Before Your Bid: How to Prepare Your Business for Government Contracting
While any individual or business can technically compete for a government contract – assuming it meets the minimum eligibility criteria – not all eligible parties are well-suited for every opportunity, even within their primary industries or categories of expertise. Taking the time to prepare proposals for every federal, state and local opportunity that matches your keywords can take a toll on your resources. The bidding process is complex: It requires a lot of market research, financial investment, and time. Time that can cost more than can be afforded, even for the largest of businesses. That simply means that, if you plan to sell to the public sector or have already begun the process, you really need to pause and conduct an honest assessment of your government contracting capabilities up front.
These are the five areas to focus on during your pre-bid business assessment:
- Business Capabilities: You may believe that you have a firm understanding of your niche but, often times, your goods, services and/or expertise could apply to multiple solicitation categories. You may also have resources to support projects and transactions that are outside your core scope of business but in high demand by the public sector. Develop a tiered strategy that defines the type of opportunities where you would be the strongest competitor, opportunities where you could team up with others to compete, and opportunities that may require a niche capability that you boast. For example, be sure to assign value to being a “green” business if you have the proper certifications. Don’t forget to define your geographical capabilities either. Can you provide services, support systems or construction projects or fulfill orders outside your region? If not (yet), that’s okay. There are actually several advantages to focusing on local agency bids as you will see here and here.
- Business Systems: As we discuss extensively here, every government supplier or contractor must be ready for an audit at any time. In fact, you must be ready for an audit even before you bid as many solicitations stipulate that the company have the proper accounting, human resources (HR), logistics/project management, reporting, and data security systems in place prior to contract award. Given the extensive amount of time and considerable financial investment required to integrate and optimize these systems, it is important that you have them in place before you spend time preparing a proposal. Research each agency’s minimum system requirements before spend a penny on a solution, as you don’t want to go through all of that effort only to be disqualified due to non-compliance.
- Labor/Inventory Resources: Underestimating labor demands or inventory availability, and therefore overcommitting to a customer, is one of the most devastating mistakes that government contractors and suppliers can make. You never want to under-deliver to a customer, especially when your performance record is so influential in future contract awards. Before you even start to search for bid opportunities, understand – and accept – your supply chain and/or worker output levels. Confirm that you have the manpower to service additional sites. Verify with your parts suppliers and manufacturers that they can fulfill additional orders on a very strict timeline. (You do not want to bust a suspense defined in your government contract. More on that below.) Check with your subcontractors about their bandwidth to support a major new infrastructure project. Will they have the equipment and people to start their part when and where you need them? If not, it’s critical to identify backup sources or have additional laborers on standby.
- Financial Resources: For many of the same reasons just explained, it is important to assess your finances and understand your current bandwidth before deciding to bid. Breaking into government contracting should not be a burden for any business, but it often becomes one due the misunderstanding about financial obligations and payments. Make sure you have the means to maintain your current operating tempo (sales, marketing, operations, labor, support, inventory, etc.) and quickly take on additional obligations. Just like you need a personal emergency fund, you must be confident that your business can comfortably fund payroll, resources, materials, etc. for the duration of the contract – even if you don't receive payment from the government until the end. Also, be sure to set a realistic pricing model, one that is competitive but that doesn’t become detrimental to your balance sheet. And don’t forget to define your bottom line for every contract award before you start to negotiate pricing with the customer and contracting officials – if and when you get to that phase.
- Legal/Regulatory Compliance: One of the most challenging requirements of government contracting is indeed the “requirements” themselves. There are rules, regulations, acts, and statutory requirements. Then there are Executive Orders and bid/award protests. And though many public sector organizations rely on the Federal Acquisition Regulations (FAR) as their procurement guide, nearly every federal, state, and local agency will issue their own guidance on vendor qualifications, performance expectations, invoicing and payments, insurance and bond requirements, and project or contract-specific terms and agreements. However, complying with government contracting rules doesn’t have to be painful. You just need to put a strong team in place to help manage these requirements from a financial, legal and administrative perspective. There are also third-party resources that can offer assistance with liability education and risk management.
If you want to increase your win rate, or decrease the volume of resources wasted in the pursuit of government contracts, then it is essential to invest in your pre-bidding due diligence as much as you do in the development of the proposal itself.
Beyond conducting a self-assessment, it is important to anticipate your potential contractual obligations so that you can prepare accordingly before you put you name in the hat for consideration. Completing this multi-step deep dive early in the process will enable you to weigh the potential payoff vs. the bidding process cost and embrace a more strategic approach to bidding (versus just casting a wide net and hoping for the best).
By filtering out the opportunities that would strain your business (at least for now), you will have more bandwidth to focus on winning the bids that align with your resource capacity. In fact, when you do win, you will be ready to hit the ground running without delay or undue burden on your business, financially or otherwise. Even better, these more strategically secured wins will drive the incremental growth that your business requires to become competitive for more demanding opportunities in the future.