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Preparing your Small Business

for the Federal Market

Presented by: Karen Williams, Certified Mentor, DC SCORE

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With SCORE, You Are Not Alone on Your Journey

For over 50 years, SCORE has served

as America’s premier source of free

business mentoring and education.

As a resource partner of the U.S.

Small Business Administration (SBA),

SCORE has helped more than 11

million entrepreneurs through

mentoring, workshops and educational

resources since 1964.

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SCORE Can Help You Find the Way Ahead

• Free one-on-one business counseling

and mentoring

• Business advisory services

• Low cost local workshops

• Free templates and recorded

webinars

To meet with a mentor or learn more

about SCORE’s resources, visit

washingtondc.score.org

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Today’s Session Objectives

• Develop an understanding of the reasons to consider selling to the

Federal Government market

• Develop an understanding of the different types of Federal

Government certifications

• Determine if you qualify

• Steps to Sell to the Government

• Market Research – how to do it; why is it important

• Subcontracting Strategies

• Next Steps – find out how to move forward

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Government Contracting

• The U.S. Government is the largest buyer in the world, outsourcing

$400B - $500B annually on products and services

• 40% spent on products; 60% on services

• Less than 5% of the businesses in the United States do business with

the U.S. Government

• Approximately $1 billion in new opportunities are available to be bid

on by private businesses every day

• The Federal Government signs over 10 million contracts a year

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Government Contracting (cont.)

• Companies are awarded new contracts daily

• Approximately 95% of federal contracts are awarded to small and

medium-sized businesses

• The U.S. Government procures everything from armored vehicles

and cutting-edge scientific research, to paper clips and super

computers

• A significant share of those contracts are specifically available for

award to small businesses

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What Can a Federal Contract Do for Your Business?

• What a Government Contract can do for your business:

• Diversify your customer base

• Cover overhead/G&A costs

• Even out cash flow

• What a Government Contract cannot do for your business:

• Jump-start your business

• Save your business

• Be the sole source of your business (especially for start ups)

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Benefits of Contracting with the Federal Government

• You get paid regularly

• Your client won’t move away, run away, hide and/or not pay their bills

- you will get paid!

• Government contracting allows businesses, many small and mid-sized

businesses, to have a bevy of profitable, long-term contracts

• The high profile your company achieves as a result of Government

contracts can be a good advertising tool for your firm

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SBA Small Business Certifications

Provided by SBA - For more information go to www.sba.gov

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Contracting Goals

PROCUREMENT TARGETS:

Small Businesses: 23%

SDVOSB: 3%

SDB: 5%

WOSB: 5%

HUBZone: 3%

$500 Billion per

year

U.S. Government: The World’s Largest Customer

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Small Business Prime and Subcontracting

• Prime contracting is where you have a direct contract with the

Federal Government

• Subcontracting is where you have a contract with a Prime contractor

• Large Businesses may have small business subcontracting goals for

large contracts – approximately $80 billion/year in opportunities

• SBA Procurement Center Representatives (PCRs) advocate for small

businesses at buying activities, along with Agency’s Office of Small and

Disadvantaged Business Utilization

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What is a Small Business?

• The SBA defines a "small business" either in terms of the average number of

employees over the past 12 months, or average annual receipts over the past

three years. SBA defines a U.S. small business as a concern that:

• Is organized for profit

• Has a place of business in the U.S.

• Operates primarily within the U.S. or makes a significant contribution to

the U.S. economy through payment of taxes or use of American

products, materials, or labor

• Is independently owned and operated

• Is not dominant in its field on a national basis

• The business may be a sole proprietorship, partnership, corporation, or any other

legal form. In determining what constitutes a small business, the definition will vary

to reflect industry differences, such as size standards.

