Think it's not worth the effort to sell your products and services to the federal government? I hear from a lot of small business owners who are convinced that the following myths are true. Think again!
Myth #1 – There are no funds available for small businesses
According to the Federal Procurement Data System, in 2010 a total of $432.3 billion in contract dollars was awarded. Of this amount, $97.9 billion was actually procured with small businesses. This represents 22.65% of available government spending, which is not bad considering the government's 23% goal. And of the remaining $334.4 billion, the large companies that got those contracts need to allot some of that money to small business contractors (see Myth #2). There is obviously a great deal of room for small businesses that wish to contract with the government.
Myth #2 - Small business is not included in federal contracting
If the value of a contract exceeds $550,000, the prime contractor awarded the contract must inform the government of their plan to include small business within the awarded contract. Prime contractors are considered for future opportunities based on how well they carry out this requirement. This provides substantial subcontracting opportunities for small businesses with prime contractors (just be sure to check out my blog post about how large businesses want appliances, not subcontractors). As well, regulations state that any contracts less than $25,000 must be awarded to small businesses.
Myth #3 – All GSA work is DoD (Department of Defense) related
It is true that 60% of activity for GSA Schedule holders is related to defense, and the DoD uses the GSA Schedule as a means to facilitate a great deal of its purchasing activities. However, other government agencies now make up 40% of the activity on the GSA Schedule and DoD’s share has been falling consistently as other agencies make more use of the Multiple Award Schedules (MAS) from GSA.
Myth #4 – The federal government is too large and my small company would just get lost in the shuffle
The federal government attempts to make things as easy as possible for small business. The Federal OSDBU Interagency Directors Council's sole purpose is to help small disadvantaged businesses work with the federal government. There are Procurement Technical Assistance Coordinators (PTACs) in every city – check with your local SBA office.
Myth #5 – The government pays too slowly
Through the Prompt Payment Act, a Federal Acquisitions Regulation (FAR) clause, the federal government is legally required to pay its contractors in full within 30 days or for partial performance hurdle payments within 14 days. The federal government has the funds to pay and if it does not pay promptly it will self-impose interest penalties upon itself.
Don't let these myths stand in the way of your success in doing business with the federal government – learn more about how to get started today.