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Government Contracts Small Business

There are many benefits for small businesses to contract with the federal government, however very few make the federal plunge. There are approximately 5.5 million small businesses in the United States with employees, and roughly 60,000 have moved forward in federal contracting. A subset of that group of approximately 20%, or 12-13,000 businesses have taken the step of obtaining a GSA Schedule Contract. So therefore, let’s look at the various ways small businesses obtain federal work.

Federal Marketplace Strategy

Mini or Micro Federal Contracts

Micro purchase

Maximum Award Amount: $10,000

A Micro purchase relative to the federal government is a very small purchase. The tradeoff is the effort the federal buyer will spend placing the procurement out for bid vs the risk of being overcharged. For small procurements this risk of overspending is much lower and therefore it becomes more cost effective for the federal government to act quickly and save bureaucratic costs. These purchases often occur with small businesses in one off transaction and as a result those small businesses look for other ways to do business with the federal government as these transactions are very limited.

Federal Marketplace Strategy

Competitive Set-Aside Contracts

Small Business and SBA Certified Firm Set-aside Contracts

Maximum Award Amount: $150,000 SB, Millions for Set-asides for SBA Certifications At least two small businesses could perform the work is the requirement for the government using this type of contact. Some contracts are set aside for small business while others require an SBA special designation. When an SBA special designation is used the maximum award can be much larger and often in the millions of dollars.

Federal Marketplace Strategy

Sole-Source Contracts SBA Certification Holders

SBA Certified firms Sole Source Contracts

Maximum Award Amount: $7,000,000 manufacturing / $4.5 million other

8a. HUBZone, WOSB and SDVOSB firms are eligible for sole source contracts. These contracts are directly awarded to the firm provided that the contracting officer believes the rates are competitive in the marketplace. Generally, a contracting officer will test the SBA Certified firm’s quality with a small contract and then gradually build up to higher and higher contracting levels.

Federal Marketplace Strategy

Simplified Acquisition Threshold (SAP)

Maximum Award Amount: $250,000

To save buying effort, agencies can use the Simplified Solicitation Methods. These can be oral, written, or simple requests for quotations instead of full formal RFQ. These transactions have less documentation requirements because they are designed to reduce the overall administrative burden. At this price point the government FAR assumption is that a small business should be able to submit a solution to the procurement in a cost-effective manner that would give them a reasonable chance at winning and performing on the procurement.

Federal Marketplace Strategy

GWAC Evergreen Contracts

GSA Schedule Contact

Maximum Award Amount: Over $1 million dollar average

GSA Schedules are good for small and large businesses. Small businesses represent 35% of sales dollars from GSA Schedules and are around 22% of overall federal spending so small businesses perform well on the GSA Schedule System.

The basic function of a GSA Schedule contract is to act as an open purchase order where the contract holder agrees to offer their goods or services at the lowest price they have offered them in the commercial marketplace. With around 12,000 small business GSA Schedule holders sharing approximately $14-15 billion in federal sales, the average GSA Schedule holder has over $1.3 million per year in federal sales. A GSA Schedule is a great way to break into the federal marketplace.

Federal Marketplace Strategy

IDIQ / GWAC / BPA Contracts

Maximum Award Amount: Several hundred thousand to tens of millions of dollars

There are many IDIQ and GWAC contracts that come available each year. Agencies or groups of agencies put these contracts together to achieve a specific mission or purpose. Among the largest of these contracts are NASA SEWP, Alliant, Alliant Small Business, 8(a) STARS III, VETS, OASIS, and Polaris. These contracts can take many different forms such as IT, Administrative, Management Consulting, Building Services, or other needed resources. In some cases, firms create a joint venture to fulfill the full spectrum of needs for the IDIQ or GWAC contract. Due to the multitude of these contracts that can come out every year we suggest letting us know if your industry and interest and we will keep you abreast when these important contracts drop.