The U.S. military spending has been growing since 2015. The requested military budget for FY 2022 exceeded $715 billion (compared to $705 billion of FY 2021), and for FY 2023 an even higher budget has been requested; up to $773 billion. Surely, this opens up a lot of opportunities for small businesses that are in pursuit of government manufacturing contracts. In this guide, we will explain how government contracts work, where to look for military tenders, and how to bid on the Department of Defense and U.S. Army contracts.
- Overview of government military contracting
- How to bid on government military contracts
- Identify your product and socioeconomic category
Overview of government military contracting
Overall, government military contracts are very similar to any other government contracts. Yes, there are additional security requirements to vendors providing products and services to military agencies, but the overall principles of working with the government remain the same.
You can win a military contract from a number of agencies, namely:
- Department of the Air Force
- Department of Defense
- Department of theNavy
- National Guard
- U.S. Army
- U.S. Coast Guard
- U.S. Marine Corps
Each agency has corresponding small business offices dedicated to helping small companies acquire military contracts. Moreover, subdivisions within an agency may also have such small business offices, which is an important point we will discuss later.
There is a school of thought that selling to military agencies is exclusively for larger companies or businesses that manufacture some military type of merchandise, like weapons and armor. But in reality, the U.S. Army, DOD and other agencies constantly need almost anything from clothes and furniture, to office supplies and janitorial services. There are hundreds of military manufacturing opportunities for any kind of company or services provider. So, whatever your business is about, you can certainly bid on, and succeed in winning military contracts.
How to bid on government military contracts
Before you can bid on government manufacturing contracts, you should first complete a number of steps. Becoming a federal contractor requires you to undergo the entire process. The brief description of such steps is below.
Identify your product and socioeconomic category
The entire military contracting system is tied to North American Industry Classification System (NAICS) codes. Federal agencies use NAICS codes for procurement and statistical purposes, so obtaining one for your products and services is obligatory. Then, you would also have to obtain a Product Service Code (PSC), a four-digit code required to sell to federal agencies. Unlike NAICS code which are rather general, PSC codes are a narrower, more specific identification of your product. You can get PSC here.
You would then need to determine your socioeconomic category. Veteran-owned businesses and businesses in historically undervalued zones receive special contracting conditions, so you better learn about available options beforehand.
Things to do before you can apply for a military contract
Before you can apply for government machining contracts or some other military contract, you should legally register your business, and create an account on SAM.gov. To officially register as a business entity, you should receive a Unique Entity Identifier (UEI) along with a Commercial and Government Entity (CAGE) code. You will then be able to create a profile at SBA.gov and register at SBA Dynamic Small Business Search database. This database allows federal agencies to quickly locate contractors among small businesses.
Understand your market
The government market is a whole different realm vs. the commercial one. We recommend searching up applicable regulations, governing cooperation of federal agencies with small businesses. This includes such documents as FAR, DFARS, NMCARS, and so on. Also, you can explore what the agencies’ current demands are, using a range of market tools, i.e. those offered by Price Reporter.
Bid on military contracts
Look for federal government contracting opportunities at SAM.gov. Federal agencies publish RFQ and RFI there, as well as on other federal acquisition platforms, and that is where contractors can place manufacturing contract bids. The procurement officer will then review bids and select the one that matches the contract best, and offers the lowest prices. Winning a military bid depends on many factors, and one of the most important of them is making a reasonable offer with well-explained costs. Experience and good financial reports are vital, as well.
You should also take into account the various categories of federal contracts. There are micropurchase contracts (typically below $10,000) where an agency directly purchases the product from a vendor. Then, there is the Simplified Acquisition Procedure that allows agencies to speed up procurement. The SAP has a limit of $250,000. The third option is a formal contract that exceeds the limit of the Simplified Acquisition Threshold.
Conclusion
Surely, getting a government military contract may seem an impossible task at first. And we cannot thoroughly explain all the details of the multilayered process in a brief article. So, if you need help getting a GSA contract, please do not hesitate to contact Price Reporter.
The article on General Services Administration was very very much so, enriched. As an entrepreneur; very much interested in pursuing a Military Contracts.