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SBA Size Standards

• Manufacturing 500 to 1,500 employees

• Non-manufacturers 500 employees

• Servicing $7.5 Million/ $38.5 Million

• Construction $7 Million/ $36.5 Million

• Agriculture $750,000/ $27.5 Million

https://www.sba.gov/sites/default/files/files/Size_Standards_Table_2017.pdf

Size Standards are based on NAICS (North American Industry

Classification System) Codes

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Types of Federal Contracting Certifications

• Self-Certified:

• Small Businesses

• Small Disadvantaged Businesses (SDB)

• Service Disabled Veteran-Owned Small Businesses (SDVOSB)

• Women-Owned Small Businesses (WOSB)

• (Self-certified, but must upload documents to SBA portal or be 3rd-

Party certified)

• SBA-Certified:

• Historically Underutilized Business Zones (HUBZones)

• 8(a) Business Development Program

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Small Disadvantaged Businesses (SDB) Eligibility Criteria

• Since October 2008, small businesses can self-represent their status

as a small disadvantaged business (SDB)

• To self-represent as an SDB, register your business in the System for

Award Management (SAM). However, you and your firm must still

understand the SBA eligibility criteria for SDBs:

• The firm must be 51% or more owned and controlled by one or more

disadvantaged persons

• The disadvantaged person or persons must be socially disadvantaged

and economically disadvantaged

• The firm must be small, according to SBA’s size standards

https://www.sba.gov/contracting/government-contracting-programs/small-

disadvantaged-businesses

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Service-Disabled Veteran-Owned Small Business

• Must self certify in SAM

• The Service Disabled Veteran (SDV) must have a service-connected

disability that has been determined by the Department of Veterans

Affairs or Department of Defense

• The SDVOSBC must be small under the NAICS code assigned to the

procurement

• The SDV must unconditionally own 51% of the SDVOSBC

• The SDV must control the management and daily operations of the

SDVOSBChttps://www.sba.gov/contracting/government-contracting-programs/service-disabled-

veteran-owned-businesses

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Service-Disabled Veteran-Owned Small Business (cont.)

• The SDV must hold the highest officer position in the SDVOSBC

• The SDVOSB is eligible for Set Asides and Limited Sole Source

opportunities

• For Department of Veterans Affairs (VA) procurements, firm must be

certified by the VA

• Vets First Verification Program

• https://www.va.gov/osdbu/verification/

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Women-Owned Small Business Program

• Firm must meet the small business size standard for the contract and

be at least 51% unconditionally and directly owned by women who

are U.S. citizens

• Woman (or women) must manage the day-to-day operations on a

full-time basis

• A woman must the hold highest officer position in the business

• Personal net worth (assets minus liabilities) is less than $750,000 for

EDWOSB

www.sba.gov/contracting/government-contracting-programs/women-

owned-small-businesses

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Women-Owned Small Business Program (cont.)

• Set-asides and limited sole source awards are permitted

• The set aside or sole source procurement must be in the industries

designated by SBA as underrepresented or substantially underrepresented.

SBA has designated six-digit NAICS codes to denote the industries where

WOSBs are underrepresented or substantially underrepresented. Current

list of six-digit 2017 NAICS codes eligible for use under the WOSB Program

may be viewed at the link below.

www.sba.gov/contracting/government-contracting-programs/women-

owned-small-businesses

• 364 six-digit NAICS industries are WOSB eligible Industries

and 80 six-digit NAICS industries are EDWOSB

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HUBZone

HUBZone - Historically Underutilized Business Zone

• Program is designed to stimulate economic development and create

jobs in urban and rural communities

• HUBZones are defined by Census Tract or counties

• Map will not change until after 2020, then every 5 years thereafter

• HUBZone Map found on www.sba.gov

• Set asides and limited sole source for certified HUBZones

https://www.sba.gov/contracting/government-contracting-programs/hubzone-program

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HUBZone (cont.)

