Many independent consultants see government contracts as another way to grow their business. Follow these three steps to understand the processes, requirements, and resources required to win government contracts as a consultant.
Requirements of Government Contracts
Time and Resources
Freelancers need to be aware of the number of hours and resources required to track and manage a government contract. For example, part of the process of applying for federal contracts represents completing declarations and certifications. These regulations require you to prepare and certify a variety of declarations ranging from environmental standards and compliance to company size.
Assurances and certifications are designed to ensure you comply with laws and regulations and are an extremely detailed part of the process. Aside from the fact that it takes a lot of time to complete the paperwork, there are also legal implications. If you are going through this process for the first time or on your own, it is advisable to seek legal verification.
2. Liability Insurance
In addition to the time, resources, and references required to obtain a government contract, there may be additional requirements. Government contracts, like many large commercial contracts, may require additional liability insurance.
3. Special payment and billing terms
Billing and payment terms may deviate from customary standard contracts. It is common for government contracts to be 60 net monthly, which means you may not get paid for 90 days. Any error can lead to a payment delay of several months.
There are also special billing requirements. Government procurement requires you to track your funding and notify the government when you reach 75% of your funding. A penalty of them may be imposed for non-compliance. Carefully to ensure you understand your responsibilities as a contractor.
4. Relationships
Relationships help you differentiate yourself from the many vendors/contractors available. Continue to apply the same networking and relationship-building practices to government contracts that you apply to other business opportunities.
Win Government Contracts?
1. Register your company
In order to win a government contract, you must follow several steps to register your company in the System for Award Management (SAM). SAM is an official US government website that hosts a database of companies interested in government contracts. You must create an account and complete your profile in order to search for it.
Employer Identification Number (EIN) Needed
While some small businesses prefer to operate under the owner’s social security number, the government requires their contractors or vendors to have an Employer Identification Number (EIN). If you need an EIN, you can do it for free through the IRS. For your business take this as your social security number.
Set up a physical address
The government does not allow you to register a PO Box with SAM, so you must obtain a physical address. If renting office space is not right for you, there is an option to use virtual office space or a registered agent to meet this requirement.
Obtain a DUNS
Number To qualify for government contracts, you must first obtain a DUNS number, a unique 9-digit number for each physical location of your business. Dun and Bradstreet (DandB) will provide you with this number free of charge within one working day.
Find Your NAICS Code
NAICS, the North American industry classification system, classifies companies to collect data on the US economy. You need a NAICS code to register your business and apply for certain federal contracts. For more information on NAICS codes, see the Small Business Administration (SBA) Guide.
Establish a Contractor and Government Entity Code (CAGE)
A CAGE code is another unique identifier for your company that is intended to be publicly available and has been required for doing business with the federal government since 2014.These codes allow the government to gain insight into corporate ownership and contract activity through various payment systems. If you are not already a government contractor and need to apply for a CAGE code, you can do so through the Defense Logistics Agency website.
After completing the above steps, you can complete your SAM registration. It is recommended to consult an expert before certifying the FAR and DFAR requirements. Inaccuracies or inconsistencies may be construed as making false statements to the government, which is a serious crime.
2. Explore Active Opportunities
Now you are ready to explore the possibilities for active contracts with the federal government. There are several ways to do this:
1. Register with Federal Business Opportunities (FedBizOpps) to search for and bid on open positions.
2. Access the Government Services Administration (GSA) Schedules program. GSA schedules spend an estimated $50 billion annually on federal procurement, much of which goes to small businesses.
3. Check out SUBNet for subcontracting opportunities.
3. Consider Small Business Certifications
If you are a socially or economically disadvantaged business, you can benefit from obtaining 8(a) status. These certifications require a formal process with a third party, but can open up additional opportunities for you. For this process, you must first register with SAM and can then start the application process through the SBA (Small Business Association). Once you have received your certification, you can apply for Reserve and Sole Source contracts. In addition, you’ll receive resources such as a business opportunity specialist to help you navigate the federal contracting landscape, opportunities to participate in mentoring programs, and technical and managerial support to support leadership development. If you are interested in certification, first take the SBA’s proficiency test to determine if you qualify.
The Bottom Line
Government Contracting is a big undertaking and can deduct from billable time if you are unfamiliar with the process. It’s important to evaluate the requirements before deciding if pursuing a government contract is right for your business. The process can seem overwhelming, the possibilities exist and may be right for you.
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