5 Things Businesses Should Be Watching in Federal Contracting

By David James, Government Contracting Assistance Program (GCAP) Counselor

Federal contracting can create significant opportunities for small businesses, but success requires more than registering in SAM.gov and searching for solicitations.

By the time an opportunity is posted, other companies may have spent months researching the agency, identifying the requirement and positioning themselves to compete. A strong federal business development strategy starts earlier.

Here are five areas to regularly evaluate as you pursue federal contracts:

1. Is Your Capability Statement Still Working for You?

A capability statement is often one of the first things a contracting officer, small business specialist or potential prime contractor sees about your company. Does yours clearly explain why someone should do business with you? Many businesses create one when they first enter government contracting and continue using it for years, even as their services, customers, certifications and past performance change.

We recommend you review your capability statement regularly to make sure it communicates your core competencies, differentiators, relevant past performance and key contracting information. Avoid trying to include everything your company can possibly do, because a long list of unrelated services can make it harder for a buyer to understand your strengths.

You can also consider developing targeted versions for your major customers or markets. The statement you provide to the Department of Veterans Affairs, for example, may emphasize different experience than the one you provide to the Department of Defense. Think of your capability statement as a sales document; a buyer should quickly understand what you do, who you have done it for and why they should consider you.

2. Prime or Subcontractor? Choosing the Right Path

Many businesses entering federal contracting assume the goal is to become the prime contractor. That is not always the best strategy. Before pursuing an opportunity as the prime, consider whether your company has the resources, personnel, past performance and technical capabilities necessary to successfully perform the contract. 

For newer federal contractors, subcontracting can provide another path into the market. Working with an experienced prime can help your company build relationships, demonstrate performance and gain experience without immediately assuming responsibility for an entire federal contract.

Certain large prime contracts also require small business subcontracting plans, creating opportunities for qualified small businesses. Companies can explore SBA’s SUBNet for opportunities posted by prime contractors.

The question is not simply how to become a prime contractor. Consider which role gives your company the best chance to enter an agency, perform successfully and build toward larger opportunities.

3. Deciding Whether an Opportunity Is Worth Pursuing

Finding an opportunity that matches one of your NAICS codes does not automatically mean you should submit a proposal. Proposal development takes time, money and personnel, making a disciplined Bid/No-Bid process important.

Start by determining whether the work aligns with your core capabilities, whether you meet the qualifications and whether your past performance is relevant. Then consider the competitive landscape. Who currently performs the work? Is the procurement expected to be unrestricted or set aside? Do you need a teaming partner? Can you perform the work at a competitive price?

Review the solicitation for requirements that could affect performance, including cybersecurity provisions, bonding, insurance, clearances, certifications and reporting requirements.

A company might qualify to bid on 100 opportunities but have a strong competitive position on only five. Focus your resources where your company has a credible strategy for both winning and successfully performing the contract.

4. Why Market Research Matters

Rather than starting with “What contracts are available,” consider asking, “Who in the federal government already buys what we sell?”

Market research can help identify which agencies purchase your products or services, how much they spend, who currently receives the work and when existing contracts may expire.

Resources such as SAM.gov Contract Opportunities, USAspending.gov, agency procurement forecasts, SBA resources and agency small business offices can provide insight into potential customers and purchasing patterns.

Pay particular attention to Sources Sought Notices and Requests for Information (RFIs). These are often part of the government’s market research process rather than contracts to bid on, but responding can give businesses an opportunity to demonstrate their capabilities before an acquisition strategy is finalized.

Don’t just watch for solicitations. Pay attention to what happens before they are released.

5. Watch How the Government Is Buying

Knowing what the government buys is important. Understanding how it buys can be just as valuable.

Federal agencies do not purchase everything through standalone solicitations. Requirements may be acquired through existing IDIQ contracts, GSA Schedule contracts, Governmentwide Acquisition Contracts, BPAs, task orders or other established vehicles. That means a business could spend months watching SAM.gov for an opportunity that is ultimately purchased through a contract vehicle the company does not hold.

As you research target agencies, look at how they typically purchase your product or service, which contract vehicles they use and who currently holds them. Procurement forecasts can also provide insight into upcoming opportunities.

Understanding these purchasing patterns can help your company position itself for future requirements instead of simply reacting to opportunities as they appear.

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Build a Federal Contracting Strategy, Not Just a Bid Strategy

Successful government contracting is not about pursuing every opportunity. It is about understanding the market, knowing where your business fits and focusing your resources where you have the strongest chance to compete.

That means doing the work before a solicitation is released. Keep your capability statement current, consider whether prime or subcontracting opportunities make the most sense, research your target agencies and be selective about the opportunities you pursue.

The SBTDC’s Government Contracting Assistance Program can help North Carolina businesses navigate this process. Our team works with businesses at different stages of government contracting, from companies exploring the market for the first time to experienced contractors looking for new opportunities. Counselors can provide guidance on market research, identifying opportunities, understanding the procurement process and developing a more focused government contracting strategy.

Ready to take the next step in the federal marketplace? Connect with the SBTDC to learn more about government contracting assistance and available resources.