Pursuing government contracts remains a mysterious process for many small business owners. The task seems almost impossible and achievable only by a few chosen companies. But in reality, federal government contracts are a very effective method of boosting sales for almost any small business! Yes, any. Well, of course, there are certain requirements your business must meet, but in the end GSA contracts are much more attainable than one might think. And this is good news, considering that the overall volume of federal contracts exceeded $690 billion in 2022, of which over $159 billion were awarded exclusively to small business government contractors.
- Understanding GSA Contracts: An Overview
- Benefits of Securing a GSA Contract for Your Business
- Qualifying for GSA Contracts: Requirements and Eligibility Criteria
- How to Identify and Evaluate GSA Opportunities
- Developing a Winning Proposal for GSA Contracts
- Tips for Pricing and Negotiating GSA Contracts
- Managing GSA Contract Performance and Compliance
In this article we explain what GSA contracts are, how to bid on federal contracts, how to win bids, and how government contracting can help you grow your business.
Understanding GSA Contracts: An Overview
Before we get to specifics, we need to understand what a GSA contract is. GSA contracts, also known as Multiple Award Schedules, are contracting vehicles used by various federal agencies to procure a range of products, supplies and services.
A government contract can be awarded to GSA Schedule holders if they either win contract tenders or list their offerings on the federal procurement platform, called the GSA Advantage. The contract is signed for 5 years and can later be prolonged for another 5 years up to three times.
Few know that GSA contracts are not only fully available for pursuit by small businesses, but the GSA is required by federal law to set aside a certain number of government contracts for small businesses only. This creates a range of opportunities for a small business to sell its products or services to federal, state or municipal organizations all over the U.S.
Benefits of Securing a GSA Contract for Your Business
Securing a government contract can yield unbeatable benefits for a small business. Indeed, the government is a reliable and trustworthy client, and so signing a long-term contract to supply your products or offer services to the government is a sure win.
Here are some benefits of holding contracts through a GSA Schedule:
- You access the federal market with thousands of opportunities and an overall value of billions of dollars.
- Your GSA contract is long-term, which means as soon as you secure one, you can constantly sell your products to federal buyers without much additional effort.
- Payments are stable and always in time. The government is a reliable client in every sense of the word.
- Guaranteed prices. After prices are negotiated within the terms of the contract, there are no price changes with just a few exceptions that can be easily ruled out with a proper approach.
- Relatively low competition. The amount of federal contractors is not as overwhelming as on the commercial market, so less marketing efforts are required.
- There are always guaranteed small business government contracts you can bid on.
- By working for the government, you also build your reputation as a reliable vendor on the commercial market. “We work for the government” just sounds too good to avoid placing it on your website.
Qualifying for GSA Contracts: Requirements and Eligibility Criteria
To start your business with the GSA and get a government contract, you need to pass certain eligibility criteria.
First of all, your business must be legal. This means that you must have a tax id, and be registered as a small business on SAM.gov which is the website of the Small Business Administration (SBA). To register with SAM, visit SAM.gov, and fill in the required forms. Note that registering as a small business requires you to know your associated NAICS codes.
If your business is either eligible for participating in certain small business assistance programs or belongs to one of small business special interest groups, you should consider it upon registering. Examples of special interest groups are woman-owned small businesses, disabled veteran-owned small businesses, HUBZone small businesses, and others. The government typically sets aside a number of contracts for such disadvantaged businesses, so designating your company as belonging to one of these categories can provide certain benefits, when competing for bids.
Once registered with the SBA, you receive a Unique Entity Identifier and may submit an application to become a GSA contractor. The UEI replaces D.U.N.S. number that was used as a main business identifier before 2022.
Of course, just being registered at SAM.gov is not enough. Your company must display financial well-being, must not be in debt, be TAA compliant, and offer products or services that fit into one or more GSA Schedule categories. Your company must do business in the industry you want the GSA contract in for at least two years prior. Also, having a clean and positive Past Performance report helps a lot.
How to Identify and Evaluate GSA Opportunities
Suppose your registration at SAM went fine. It is now time to get some contracts. There are several places to look for GSA opportunities:
- SAM.gov. This small business resource introduces a powerful search engine to identify the current GSA contracts for bid on.
- GSA Advantage. This federal acquisition platform also allows you to search for actual contracting opportunities.
- GSA eBuy. Finally, you can look for open Requests for Proposals or Requests for Quotation on eBuy.
Each platform allows you to inspect past contracts, so you can see who won the various awards, and what the terms and conditions were. This allows you to understand both the overall and more specific federal requirements to participating contractors and the products that are being procured. This is an important part of GSA opportunity evaluation.
How to evaluate an opportunity? Before responding to a published solicitation and placing a bid, make sure to read the entire solicitation, every part of every document attached to it. Make sure you clearly understand the terms of the future contract and its requirements, and confirm that you are able to fulfill them.
Developing a Winning Proposal for GSA Contracts
The secret to winning the best GSA contracts for small businesses is to bid competitively. What does it mean?
