Have you ever wondered how to work with the government as an independent contractor? The federal government is the largest contractor in the world, with many opportunities for independents. Each year, billions of dollars in contracts are set aside for small businesses, women, minorities, and veterans.
Many independents look to government contracting as another option for growing their business. Follow these four steps to understand the processes, requirements, and resources needed to engage with the government.
To be eligible to win government contracts, you will first need to obtain a D-U-N-S number—a unique 9-digit number for each physical location of your business. Dun & Bradstreet (D&B) provides this number within one business day at no cost to you.
NAICS—the North American Industry Classification System—classifies businesses to collect data related to the U.S. economy. You’ll need a NAICS code to register your business and to apply for certain federal contracts. For more information about NAICS codes, check out guidance from the Small Business Administration (SBA).
Next, you need to register with the System for Award Management (SAM). SAM is an official website of the U.S. government that houses a database of companies interested in government contracts. You’ll need to create an account and complete your profile to become searchable.
Now you’re ready to explore active federal government contracting opportunities. There are a few different ways you can go about this:
Keep in mind, however, government contracting is a tough area to navigate alone. The criteria can be difficult to meet—it can be hard to hold your own security clearance, for example—so many independents find they have to go through vendors or integrators to secure contracting opportunities.
Independents may not be aware of the number of hours and resources required to pursue and manage a government contract. For example, part of applying for federal contracts involves completing Representations and Certifications. These provisions require you to represent and certify to a variety of statements ranging from environmental rules and compliance to entity size. Representations and Certifications are designed to ensure that you are in compliance with laws and regulations and are an extremely detailed part of the process.
In addition to taking a great deal of time to complete paperwork, there are legal implications as well. If you’re going through this process for the first time or on your own, it’s advisable to obtain a legal review.
In addition to the time, resources, and credentials needed to obtain a government contract, there may be additional requirements as well. Government contracts, similar to many large commercial contracts, may require additional liability insurance.
Invoicing and payment terms may differ from standard business contracts. It’s common for government contracts to be monthly, net-60, which means you may not receive payment for 90 days. Any mistakes can lead to a delay in payment for several months.
There may also be special invoicing requirements. Government contracting requires you to keep track of your funding and notify the government when you’ve reached 75% of your funding. Failure to do so may carry a penalty. It’s therefore important to read contracts very carefully to ensure that you understand your responsibilities as a contractor.
Independents interested in contracting with the government often solely focus on certifications and requirements. But checking all the boxes and becoming part of the pool of applicants is just one part of the process.
Relationships will help you stand out as more than one of many available vendors. Continue to apply the same practices of networking and relationship building to government contracts as you do to other business opportunities. Another helpful item is pursuing 8-A status as a small disadvantaged business. This program contains certifications such as the Women-Owned Small Business program or Service-Disabled Veteran-Owned Small Business program, which can give you a leg up in obtaining government contracts, as many government contracts have a small business set-aside.
Government contracting is a big task and can detract from billable time if you are not familiar with the process. It is important to assess the requirements before deciding if pursuing a government contract is right for your business. However, while the process may seem overwhelming, opportunities do exist and could be the right fit for you.
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