• Must be a small business for its primary NAICS code

• Owned and controlled at least 51% by U.S. citizens

• Principal office of the concern must be located in a HUBZone

• At least 35% of the concern’s employees must reside in a HUBZone;

residency means to live in a primary residence for at least 180

days, or as a currently registered voter, and with intent to live

there indefinitely

• For additional information please refer to:

www.sba.gov/contracting/government-contracting-

programs/hubzone-program/applying-hubzone-program

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8(a) Business Development Program

• Nine-year business development program

• Training in business management & marketing

• Access to set-aside contracting opportunities

• Sole Sourcing Direct Award Contracts

• U.S. citizen, own unconditionally at least 51% of concern

• Business must be small per SBA’s size standards

• Two (2) years in-business requirement (may sometimes be waived)

• Social and Economic Disadvantage required

https://www.sba.gov/contracting/government-contracting-programs/8a-business-development-

program/about-8a-business-development-program

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8(a) Eligibility Criteria

Economic Thresholds - Assets, Income, Net Worth

• Before SBA can approve an application, the individual(s) claiming to be

disadvantaged must submit supporting documents to prove their assets,

income, and net worth fall below certain threshold amounts. These include:

• Assets cannot exceed $4 million

• Personal income cannot exceed $250,000, averaged over 3 years

• Adjusted net worth must be less than $250,000, excluding equity in

business, primary residence, and retirement account

• 13 CFR 124.104

*When married, separate statements from each spouse are required to show each individual’s joint or community

property shares and separate property - http://www.sba.gov/content/economic-disadvantage-eligibility

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For additional information please

refer to: www.sba.gov/allsmallmpp

Applications now being

accepted, via certify.sba.gov.

for All Small/8(a), or through

District Office for 8(a)

8(a) and All Small Mentor Protégé Program

Protégé Needs: Six categories

1. Management &Technical

Assistance

2. Financial

3. Contracting

4. Business Developing

5. General/Administrative

6. Trade Education

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Mentor Protégé and Limitations on Subcontracting

• Approved Mentor Protégés may joint venture and be considered

small and socioeconomic status of the protégé

• Set aside or sole contracts, there are limitations on the amount that

can be subcontracted

• Supply set aside or sole source contracts, prime must supply the

product of a small business unless SBA has issued a waiver

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SBA Certifications Handout

• The following handout provides a

summary of all the Small Business

Certifications:

https://www.sba.gov/sites/default/fil

es/articles/Small%20Business%20C

ertifications.pdf

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Questions re Certifications?

?

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Steps to Sell to the

Government

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Steps to Sell to the Government

• Business must be established in the commercial marketplace with EIN and

DUNS numbers

• Identify your product or service

• Identify your NAICS code(s)

• Register in the System for Award Management database (www.sam.gov)

• Determine small business program set-aside eligibility – do you qualify?

• Conduct Market Research

• Look at what the Federal Government has purchased previously

• From whom did they purchase – at what price?

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Market Research

• Where to start?

• Federal Resources:

• FPDS.gov

• USASpending.gov

• Agency Forecasts

• Begin searching by Agency

• Continue searching FPDS by Date Signed, NAICS, Socio-Economic

Indicators, etc.

• Search USASpending by contractor, location, fiscal year, etc.

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Market Research (cont.)

• Become a “sponge” – learn how the Federal process works

• Attend Workshops

• Buy books on the Federal process

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Market Research (cont.)

• Let’s do it together

• Scenario – you’re an IT support contractor looking for opportunities

at the Department of Justice

• Steps:

1) Review DOJ’s FY19 procurement forecast to identify potential

opportunities

2) Identify applicable NAICS codes (e.g. 541511, 541519) or key

words

3) Pinpoint specific opportunities

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Market Research (cont.) DOJ’s FY19 Forecast

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Market Research (cont.)

4) Cross reference with FPDS.gov

5) Cross reference with SAM.gov/Dynamic Small Business Search

(http://dsbs.sba.gov/dsbs/search/dsp_search-

help.cfm?goto=Certs)

6) Find a contractor/research their corporate website – look for

mutual connections on LinkedIn

7) Find a contract/request a copy under Freedom of Information

Act (FOIA) - learn what DOJ is actually buying – read the

Performance Work Statement

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Market Research (cont.) FPDS.gov

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Market Research (cont.) SAM.gov

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Market Research (cont.)

