Should the Federal Government be Your Next Customer?

As a manufacturer, you’re probably looking to expand your customer base with recurring and reliable clients. One option that may be a good fit is federal government contracting. Just like any other business, the government procures supplies and services for the military and defense initiatives, healthcare operations, and many other activities. The defense industry alone spends more than $300B per year purchasing goods and services. The difference is, where private-sector agreements may be based solely on cost or performance, government contracts take other factors into account that could give your company an edge over the competition. The federal government in particular has a vested interest in supporting small businesses in manufacturing and other industries, and uses its purchasing power to help job-creating companies thrive. Read on for five initial questions to ask yourself if you are considering a move into the federal contracting marketplace. . . 

1. Does what you sell match what the government needs?
   Knowing that you offer a product or service the government needs is a crucial first step in becoming a government contractor. No matter what you produce, you can see if the government is purchasing your goods or services and who potential competitors are by searching www.USASpending.gov using your NAICS code. This quick search can also tell you whether you are entering a crowded marketplace or have the chance to carve out a niche for your business. 
    
2. Are you a small business?
   The Small Business Administration ensures that small businesses can compete for federal contracts, either as a prime contractor or as a subcontractor for a larger entity. Some contracts, including all contracts valued between $10,000 and $250,000 with at least two potential suppliers, are automatically set aside for small businesses. Other contracting vehicles give preference to prime contractors who subcontract to small businesses. To compete for these contracts, you must meet the federal definition of “small business” and additional basic requirements. A comprehensive contracting guide is available from the Small Business Administration to help potential vendors better understand the benefits and challenges of government contracting. 
    
3. Is your business classified as “disadvantaged” by the federal government?
   Businesses owned by service-disabled veterans, women, people from minority populations, and those operating in certain economically disadvantaged areas may be eligible for preferential contracting or additional set-asides. Business entities must meet the legal criteria for classification in these categories. More information about each category and applicable set asides is available at the General Services Administration. If you qualify for one of these categories, the government may provide additional assistance with launching or growing your business. Visit the Small Business Administration for details on programs and initiatives that can provide invaluable support to small businesses pursuing federal contracts.
    
4. Are you the sole domestic provider of your product or service?
   If you are the only company in the United States that produces your specific product, you may be eligible for direct or noncompetitive contracting opportunities. The Small Business Administration provides additional details about the process for becoming a registered vendor and pursuing sole-source contracts here. 
    
5. Are you prepared to “spend money to make money”?
   Although government contracts can provide a reliable source of income for small businesses, getting into government contracting can also cost money. As most government contracts reimburse companies after work is performed, companies must be able to sustain operations until government payments are made, which may be a period of months. Companies may also need to pursue training opportunities, legal assistance, or other types of consulting to develop or refine their contracting offerings and ensure they meet General Services Administration requirements. Resources like the Department of Defense’s APEX Accelerator can help businesses strengthen their operations and prepare for success as federal contractors. 

Whether you are manufacturing automotive parts, producing healthcare supplies, or providing custom manufacturing services, the federal government may be an eager buyer to add to your customer mix. The journey into federal contracting can be complex, but plenty of resources exist to help. Contact the Michigan Manufacturing Technology Center today for more information about pursuing government contracts at any level—local, state, or federal.

Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.