To Bid Or Not To Bid: Government Contracts For Small Businesses

Becoming an entrepreneur has a large number of benefits that you can’t achieve otherwise. Some of the most notable include the capability to work where you want and when you want.

To succeed during the early years of small business growth, though, you will likely need to take advantage of as many opportunities as possible. Some of the most notable are government contracts.

These are sought after by companies across hundreds of different industries. Let’s explore everything you need to know about government contracts for small businesses.

What Are Government Contracts?

In a nutshell, these are formal agreements between a business and a government agency.

The most common type is the agreement used to finance large projects where the private sector is invited to participate through tenders. Small businesses can participate in these projects by bidding on them alongside larger companies with more resources than they have.

While large companies will put together teams of specialists to compete, small business owners can complete the task themselves. This is due to the fact that the actual project will be subcontracted.

If your small business has the knowledge and capabilities to complete a wide range of projects, this could be one of the best ways for you to get ahead. Smaller businesses are given the opportunity to develop new skills in these areas while gaining experience for future projects.

How Can A Small Business Benefit From These Contracts?

This is one of the most important parts of any government contract for small businesses.

The largest benefit you will receive is when your project wins the tender process. This means that you are awarded a large contract to complete a major project.

From the outside, it may seem like you lose by default since your competitors will be larger and more resourceful than you. However, it is important to remember that there is always competition for these contracts regardless of how powerful or established a company already is.

The best way for you to take advantage of an opportunity like this is to demonstrate that your knowledge and abilities are more suited for the job. The next benefit you can enjoy with these contracts is through sub-contracting. This type of arrangement makes it possible for small businesses to outsource parts of larger projects.

You may even be able to complete several sub-projects if they are related enough together. This will allow you to establish relationships with larger companies that may benefit your business in the future. As long as they are satisfied by your work, you have an opportunity to establish a relationship that could grow into more contracts if the circumstances are right.

What Are The Risks?

Although there is always some risk involved when working on government contracts for small businesses, you can reduce this risk by focusing on the strengths of your company. A common mistake many business owners make is focusing too much on their weaknesses and not enough on their strengths.

Since these tenders are competitive, any weakness could cause the entire bid to suffer as a result. For example, let’s say that you have a small business that specializes in IT.

When responding to a government contract, you decide not to include information technology professionals on your team. Although you could complete the job with this limited knowledge, it would be so much better to subcontract the relevant sections of the project or hire a specialist before submitting your bid. By focusing on what you know best in your business, you are in a better position to succeed in these contracts.

Being known in the industry with a strong reputation is another key benefit of government contracts for small businesses. This means that when you submit your bid, it will be taken more seriously by potential clients.

If you have already established yourself with one successful project, this could increase your chance of winning future contracts.

When To Seek Legal Assistance

One of the most important questions you should ask yourself before starting a new contract is if your company needs legal advice. The government will require that all bidders fill out several forms during the process to ensure they are following the rules and regulations.

If there is any doubt about completing these forms, you should hire a legal expert to help you complete the process. This will ensure that your bid is 100% compliant. For this reason, it’s not uncommon for business owners to get in touch with a lawyer early on in the process.

Although it will cost time and resources to do so, the consequences could be dire if you do not. Looking to find government contracts for your company? You can check out this resource to learn more about how to do so.

How Can I Maximize My Chances of Winning Government Contracts?

You can start by identifying key government contacts at the department you want to work with. For example, if you are interested in defense contracts, it would be beneficial to know which section of this department is responsible for managing those types of projects.

Once you have identified this contact, find out what they need and how your company can meet that need. You can even offer to provide advice or give a presentation to this person about how you could be the best choice for future projects.

Getting in touch with this key contact allows you to build an important relationship during the early stages of your bid process. This will increase your chances of being selected since they have already invested time and effort into getting to know you.

Securing a government contract is much like any other business agreement. The more value you bring to the table, the more likely it is that somebody else will want to work with you. Having stellar communication skills is also beneficial.

