Breaking new ground: How to crack open the federal contracting world
When you hear about the billions of federal dollars pouring into state coffers for highway and infrastructure projects or read about multimillion-dollar Veterans Affairs hospital jobs, do you ever wonder, "Why not my company?" It's the government after all, how hard can scoring profitable contracts be? It turns out that making the move from the private sector to the world of government contracts might be harder than you think.
Kicking off the process
First, if you even want to be considered for federal work, you have to take care of a few simple tasks — starting with obtaining a D-U-N-S number, free from Dunn & Bradstreet, and then registering with the System for Award Management database at Sam.gov. During registration at Sam.gov, you’ll also be able to obtain a Commercial and Government Entity (CAGE) Code. Both the D-U-N-S and CAGE codes are used to identify you throughout your activity as a federal contractor.
Many states have a similar mandatory sign-up program for those wishing to bid on state construction contracts. Most highway projects are federally assisted, which means the federal government gives the states the money to complete the needed work. So if infrastructure is where you think your fortunes lie, go to your state’s website, look for the "doing business with us" section, and register.
A word about the Sam.gov registration process — the information you have to provide is not difficult, but there’s a lot of it. Here’s where the most crucial rule of government contracting comes into play: Pay attention to details. Some of the information you enter at Sam.gov will determine the kinds of invitations to bid you might receive. And your vendors will use the information you enter here when they're making payment to you during the course of a contract.
Take the legal factors into account
Perhaps the most important factor to remember about government contracting is that many of the conditions of the contracts are not only legally binding, but carry severe penalties if violated, just like in private work. Fines, debarment and even jail time are not out of the realm of possibility.
Attorney Aron Beezley, with Bradley Arant Boult Cummings, said he believes that it’s never too early in the federal contracting process to seek legal advice, particularly when the potential penalties can far outweigh legal fees.
"I'm a big proponent of an ounce of prevention is worth a pound of cure," Beezley told Construction Dive. "It’s better to put in the time up front to make sure that you’re complying with rules and regulations rather than hoping that you’re in compliance."
"Some things that you might be able to do on private jobs, not only can’t you do on federal jobs, but they might be criminal," Beezley said.
Jimmy Christianson, director of the Associated General Contractors of America's federal and heavy construction division, agreed with Beezley.
"If you're trying to go this alone, you can get into a lot of trouble," he told Construction Dive. "Your company could be suspended and debarred, which is basically a death sentence for any federal contractor. Even for a lot of private contracts, they will ask if your company has been suspended or debarred by state government or federal government. If the answer is yes, it’s not going to look good for you from there on out, even for private work."
Prepare for the bonding process
Now is also the time to get your financial house in order because most federal and state projects will require contractors to provide performance and payment bonds. A payment bond guarantees the owner that you will pay all the supplier and subcontractor bills associated with your work, and the performance bond is the owner’s guarantee the project will be completed satisfactorily.
The surety company providing the bond for a project on your behalf is basically telling the owner — in this case either the state or federal government — that if you don’t pay your bills or perform under the contract, they’ll step in and make good on it, even if that means taking over the project themselves.
With that kind of money at stake, count on the surety company doing a thorough investigation of your finances, credit history and how you’ve performed under previous contracts.
Next steps to scoring contracts
So now that you have all your ducks in a row, what’s next? How do you find the work? Almost every federal contract out for bid is listed on the Federal Business Opportunities website. This is truly your go-to resource. In addition, the information you entered during your SAM registration might lead customers to you as well.
However, many experts agree that nothing beats a face-to-face when it comes to getting your foot in the door.
Patricia Bonilla, president and CEO of Florida-based Lunacon Construction Group, which does tens of millions of dollars of federal work annually, said that as soon as she went into business, she began traveling to different work sites to try to better understand the market.
"To get government work, you have to go meet the client," Bonilla said. "They’re not going to come to you. You have to go knock on their doors and try to develop those relationships so that they understand well what you do, and you understand well what they need."
Christianson said the AGC facilitates networking between AGC members and federal agencies on a regular basis and that he has seen relationships develop that would have never made it off the ground if the parties had relied on email.
"Going to those meetings are where you meet people," he said. "You meet your colleagues, and it's really a good first step into making the connection. If you send an email to the CEO of a multimillion-dollar company, they’re probably not going to answer you. But, if you’re sitting next to him at a meeting, you say, 'Hey, I did some work for you a while back with and was wondering if we can talk about that.'"
Bonilla, who is also certified as a minority with the Small Business Administration's 8(a) program, said a woman in the construction business, especially one who is an engineer and owns her own company, is still a rarity. Her minority certification gives her an opportunity but doesn’t guarantee success, she noted.
"There's not a shortage among contractors that are certified," Bonilla said, "but it’s one thing to be certified and one thing to be able to perform — to be a real contractor."
Other options for newcomers
Beezley said that if your resume is a little thin, another entry point is to either act as a subcontractor first as a way of getting your feet wet or consider joint venturing with a more established contractor.
"That can allow you to draw from the experienced company’s resources and experience with contracting with the federal government," Beezley said. "It helps you also share risk. For smaller companies, it can help you increase your bonding capacity."
Beezley added, "It might take more than a few times bidding on a competitively bid contract before you actually win one. Don’t necessarily be discouraged. Learn from the process."