You see, when a federal agency publishes a solicitation, not only does it want a solution to its problem, it also wants to minimize the costs of a solution, so the pricing has to be reasonable and favorable to the American taxpayer. Whenever you bid on a solicitation, keep in mind that the government evaluates your bid and accepts it only if it considers the bid reasonable.
The requirement of reasonableness implies that you must not submit overpriced proposals with pricing levels that are way beyond the market average. But then, the unusually low prices could also be suspicious. In such instances, you should provide documented proof that your company is really able to provide a product or service at a lower price than competitors.
So, the viable strategy is to investigate past price proposals using one of the pricing tools available on the web, the most common one being USASpending.gov. This way you can get an insight into pricing levels that the government in the past treated as well-grounded within a particular industry. Sure enough, if you can substantiate that your prices, either higher or lower than average, are sound and eligible, the government will be happy to grant you the contract, provided your offer complies with all the pertinent requirements of the solicitation.
Tips for Pricing and Negotiating GSA Contracts
Understand your costs
Your total costs include direct costs, such as labor and materials, as well as indirect costs, such as overhead and administrative expenses. Knowing your costs will help you determine a fair and reasonable price that will cover your expenses while remaining competitive. It goes without saying that you should pay special attention to cost analysis, because many additional expenses related to delivering your product or service to the federal buyer might not be immediately obvious.
Research your competition
Aside from researching past price proposals, it is also advisable to do your homework with regards to the competitors and their offerings. Look at the pricing of other vendors and determine how your prices stack up. If you set the price too high, you may not win the contract. If your pricing is too low, you risk being unable to cover your costs.
Justify your prices
One part of your GSA proposal is the Price Narrative. In this section you should provide a fair and reasonable explanation as to why your prices are as they are. If your prices are higher than your competition, be prepared to explain why. Compliance of your offer with Commercial Sales Practices (CSP) is also a must.
Get ready to go lower in price
After you have submitted your proposal, a contracting officer will eventually get back to you to start price negotiations. The Most Favored Customer principle applies to each and every government contract, so be ready to go beyond the lower threshold you outlined in the pricing section of your GSA proposal; this is standard practice.
Do not accept the first discount offer
Remember: this is price negotiation, so you don’t have to accept the very first discounted offer the CO makes. There are some dynamics in the process, when both sides go back and forth several times, until some fair and reasonable price is determined.
Be willing to walk away
Sometimes, the discount the contracting officer asks for is just too big to handle for your business. Never agree to the price requirement your company cannot fulfill. After all, the whole purpose of a GSA contract is to make profits, not to go broke. If the discount asked is not feasible for your business, it is time to quit negotiations and look for other opportunities.
Managing GSA Contract Performance and Compliance
Successful navigation through the list of government contractors and solicitations is an impressive achievement, but you should not stop just yet. You now need to think about GSA contract management, in order to remain compliant with federal regulations and keep apace with competitors.
Managing your GSA contract performance includes a range of activities, including but not limited to:
- Managing your product catalog. The pricelist and technical descriptions must be up-to-date and conforming with those in the contract. To make your catalog listings more appealing, you can submit images of your products.
- Managing updates and modifications. Whenever you need to modify something in your contract (specification change, constructive changes, product adjustments etc.), you should do this by submitting your revision via the eMod platform. Note, that bilateral modifications require confirmation from your contracting officer.
- Price adjustments. Even though prices are fixed for the entire duration of the contract, there are situations when either you or the government may need to alter them. The government may ask for price reduction in certain cases, and you can submit a request for Economic Price Adjustment, should you decide that the initial contract terms are no longer profitable for you due to economic reasons.
- Monitoring competition. Yes, your competitors are up to every move you make, so you should keep an eye on them too.
Plus, you should also make sure your company and the products it offers remain compliant with federal regulations. Your products may turn noncompliant abruptly and without a preliminary notice. The political climate is inconsistent, so parts and components you imported from certain countries may suddenly fall outside of the Trade Agreement Act (TAA) and you will need to urgently reflect these changes in your GSA contract.
Compliance to various small business certifications is also necessary. You need to review carefully the requirements and timeframes of each particular certification upon renewing it, to see if your business still satisfies them. Here are some examples of such certifications:
- Woman-Owned Small Business certification
- 8a disadvantaged business certification
- HUBZone Program
- Small disadvantaged businesses
- Veteran-Owned or Service-Disabled Veteran-Owned Small Business certification
- Mentor-Protégé Program
Please note that the above mentioned contract administration tasks are not one-time, but rather a continuous, ongoing process! This is part of normal day-to-day GSA contract management that you need to perform either in-house or hire a third-party GSA agent such as Price Reporter to do this for you.
Conclusion
Do you have a question? Really, you should have questions, especially if you are all new to government contracting. The goal of this article is to give you a brief insight into how a small business can leverage federal contracts, in order to grow. But the topic is just too vast to cover in one text, so please don’t hesitate to read through our entire blog. Or just ask a question by contacting Price Reporter directly. We will be happy to assist you with understanding GSA contracts, to eventually win one.
