Starting a government contracting business can be a complex and challenging process, but it can also be highly rewarding if done correctly. In this blog, we provide answers to key questions you'll need to ask if you are thinking about starting a government contracting (GovCon) business.
Here are some things you need to know when starting a government contracting business:
Understand the government contracting market: The government contracting market is highly competitive and complex. You need to understand the federal, state, and local procurement processes, regulations, and requirements. You should also research the various agencies and organizations that buy goods and services from contractors.
Identify your market niche: There are many different types of government contracts, and it's important to identify your niche. Some examples of niches include IT services, construction, and healthcare. Determine what type of services or products you want to provide and focus on building expertise in that area.
Register your business: Before you can do business with the government, you need to register your business. You can register with the System for Award Management (SAM), which is the federal government's primary database of vendors doing business with the government.
Obtain necessary certifications: Some government contracts require certifications, such as the Women-Owned Small Business (WOSB) certification or the Service-Disabled Veteran-Owned Small Business (SDVOSB) certification. These certifications can help you stand out in the competitive market.
Build relationships: Building relationships with government officials and procurement officers can help you win contracts. Attend networking events and participate in industry associations to connect with potential customers and partners.
Be prepared to meet requirements: Government contracts come with specific requirements and regulations that contractors must follow. Be prepared to comply with these requirements, such as security clearances or specific reporting requirements.
Develop a competitive proposal: Winning a government contract requires a strong proposal. Ensure that your proposal addresses the requirements and specifications outlined in the request for proposal (RFP) and demonstrates your expertise and capabilities.
Understand the payment process: The government payment process can be slow and complex. Be prepared for delayed payments and have a plan in place to manage your cash flow.
Starting a government contracting business can be a challenging but rewarding venture. By understanding the market, identifying your niche, building relationships, and complying with regulations, you can position your business for success.
Small Business Administration (SBA):The SBA offers a variety of resources for small businesses, including those interested in government contracting. They offer training, counseling, and financing options to help businesses get started in the government contracting market.
Procurement Technical Assistance Centers (PTACs): PTACs are organizations that provide free and low-cost assistance to businesses interested in government contracting. They offer training, counseling, and technical assistance to help businesses navigate the procurement process.
Government contracting associations: Joining a government contracting association, such as the National Contract Management Association (NCMA) or the Association of Procurement Technical Assistance Centers (APTAC), can provide access to industry events, networking opportunities, and educational resources.
Online resources: There are many online resources available to help businesses navigate the government contracting market. The Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS) are two important resources for understanding the regulations and requirements of government contracts. The General Services Administration (GSA) also offers resources for businesses interested in working with the government.
SCORE: SCORE is a nonprofit organization that provides free business mentoring and education. They offer online resources and workshops on government contracting and can connect businesses with experienced mentors who can provide guidance and support.
Office of Small and Disadvantaged Business Utilization (OSDBU): OSDBUs are government offices that promote the use of small businesses in federal contracting. They can provide information on contract opportunities, assist with proposal preparation, and help businesses navigate the procurement process.
Mentor-protégé programs: Mentor-protégé programs offer support to small businesses by pairing them with larger, more established businesses in the government contracting market. These programs provide training, technical assistance, and mentoring to help businesses succeed in the government contracting market.
Federal Business Opportunities (FedBizOpps): FedBizOpps is a website that lists federal procurement opportunities. Businesses can search for opportunities by keyword, agency, or location, and sign up for email notifications when new opportunities are posted.
Minority Business Development Agency (MBDA): The MBDA is a government agency that promotes the growth and development of minority-owned businesses. They offer training, counseling, and networking opportunities, as well as access to funding and capital.
These are just a few examples of the many resources available to support a new government contracting business. By taking advantage of these resources, businesses can gain valuable knowledge and support to help them succeed in the government contracting market.
When building a government contracting business, it is important to determine which capabilities to develop in order to be competitive and successful. Here are some good ways to identify the capabilities to develop:
Identify your target market: It is important to understand the needs and requirements of your target market. Research the agencies and organizations you want to work with, the services they require, and the contracts they typically award. This will give you an idea of the capabilities you need to develop to meet their needs.
Conduct a capabilities analysis: Conduct an analysis of your organization's current strengths, weaknesses, opportunities, and threats (SWOT analysis). This will help you identify areas where you have a competitive advantage and where you need to improve.
Conduct a competitive analysis: Research your competition and analyze their capabilities. Identify areas where you can differentiate your business from your competitors and focus on developing those capabilities.
Seek input from customers: Engage with your current and potential customers to gain insight into their needs and requirements. This will help you identify the capabilities you need to develop to meet their needs and win their business.
Develop partnerships: Develop partnerships with other businesses or organizations that have complementary capabilities. This will help you expand your capabilities and offer a broader range of services to your customers.
By using these methods to identify the capabilities to develop, you can position your business for success in the government contracting marketplace.
When determining a competitive fringe benefits package for a government contract, there are several key factors to consider:
Industry standards: Look at what other companies in the same industry and with similar size and scope of work are offering as fringe benefits. This can give you a good starting point for developing your own package.
Labor market: Consider the current labor market in the geographic region where the work will be performed. If there is high demand for skilled workers, you may need to offer a more generous package to attract and retain talent.
Government regulations: Ensure that your fringe benefits package complies with all relevant government regulations, such as the Davis-Bacon Act and Service Contract Act. Failure to comply with these regulations can result in penalties or even loss of the contract.
Budget constraints: Determine how much you can afford to spend on fringe benefits while still maintaining a competitive price for your bid. This may involve making trade-offs between different types of benefits or negotiating with suppliers to lower costs.