If you need guidance, check out businesses similar to yours that work with the government. You can then do your best to learn more about the strongest skills they have.

How Does the Process Work?

This process is going to vary depending on which type of contract you are bidding for. As a general rule, all bidders must complete an Expression of Interest at the beginning of the bid or procurement cycle.

Once this has been accepted, you will be able to move forward with your bid and begin negotiations with the client. In order to be eligible for this type of contract, your company must have a certain amount of experience in the industry as well as financial stability. These contracts are generally considered to be non-competitive and only the most qualified bidders will receive a response from the government.

However, you have a better chance of being chosen if you can offer lower prices. If you can provide a solution that is not only superior but also cheaper than your competitors, you will greatly improve the odds of winning the bid. If these requirements are fulfilled and all terms are agreeable to both parties during negotiations, your company’s proposal will be accepted and you win the contract!

There are two different types of competitive bidding for government contracts:

  1. Lowest Price Technically Acceptable (LPTA
  2. Best Value

These two methods are not the same and require different skills when preparing your bid. However, they aren’t as complicated as they might seem.

Understanding the difference between these types of bids will help you better prepare. Let’s explore what both of these are.

Lowest Price Technically Acceptable (LPTA)

When you are preparing your bid, the government usually requires that certain criteria be met. Otherwise, you won’t be able to meet all of the specifications. One of these requirements is that bidders must provide documentation showing how they plan on meeting or exceeding standards set by the client.

After this section has been completed. The government will rate each company’s submission based on price. The lowest-priced bidder is then chosen for the contract.

Best Value

A “Best Value” bid requires you to answer questions about how your solution is better than other bids. You are then asked to rank these answers based on their importance.

The government will look at the ranks and assign a numerical value (between 0 and 100) to each solution. The highest-ranked solution with the lowest score is chosen as the winner. This type of process helps ensure that you are providing the best solution. It also demonstrates how this solution provides measurable benefits.

When you go above and beyond, you are much more likely to win. This shouldn’t come as a surprise, as the government only wants to work with quality businesses.

These types of bids are often subject to negotiation. So, you may have the opportunity to change or modify some terms before a final agreement is reached with the government. You will also want to ensure that your company has enough resources and time allotted for this project before submitting a bid.

What Should You Expect While Bidding?

Once the deadline has passed, you will receive a response from the government letting you know if they accept your bid. This could be anywhere between 30 days and 6 months. You can also expect to begin negotiations shortly after this process concludes.

The next step in the process is to sign a contract with the client and begin project execution. If your bid is not accepted, you can try bidding again or change some aspects of your proposal.

Let’s assume that your bid was rejected at first. This is likely due to not having enough experience.

You can reapply after gaining more qualifications and showing how you have improved as a business. In the meantime, you can improve your skills. The better of a candidate you are on paper, the more likely you will get approved.

When you are preparing to bid, the most important thing is to ensure that your proposal demonstrates how your solution is superior. Showing why yours will be the best choice for the customer will give you a better chance of getting accepted.

What Should I Do if I Can’t Get Any Contracts?

“I need to get contracts so I can make money and grow my business!”

This is a common dilemma for many entrepreneurs in today’s climate. If you find that you cannot compete with larger businesses, the answer is simple.

You must strengthen your weaknesses and begin building your advantages!

If you’re lacking in contract experience, don’t be afraid to use the remarks section to explain yourself. The government is more reasonable than you might think.

Remember that it can take years of working on a small contract before you are ready for larger opportunities! Don’t give up hope, and keep working through these opportunities one at a time.

Over time, you will be able to meet and exceed the standards set by these types of clients and opportunities will start coming your way. Even if you don’t win this contract, you can always try again with another proposal! After you obtain your first few, you will find that it becomes easier to win government contracts in the future.

Obtaining Government Contracts For Small Businesses Might Seem Impossible

Even for those who have had contracts before, it may seem difficult to acquire them. The good news, though, is that the above guide about government contracts for small businesses is a powerful resource. This will help ensure you maximize your success.

You can check out the rest of our blog for other useful information about running a successful company.

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