8) Attend DOJ events

9) Schedule an appointment with a DOJ Small Business Specialist –

discuss how your firm can help them meet their mission; have

specific “asks”

10) Develop a strategy

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Market Research (cont.) DOJ-OSDBU

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Subcontracting Strategies39

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Pursuing Subcontracting Opportunities

Treat subcontracting as part of your multiple revenue streams

• Perform market research to identify prime contractors

• Identify subcontracting opportunities

• Market your services and products to a prime contractor

• Develop a unique marketing strategy (more on this later)

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Perform Market Research to Identify Prime Contractors

• Utilize research tools such as FPDS.gov and USASpending.gov

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• Utilize SUB-Net: www.sba.gov

• Click on Subcontracting

• Click on SubNet

• Review Agency’s forecast

• Visit prime contractor’s website; introduce yourself to their Small

Business Liaison Officer (SBLO)

• Review solicitations on FBO.gov

Identify Subcontracting Opportunities

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Market Your Services/Products to Prime Contractors

• If it is an Agency of focus for you, treat it as such! Treat that large

business as a customer you are marketing

• Establish relationships with project managers and/or business

development staff

• Participate in events organized by industry associations – become an

active member – Network!!

• Attend pre-solicitation meetings hosted by Agencies and prime

contractors

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Develop Unique Marketing Strategy

Examples include:

• You have a contract with the Agency

• You have relationship(s) within the Agency

• You have recent and/or relevant past performance

• You have teamed with large businesses before

• You have the resident and/or unique expertise

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Becoming a Preferred Subcontractor

in the Federal Contracting Market

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How to Become a “Preferred Subcontractor”

Understand What Motivates Prime Contractors

• The only true mission statement:

• Provide owner(s) with a rate of return on their investment better

than they can receive by investing their resources elsewhere. We

do this by:

• Winning business

• Performing the business we win profitably

• A preferred subcontractor will support one or both of these

missions

Aronson information

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Deal with the Decision Makers

• Small Business Subcontractor Fairs are not productive

• Bidders list only work for commodities

• Business Development Professionals make the decisions

• You find them

• They find you

How to Become a “Preferred Subcontractor”Aronson information

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How to Become a “Preferred Subcontractor”

Be a Good Contractor

• Corporate experience

• Past performance references

• Relationships with key agency executives

Aronson information

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How to Become a “Preferred Subcontractor”

Other Attributes of Preferred Subcontractors

• Competitive prices

• Strategic hires

• Quid pro quo, you let us bid with you, we will let you bid with us

• Help with the proposal

• Handle staffing surges

• Ethical

• Adequate business systems, especially accounting

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How to Become a “Preferred Subcontractor”

Things NOT to do

• Don’t depend on your small

business status

• Don’t just provide staff

augmentation; you should offer

more

• Don’t be all things to all people;

develop a niche

Aronson information

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Next Steps

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Develop a Strategy

• Target 2 – 3 Agencies and 4 – 5 Prime Contractors

• Have clear discriminators and a value proposition

• Establish and build relationships with selected Agencies and Prime

Contractors

• Team with other small businesses

• Network, network, network

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Develop a Strategy (cont.)

• Develop a Federal Marketing Plan

• Capability Statement

• PowerPoint presentation

• Timeline

• Website

• Find a mentor; ask for help

• SCORE

• Women’s Business Centers

• Small Business Development Centers

• PTAC

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SCORE Help is Available

• Contact your local SCORE office; register for a mentor at

www.score.org

• Request a free 1:1 appointment with a SCORE mentor with

Federal expertise

• Watch Federal Webinars on www.washingtondc.score.org

• Attend Federal Procurement Workshops to learn how the

Federal Government buys goods and services

• Prepare for a long, but fruitful journey

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Questions?

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Contact our local Chapter for

more help

www.washingtondc.score.org

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