Employee preferences: Consider the preferences of your current employees or the types of employees you hope to attract. For example, if you are seeking highly skilled workers, you may need to offer more comprehensive healthcare benefits or retirement plans to attract and retain them.
By considering these factors, you can develop a competitive fringe benefits package that meets the needs of your employees and allows you to win and perform government contracts.
Financial Management: Strong financial management skills are essential to managing the finances of a government contracting business. This includes budgeting, forecasting, managing cash flow, financial reporting, and ensuring compliance with tax laws and regulations.
Contract Management: Contract management involves managing the entire contract lifecycle, from proposal preparation and contract negotiation to contract execution, administration, and closeout. This requires a good understanding of contract law, negotiation skills, and the ability to manage multiple contracts simultaneously.
Human Resources: Managing a workforce in compliance with various laws and regulations requires knowledge of employment laws and regulations, including hiring, employee benefits, and compliance with labor standards.
Information Technology: IT skills are essential to managing the information technology infrastructure and systems needed to support a government contracting business. This includes hardware and software maintenance, cybersecurity, data backup and recovery, and network administration.
Compliance: Government contracting businesses must adhere to various laws and regulations, such as the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS). Compliance skills are necessary to ensure adherence to these regulations, including regulatory reporting, audits, and risk management.
Project Management: Strong project management skills are necessary to manage multiple projects, set realistic goals and timelines, and ensure that projects are delivered on time and within budget.
Overall, a government contracting business requires a team of skilled professionals with expertise in finance, law, contract management, human resources, IT, and compliance.
Managed accounting services for government contractors typically include a range of services designed to ensure that the contractor's accounting and financial management needs are met, and that they are able to comply with the complex regulatory requirements of government contracting. Some of the typical managed accounting services for government contractors may include:
Bookkeeping and Accounting: Managed accounting services providers can provide bookkeeping and accounting services to government contractors, including accounts payable and receivable, general ledger maintenance, financial statement preparation, and other day-to-day accounting functions.
Payroll and Benefits Administration: Managed accounting services providers can also manage the payroll and benefits administration for government contractors, including payroll processing, tax withholding and reporting, and employee benefits management.
Compliance and Regulatory Management: Government contractors are subject to a wide range of accounting and financial management regulations and requirements, and a managed accounting services provider can help ensure that the contractor is in compliance with these requirements.
Budgeting and Forecasting: Managed accounting services providers can help government contractors develop and manage budgets, as well as perform financial forecasting and analysis to help the contractor make informed financial decisions.
Audit and Assurance Services: Managed accounting services providers can also provide audit and assurance services to government contractors, including internal audits, compliance audits, and financial statement audits.
Cost Accounting and Pricing Support: Managed accounting services providers can help government contractors with cost accounting and pricing support, including developing pricing models, determining indirect cost rates, and analyzing and managing cost data.
Financial Reporting: Managed accounting services providers can assist government contractors in preparing and filing required financial reports, including tax returns, financial statements, and other regulatory filings.
Overall, managed accounting services for government contractors are tailored to the specific needs and requirements of the contractor, ensuring that they have the financial management support they need to succeed in the complex and highly regulated world of government contracting.
There are several advantages for government contractors in utilizing managed accounting services, including:
Expertise and Experience: Managed accounting services providers specialize in accounting and financial management for government contractors and have extensive experience in working with contractors in the industry. This means that they have the expertise and knowledge needed to help contractors navigate the complex regulatory landscape and ensure compliance with government contracting requirements.
Cost Savings: Utilizing managed accounting services can be cost-effective for government contractors, as it can help them avoid the need to hire and train in-house accounting staff. Additionally, managed accounting services providers may be able to negotiate lower rates with vendors and suppliers on behalf of their clients, further reducing costs.
Improved Efficiency: Managed accounting services providers can streamline accounting processes and automate routine tasks, such as accounts payable and receivable, payroll processing, and financial reporting. This can help government contractors improve efficiency and reduce the risk of errors.
Enhanced Security: Managed accounting services providers have advanced security measures in place to protect their clients' financial data and ensure compliance with data protection regulations. This can provide peace of mind for government contractors, who may be handling sensitive data related to government contracts.
Scalability: Managed accounting services can be scaled up or down as needed, depending on the contractor's changing needs and requirements. This can help government contractors manage costs and ensure that they have the financial management support they need, regardless of their size or scope of operations.
Overall, utilizing managed accounting services can provide government contractors with a range of benefits, including access to expertise and experience, cost savings, improved efficiency, enhanced security, and scalability.
AtWork Systems designed OneLynk to enable GovCon's to navigate through the challenges of growing a GovCon business by providing a DCAA compliant ERP system to deliver exceptional performance. While a government contractor is maturing in the government market, as either a prime or subcontractor, OneLynk is there to instill the processes and systems needed to help achieve government compliance. AtWork Systems offers fractional subject matter experts - across functions like accounting, HR, financial, contract and project management - to help startups step out on the right foot or to help more mature firms transform ad hoc or inadequate processes into higher levels of performance. The combination of AtWork Systems' OneLynk and associated professional services is available as a comprehensive, secure, and affordable means of gaining the competitive advantage.
AtWork Systems is an Arlington, Virginia based managed services and software development company. Its principals have decades of experience doing business with and working for federal, state, and local government. They developed OneLynk as a configurable and scalable SaaS platform that digitizes and optimizes processes while providing just in time business intelligence for decision making. OneLynk contains a suite of easily configurable web applications for automating and monitoring business transactions, including: human capital management, accounting, timekeeping, expense management, procurement, contracts and project management, payroll services and more. Discover the latest ERP System for Government Contractors at www.atworksys.com.