Many small businesses maintain and increase their operations through reliance on local, state, and federal government contracts. While these businesses may also secure business through the offering of competitive bids on jobs offered by the private sector, small business owners should be aware of the differences in procuring work from the public and private sectors. 

The most fundamental difference between the procurement process in the public and private sectors  concerns the process itself; whereas some private companies may have fairly streamlined processes for awarding contracts to outside bidders, – or may not even bother with competitive bidding at all,  if they are comfortable with a certain contractor,  –  governments at the local, state, and federal level are all obligated to adhere to a significant body of law designed to ensure that: 1) taxpayer money is spent wisely, 2) contracts are not awarded for less-then- legitimate  reasons, and 3) all businesses are provided with a fair opportunity to make their case for the contract in question.

 Government buyers are expected to spend money wisely – in the public interest – so that purchases are usually subject to much public review. To avoid charges of favoritism, most government customers buy by specification using a mandatory bidding procedure.  Often, the government buyer is required to accept the lowest bid that meets the specification. 

Submitting bids for public contracts can be a frustrating experience for businesses. The process of awarding contracts – at the local, state, or national levels – is a sometimes cumbersome one that is still heavy on bureaucracy, despite recent streamlining. In addition, government contracts are far more exposed to public scrutiny than are private ones. But business analysts and government procurement officers agree that the potential benefits of securing public contracts far outweigh the disadvantages. After all, local, state, and federal government offices and agencies comprise the single biggest customer block in the nation. For many small businesses, then, government procurement is a potentially lucrative avenue to long-term organizational growth and success. 

Business consultants, executives, manager, and purchasing officers alike note that there are several keys to successfully pursuing government contracts, no matter what their size or other characteristics.

  1. Learn about the process and the impact of successful bids on business operations. – In addition to conducting basic research  on the agencies and project areas in which they are interested, small business owners need to educate themselves on the nuances of bidding, the repercussions of a successful bid on company operations (workforce allocation, needed facility upgrades, etc.), and a host of other considerations.
  2. Review Federal Procurement Regulations (FPRs) on a regular basis – Small business owner should faithfully check Commerce Business Daily (CBD) and other sources to make sure that possible projects do not pass by unnoticed.
  3. Make bids judiciously – Small business owners should consider many factors when weighing whether to put in a bid on a project, such as current workload, delivery schedule, expectations of the agency, etc.
  4. Submit a strong proposal in accordance with agency guidelines and time-table – Businesses do not always allow for sufficient time to put together an adequately researched and detailed bid. Company leadership should make sure that adequate resources – both in terms of time and effort – are allocated for this purpose. Agencies who receive tardy or shoddy proposals will quickly discard them.
  5. Prepare for the awarding of the project – Businesses are sometimes subjected to pre-award surveys to determine their ability to fulfill all contract obligations; this is especially true if the government office has never worked  with a bidder before.

Key competency areas typically examined by government purchasing agents include:

  • Adequacy of financial resources, organizational talent, technical knowledge, and operational controls to perform the duties detailed in the contract.
  • Ability to comply with the require delivery or performance schedule.
  • Good prior performance record and business reputation. 
  • Access to all production, construction and technical equipment, and facilities necessary for completion of project.
  • Eligibility to receive the contract under all relevant laws and regulations.

Contractors are often asked for extensive information by government purchasing agents, and they should be prepared to hand it over and accommodate surveys and other information-gathering activities by the government office in question. 

Information that may be requested from the contractor includes financial data,  personal information, ad reports on all aspects of production (from technical capability to quality assurance capability), but the agent may also contact  suppliers, trade and business associations, customers, financial institutions, and contract administrators of previous government jobs that your company has completed.


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