues, you will need to speak with your banker to arrange a loan or line of credit. The government will not finance your contract up front, nor will it guarantee your success or bail you out.
If you are just starting out and short on cash, or having problems with payroll and other payments, government contracting is not for you. In fact, a contract might push you over the edge and put you completely out of business if you cannot fulfill its requirements.
Make sure that you can financially support the contract, and don't forget to take into account any start-up costs for the job that may be required.
Are you willing to do ongoing, detailed market research to find procurement opportunities and then take time to prepare and present offers?
Getting registered is just the beginning. Next you will need to do relentless marketing in order to find the procurement opportunities. It involves looking at the CCR (http://www.ccr.gov) and VIP (http://www.vetbiz.gov) databases regularly and often. It involves networking with everyone. It involves having contacts with the contract managers at the agencies you have targeted to allow them to get to know you. It involves being familiar with the supplier diversity managers and OSDBU (http://www.osdbu.gov) managers in the companies and agencies that you have targeted.
Marketing takes time and persistence so be prepared to be committed to the process.
One thing to know that will help is this: If you submit a proposal and you are not awarded the contract, you can ask for a review from the contracting manager. In the review, you will be told exactly why you did not win the award. This information will be very useful to you when you write the next proposal.
Subcontracting and Teaming
Are you willing to be a subcontractor to companies that are prime contractors?
Some small businesses will partner with others to win government contracts or find the prime contractor of a major project and subcontract their services. This allows smaller companies who may lack certain resources to pursue opportunities they otherwise could not do on their own. Partnering can also help spread the workload and ensure that you are not taking on more than you can handle. In addition, experience gained from being a subcontractor can help you become a prime contractor.
Subcontracting opportunities can be found at SUB-Net, SBA's searchable database that prime contractors use to post subcontracting opportunities (http://www.sba.gov/subnet). The website is also used by federal agencies, state and local governments, nonprofit organizations, colleges and universities, and even foreign governments.
Are you prepared to learn and follow the rules relating to federal acquisition?
Chief among the rules is having your business be capable of doing business using an approved electronic commerce (e-commerce) or electronic procurement (e-procurement) protocol. This is a mandate of the Government Paperwork Elimination Act of 1995, requiring the government to use electronic means to issue and award small business contracts, specifically those between $25,000 and $100,000. In a continuous effort to streamline the procurement process, government buyers are using new options in making purchases, such as multiple-award schedules, purchase cards, reverse auctions, etc., almost all of them technology-based.
Many small businesses are still coming up to speed with computer technology and online purchasing. E-procurement takes many forms — portals, web-based forms, electronic document management systems and so on — so be ready to do business electronically. This type of requirement is not unique to the government, as almost all major corporations now require this type of system from their vendors and suppliers.
**Veteran Tip-The Big Question
After years of serving in the military, probably the biggest question you need to ask yourself is whether you want to continue working in the government sector? As a veteran, there are many advantages and you likely have some sort of expertise that you can tap into. However, if you’re looking for something new, Government Contracting is only one of many entrepreneurial paths you could explore. If you’re still unsure which path is right for you, stay tuned as we explore other types of business endeavors that might peak your interest.