How to Win and Fund Government Contracts: A Complete Guide
Government Contract Financing
Bankers Factoring Government Receivables Financing-Be ready to win that Govt RFP
- How to Win and Fund Government Contracts: A Complete Guide
- Government Contract Financing
- Govt Factoring & Govt PO Funding
- A Government Contract Factoring & PO Funding Company
- How to Prepare for and Find Government Contracts
- Easiest Government Contracts to Win
- Government Contracting Mentor
- How to Bid on Government Contracts
- Types of Government Contracts
- Top Tips to Get Government Contracts
- Financing a Government Contract
- Letter of Comfort or Letter of Financial Capability
- Ready for the owner-employees of Bankers Factoring to fund your entrepreneurial dreams with government contract funding? Call 866-598-4295 or go to Bankers-Factoring-Application.
A Government Contract Factoring & PO Funding Company
Pumping over $1 trillion annually into businesses across the country, the US government remains the largest single purchaser of goods and services from large and small companies. Businesses of all sizes and industries can win contracts with the federal government. These contracts don’t just go to Fortune 1000 companies.
Fully 23% of U.S. government contracting funds go to small businesses. Firms include staffing agencies, janitorial services, merchandise providers, and technical consultants. These firms can offer valuable services to fulfill small and large federal contracts. Many use government invoice factoring and purchase order funding to fulfill the government contracts they have been rewarded. Bankers Factoring also has special programs for Veteran-Owned Businesses selling to the US Government.
The biggest challenge after winning the award is getting government contract funding. As a government contract financing company, Bankers Factoring, a government factoring & PO funding company, compiled this basic guide about what you need to know to win and fund government contracts so you can grow your business, scale your team, and improve your bottom line.
How to Prepare for and Find Government Contracts
Finding government contracts can feel like searching for that proverbial needle in a haystack. Uncle Sam puts out so many calls for proposals each day. It can overwhelm the most intrepid small business owner to sort through them and select the most likely options. Before you search online databases, be sure you are ready to take on the complexities of a government contract.
The last thing you want is to make a high-volume mistake that could cost you big in lost products, delayed checks, and fines. Realize, too, that many contracts show low-profit margins. This can be harder to finance, although they result in high business volume and a regular revenue stream.
Due to the sheer complexities of federal contracts, some companies choose to work as a subcontractor for another firm to learn the ropes of government contracting first. Working as a subcontractor also helps bolster your first bid. This will show your company that it can deliver the goods and manage the back-office end of a federal contract. You can use the SBA SUBNet website to search for subcontractor opportunities.
Once you know the time is right for you, seek federal funding. Make sure to register with the System for Award Management (SAM) using your D-U-N-S number. Signing up for SAM is free and easy. However, unscrupulous companies will send pushy emails offering to shepherd you through the process in exchange for hundreds or thousands of dollars. They are scammers. Ignore them. Just go to the SAM site, fill out the form, press the button, and you’re done.
After you complete the Sam registration step, you can start searching the online federal marketplace. Contracting Opportunity Finder, is a newer initiative now part of sam.gov site. This initiative serves as a searchable database specifically targeted at companies new to U.S. government contracts. It also lets you search by keyword, location, date, or business label. Other government websites like the FedBizOpps database (now part of sam.gov) and each agency’s Offices of Small and Disadvantaged Business Utilization list current bid requests.
Beware of any site that charges you to search for government contracts. All official listing sites are free.
Easiest Government Contracts to Win
The easiest government contract to win is the one you can execute and manage. Government contracting does not require sleight-of-hand tricks in wording or budgets. Just a perfect alignment with what the federal agency wants to purchase and your ability to execute it at a reasonable cost. Searching for small contracts can be a good idea for beginners.
While the high-dollar numbers at the top of thick request packets can entice you, slowly building your contracting business is better. You can even bid on projects worth as little as $3,000. It can seem like much work for a small reward, but it’s always a good idea to make your first errors. When the stakes are low, and the problems are easier to fix. Learn as you go.
Government Contracting Mentor
Another way to make government contracting easier is to identify a mentor or coach through your industry’s professional organizations. Attending a conference or networking online can give you access to experienced consultants who won’t overcharge you for the benefit of their advice and help. You can also contact a local Procurement Technical Assistance Center (PTAC). The federal government set up PTACs to help guide small businesses through the process of finding and bidding on contracts.
Once you’ve located the right opportunity for you, decide if you will submit the bid. Although having the federal government as a client can prove profitable, you want your contract to be the right decision for your agency. Ask for advice. Run your forecasts. Use your data. Only then should you make a bid.
How to Bid on Government Contracts
Begin by writing a capability statement. This document includes a thumbnail sketch of your business and a brief statement about your past performance. Your goal in this document is to give the contract agent an idea of your company’s scope and ability to execute a contract and alleviate any concerns.
Typically, a capability statement includes company information, and these are:
- A brief narrative history
- Biographies of key staff
- Your DUNS number
- A list of your vendors
- A list of your clients
The Federal Contracting Center offers a free online document about writing a capability statement, which can serve as a helpful guide.
