Three Killer Mistakes in Government Contracting

Small businesses from all over the U.S. sold more than $110 billion of services and products to the U.S. federal government over the past federal fiscal year. Large businesses sold more than $427 billion. If a company is not as successful in the market as planned, it is time to ask: “What do they know that I don’t?”

Even successful contractors will admit that they have made many mistakes learning the ropes. It is a tough, complicated and rigorous market that demands expertise, dedication and perseverance.

While all contractors have made mistakes when trying to enter or become more successful in the government market, successful business owners learned from their mistakes, make the necessary changes and move forward to greater business opportunities and larger contracts.

Read through the top three killer mistakes listed here and make the recommended changes now to start seeing benefits and experience how the doors that were slammed tight will start to open enough for a toe-hold.

Killer Mistake No. 1

• Does Your Business Look Like a Risky Business?

This is a core issue with government contracting. Often we are talking about not just thousands, or hundreds of thousands, but millions of dollars in contracts. Contracting officers and other decision-makers have been trained to choose the least risky of options.

As taxpayers, this is a good thing. And for businesspeople who want to win contracts, once one knows and understands this, steps can be taken to make a business stable, secure and as capable as possible.

• What Exactly Does a Risky Business Look Like?

A risky business has no track record. It has no customers that could be asked for a reference. It has no bank account. It has no credit history. It has no web site. The owners use AOL, G-Mail, Yahoo and other free e-mail services for “official” government communications. There is no commercial phone number, just a cell phone. It has no employees and no record of making tax payments.

Since all government contracting officers are, by the nature of their jobs and their legal responsibilities, risk-adverse, the more steps one can take to mitigate these issues, the better the chances are of being successful.

• Steps to Mitigate Risk

There are specific steps that can be taken to make a business as appear as stable and secure as possible. First, know the requirements of being a government contractor. For instance, all federal contractors must be registered in the Central Contractor Registration (CCR), a federal government web site located at www.ccr.gov. Simply by being successfully registered, a company looks more legitimate and has the legal basics (company name, bank accounts, etc.) covered and documented.

If a company has a track record, ask three to five customers to be a business reference. Contracting officers will check these, so be sure they’re solid.

Create a professional web site describing the services and products offered and clearly define how the business fits into the government market. Use an e-mail address containing the business web site name. Never use the free e-mail services for government contracting communications as they make one appear fly-by-night and unprofessional.

Use a commercial phone number listed in the name of the business; do not use a personal cell phone as the business line. This phone number would be used as the main, or corporate, contact number. Government also wants a separate fax number as well. It is fine to use a cell phone as your direct line, but not as a main business number.

Killer Mistake No. 2

• You Do Not Speak the Language

Whether you are starting at the local, the state, or even the federal government level, every segment has its own language, processes and procedures. If the conversations, acronyms or procedures sound like a foreign language, it is impossible to be taken seriously.

New government contracting terms and acronyms are used at every meeting, outreach session and conference. If one is unsure of what they mean, it is appropriate to ask. People involved in government contracting get very used to speaking in acronyms, technical terms and buzzwords and often do not remember that even they had to learn the terms at one point.

If you prefer to research first and therefore feel more comfortable conversing with contracting officers, you can use resources such as www.sba.gov for study materials.

• Example of Lingo: Purchase Vehicle

Government entities most often do not buy products and services the same way consumers or other businesses may buy. In the private sector, when we sell something to a consumer, we often write up a receipt after the person give us the money. If we propose a complicated or high-cost service or product to another business, we often use a contract that both parties will sign which includes all of the required information and payment process.

Government entities have a more complicated purchase process (with one exception). Most often, they will use something called a purchase vehicle. This vehicle is not something one would drive, but rather it is a tool or method used to buy something.

The good news is a vehicle may be as simple as a credit card. The bad news is that it also might be as complicated as writing a 200-page response to a formal proposal.

A GSA Schedule is a common purchase vehicle used by the federal government. Essentially, it is a pre-approved contract where pricing structure, legal business entity and services and products are all analyzed and final prices negotiated until the vendor and the government agree. A GSA Schedule is a five-year contract, and it is renewable for three more five-year periods, making it a total of a 20-year-long contract.

Once approved for a GSA Schedule, a vendor has not made a sale, but does have a license to hunt — and an easy tool or vehicle for the government to use when it wants to buy something.

• Accept Credit Cards

One of the best and simplest contract vehicles used is a government credit card. The government made more than $40 billion in purchases just last year for all types of products and services simply by using a VISA or MasterCard. If a business accepts these cards, it can participate in this market. Check with a local bank for the steps needed.

Killer Mistake No. 3

• Do Your Homework

The third biggest mistake that business-people make in government contracting is to not be prepared before asking for and meeting with decision-makers. Most government entities, and definitely the federal government, makes all the background information needed readily available; however, one must do the research and homework first.

To find out what opportunities the federal government has available, check the web site www.fedbizopps.gov. While every opportunity is not listed, most over $25,000 are shown, and it is well worth the time and effort to use this site as a mandatory stop in the research process.

To learn what the federal agencies are projecting to buy during the rest of the fiscal year, but for which they have not yet created actual contracts, use each agency’s Forecast of Contract Opportunities at its own web site, usually by searching for the keywords “Small Business Office.” This forecast is a “wish list” of what the agency would like to buy, and a great place to determine if it is worth the time to pursue an agency as a target.

Another extensive data resource available through the federal government is the Federal Procurement Data System-Next Generation. This is a secure web site available to everyone at www.fpds.gov. This is a database of all of the recent past government contract information. It is good to use to find the agencies that have already purchased what you sell. If they purchased it last year, there is an excellent chance they will need it again this year, and next year too.

Eliminating these killer mistakes will help you turn the corner to success in the government contracting market. Use these tips to build a healthy, stable and secure government contracting business.

Gloria Berthold Larkin is president of TargetGov (www.targetgov.com) in Elkridge. She can be reached at 866-579-1346.