The federal government requires 23 percent of contracts go to small businesses.
The average small business will submit four proposals before winning a contract, according to American Express OPEN.
Dealing with the government is not something most business people put high on their lists of things they enjoy. But there’s a reason that small business owners are willing to put so much into learning the inner workings of the federal government in an attempt to win contracts.
“The federal government pays on time,” says Lourdes Martin-Rosa. “It’s a solid, viable customer who is less likely to bounce a check.” And, bonus: That non-rubber check comes every two weeks.
Martin-Rosa works with American Express OPEN as an advisor on government contracting, mentoring small business owners on the what they need to know to succeed.
Winning a government contract is not a linear process. Navigating the acronym-laden bureaucracy can stymie the most motivated small business owners, who get bogged down in the paperwork or knocked out of the running with the wrong bid. “The average small business person submits four proposals before they win a contract,” states Martin-Rosa.
For Maureen Borzacchiello, founder and owner of Creative Display Solutions in Garden City, N.Y., it took nearly two years of work to land her first contract. It was with the U.S. Army to create signage at Picatinny Arsenal in New Jersey. Now, she’s on a roll. That project led to more work, including a remodeling job at the Army base in Fort Dix, N.J.
But starting the process was daunting. Borzacchiello learned pretty quickly that applying for a contract required more than “just putting together a response to an RFP.”
Beyond getting familiar with terms such as OSBDU (for the unitiated, that's the Office of Small Business Disadvantage Utilization, each government agency has one, and the person in that office is the key to success), Martin-Rosa advised her to narrow her focus to agencies that were looking for specific types of companies. “I would have tried to take on every division of the government,” said Borzacchiello. Martin-Rosa advised her to contact agencies that were looking to work with women-owned businesses, and to highlight the fact that her company incorporated sustainable products and standards into its services, which gave her an edge over her competition.
The next step was face-to-face meetings with the people that award those contracts, which almost always means a trip to Washington, D.C. “It’s all about establishing relationships,” says Borzacchiello. “That’s been the fun part; that’s what I like to do.”
For Ricki Ann McGuire, president of St. Louis-based Optitek, getting face-time in Washington is the next step on her quest to land a government contract.
McGuire, whose company handles document management and scanning, had a taste of government contract work when Optitek was subcontracted to do a job for the Immigration and Naturalization Service in 2001. She has continued to do work on the state and local level. Now, she’s working toward larger government contracts, and a trip to D.C. is in the works.
McGuire says her company gained a lot from having that subcontract. Despite the fact that the government has more rules and regulations than the private sector, she said, the work we did for the INS “was energizing, and my people learned a lot on that job.”
She was also able to expand her payroll; 15 people were added to her staff due to that contract. If she’s successful in landing another contract, she hopes to add up to 10 employees this time around.
Job generation is a key result of obtaining contracts, and one reason the federal government has mandated that 23 percent of its contracts go to small business. The Obama Administration has been criticized for missing that goal by a few percentage points over the past two years. Congressmen on both sides of the aisle have introduced legislation recently to ensure that the government does better.
The Small Business Growth and Federal Accountability Act, introduced January 18 by Rep. Bill Owens (D-NY), calls for reducing an agency’s budget by 10 percent each year it fails to hit that 23 percent mark.
The GET Small Business Contracting Act of 2012 increases that goal to 25 percent. Introduced by House Small Business Committee Chairman Rep. Sam Graves (R-MO), on January 31, it calls for withholding senior agency officials’ bonuses if that 25 percent goal is not met. Neither bill has been voted on yet.
But this attention is a positive sign for the business owner, says Martin-Rosa. “This new buzz of legislation to boost small business contracting is good news for small businesses,” she said. Noting that the proposed legislation to increase procurement goals to 25 percent could mean an additional $11 billion in contract opportunities for small businesses, she says now is the time for small businesses to take advantage of the opportunities.
“Learning how to tap into the federal marketplace can be daunting, but with this renewed focus towards small business set asides, the odds are on our side,” she said. “One, with the Department of Homeland Security, has a $3 billion small business set aside with multiple contract awards. Large prime contractors are seeking good viable teaming partners in a market exclusively for small businesses.”
It's enough to make some business owners commit more time and effort to winning contracts.
Like Borzacchiello, who is encouraged by her success so far. “Right now, it’s about 5 percent of our work, but my goal is to make it closer to 40 percent,” she said. To that end, she has made the ultimate commitment. "I hired someone six months ago. Her sole job is to focus on the work we need to do to get more contracts."