Next, identify the type of solicitation you are responding to. In general, the federal government offers
Four kinds of solicitations:
- Request for Quotation (RFQ) – You are not making an offer. You send information and a quote.
- Request for Proposal (RFP) – You send a full business proposal.
- Invitation for Bid (IFB) – You submit a sealed proposal to provide a specific good or service.
- Request for Information (RFI) – A preliminary document used when the government wants to better understand your industry before issuing another kind of solicitation.
No matter what kind of solicitation you are responding to, be sure to read the document thoroughly. Highlight any areas you do not understand so you can ask the contracting officer about them. Don’t be afraid to call your officer since helping companies create their bids is their job. After a careful read-through, use USASpending.gov to research past bids so you can make sure yours is competitive.
It’s also a good idea to research your price estimates thoroughly. So you don’t accidentally eliminate your profit margin to get a contract. Finally, when you write your proposal, respond to each requirement in the bid. A missing section can disqualify you from consideration. So have a colleague review the document for completeness and accuracy before submission.
Types of Government Contracts
The U.S. government offers numerous contract types, including fixed-price contracts, cost-reimbursement contracts, incentive contracts, and indefinite-delivery contracts.
- Fixed-Price Contracts – These are the most common contract the U.S. government extends to small businesses. While they come in multiple forms, all fixed-price contracts have a clear scope of work and a price determined in advance.
- Cost-Reimbursement Contracts – Used when the costs would be too difficult to estimate ahead of the project. These contracts work on a defined spending limit and limit the risk to the supplier.
- Incentive Contracts – In these contracts, the contractor receives an incentive payment determined according to a sliding scale once the project is complete.
- Indefinite-Delivery Contracts – The U.S. General Services Administration says, “Indefinite delivery, indefinite quantity contracts provide an indefinite quantity of services for a fixed time. They are used when GSA can’t determine, above a specified minimum, the precise quantities of supplies or services that the government will require during the contract period.”
Being prepared with all the proper licensing, forecasts, insurance, back-office staff, vendors, and government contractor financing in place can help you secure and manage any type of government contract.
Top Tips to Get Government Contracts
Winning and financing government contracts is a direct and complex process. The steps are clear and well-documented, but the sheer volume of effort required to secure a contract can seem daunting.
Here are our best tips for submitting a winning bid and becoming a government contractor:
- Know Your Business – The more thoroughly you understand the workings and operations of your enterprise, the more likely you are to submit winning bids for the right RFPs.
- Learn the Rules of Government – Nothing can foul up a proposal or even an award like a contractor who fails to meet government expectations out of ignorance. Save yourself many headaches later by knowing the contract’s guidelines and relevant laws before responding to a request and again before signing an offer.
- Attend Government Conferences – Government agencies frequently sponsor conferences to announce upcoming RFPs or help navigate the world of government contracts.
- Take Advantage of Mentors – You can reach out to experienced government contractors and coaches you know for advice. You can also ask to get matched with the right mentor for you through the SBA Mentor-Protégé Program or the GSA Mentor-Protégé Program.
- Learn to Love Paperwork – You’ll be doing a lot of it! Hiring a specialized manager or administrator with government contract experience is usually best. They will oversee this aspect of the project. Many of these people work as outsourced employees or freelancers, so you don’t have to take on a new FTE.
- Build Relationships at Government Agencies – If the team at your funding agency remains a cloud of faceless bureaucrats in your mind, you’ll find it hard to work with them. However, when you get to know them as people and trust them as partners, they can make your life as a contractor run a lot smoother.
- Keep Trying – If securing a government contract was easy, every small business would have one. Keep learning and submitting better bids until your award shows up.
Financing a Government Contract
Once you’ve secured a government contract, it’s time to get your financing in order.
The U.S. government pays contractors on a net 30-60 day schedule. However, contractors typically have to pay vendors before funds come through from the government paying your open accounts receivable. The delay between paying their own bills and receiving the government’s reimbursement can severely strain their cash flow. This is one reason Bankers Factoring offers Government contract PO Funding.
In 1940, the Federal Government set up legislation for government contractors to get funded. They can be funded by setting up a mechanism for a contract’s proceeds (but not the execution). These will be assigned to factoring companies and other lending sources in Subpart 32.8—Assignment of Claims Act of 1940.
Letter of Comfort or Letter of Financial Capability
Bankers Factoring can also supply you with a Letter of Financial Capability or Letter of Comfort that shows your government client that you have the funds to deliver on the awarded contract with our factoring and PO funding products.
What is a Letter of Comfort or Financial Capability? This program provides Bankers Factoring’s clients with a contingent financing commitment to demonstrate to government contracting officers and large US corporations that they possess the financial wherewithal to execute contract awards. This results in Bankers Factoring’s clients being able to bid on and win more (and larger) contracts! This program is very advantageous to SMEs, MBEs, and DBEs.
We bring more than 50 years of combined personal experience to government contract financing and government PO funding. We can provide the working capital you need to fulfill the contracts you have been awarded. Our funding solutions and factoring services will cover your operational costs. It can also fill those cash flow gaps faster than a bank loan.