How to Win A Government Bid

The U.S. federal government is the largest buyer of goods and services in the world, purchasing everything from loose-leaf paper to construction services. The government purchases almost every kind of commodity and service available; becoming a government vendor has the power to supercharge revenue. It is a valuable endeavor for any business, but the challenging part is getting through the intimidating government bid application and approval process.

Prepare your business before submitting a government bid

  • Businesses must be seasoned, at least 2 years old.
  • Maintained financial reports reflecting consistent revenue and a strong cash flow to sustain the business.
  • An extended history of strong financial management.
  • A track record of timely delivery and staying within budget.
  • Register for company codes: DUNS number from Dun & Bradstreet, North American Industry Classification System (NAICS) codes, Federal Supply Codes (FSC), and Product Service Codes (PSC).
  • Established business credit profiles that reflect a reliable business.
  • Register with the System for Award Management (SAM) to determine whether your business qualifies for preferential status – woman owned, HUBZone Certified, or veteran-owned, to name a few.
  • Make sure you’re complying with federal mandates and regulations.

Small businesses are encouraged to apply

There are federal regulations in place to help level the playing field for small businesses; each year the government must allocate at least 23% of their budget to small businesses. According to the SBA in 2017, $105.7 billion or 23.88% of contract dollars was spent on small business federal contracting.

Helpful strategies for small companies:

  • Research your industry & compliance with SBA standards.

The SBA sets up size requirements for each NAICS code. The standards are based on either size (number of employees) or average annual receipts to qualify as a small business. They offer a list of their size standards.

  • Consider the size of the contract.

A small business will not be looked at for a multi-million-dollar project if their resources won’t meet the needs. Think realistically about what your firm can handle.

  • Align agency needs with your deliverables.

The Federal Procurement Data System is a helpful tool for evaluating which agencies are not complying with the small business contracting goal. Applying for a bid through a non-compliant agency will guarantee the application is seen as a priority. You can also look for open opportunities through FedBizOpps.Gov.

  • Federal budgets.

Pay attention to federal budgets which will detail where funds will be allocated for the coming year.

  • Attend industry events.

Connect with relevant industry leaders both government and private-sector. Follow government agency needs closely and be ready to jump on opportunities.

If your business ends up getting denied for a government bid despite your preparation, look back at the steps you took before applying. Consulting a government bid or SBA consultant can be beneficial.

Business credit could be the culprit

Every financial detail and record that you keep will be scrutinized when you’re bidding for a contract. In addition to financial records, company credit scores and indexes will be reviewed. If there is no information reporting or the scores are poor, bids will likely be denied since you’re reflecting a higher risk company.  For many business loans and credit, the principal can get away with offering a personal guarantee, but personal guarantees are not enough for a government bid. They will be looking for established business credit. The government normally uses Dun & Bradstreet credit profiles, but the other two major business credit profiles should also be at their best (Experian & Equifax).

Many people confuse company credit with personal, there is a common misconception that they’re reported the same. Many business owners assume the company has strong business credit profiles because they have been operating for a long time. This couldn’t be further from the truth. To have business credit profiles, you must be working to build them by purchasing from vendors and creditors who report. The tricky part is, most vendors do not report payment data to the business credit bureaus.

Due to the unregulated nature of business credit, many profiles end up reflecting incorrect information. For instance, companies with similar names may find negative accounts or information on their reports that is related to an entirely different company, a vendor may be reporting inaccurate information about your account, public records might be outdated or incorrect, or derogatory accounts could be causing poor scores and indexes. Many firms have misinformation updated on business credit related to size and revenue making them appear to be much smaller than what is truly accurate which could reflect an inability to handle larger projects.  Reviewing your reports is just as important before entering a bid as it is before applying for a loan or line of credit.

North Shore Advisory offers a Concierge Program for building business credit that is done in-house by our team of Credit Experts. We also offer Business Credit Repair and will customize our services to fit the needs of your unique business. Reach out to us today for a free consultation.


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