The Reality of Government Contracting


In 2012, the U.S. federal government sector spent an estimated $89.9 billion in contracting services from small businesses across the entire country. On the same note, the federal government is required to spend a certain percentage of its budget each year contracting with these small businesses. For a small business looking for their next big account, becoming a government contractor can prove to be very enticing as the contracts are typically large in size and payment is guaranteed and prompt. Even in a recession, government shutdown, or federal budget cutbacks, billions are still being spent each year on a wide range of services and products. However, there is a certain tough reality that comes with being a government contractor.  Some of these tough realities include specific marketing programs and business filing procedures, as well as accountability measures.

When seeking to market your service or product to the federal government there are several ways to find out what type of services the government is looking for and what amounts are budgeted for each sector.  Don’t let the formal “red tape” disillusion your thoughts on more traditional ways of marketing your services through face-to-face, phone calls, or other methods. However, when using the more personal approach, understand the vast number of small businesses seeking their attention, so make sure you take a professional approach.

In 2012, 22.25% of all eligible federal contracting dollars went to small businesses. Each year, a goal is set to ensure small businesses are fairly represented in their spending.  So, there is huge potential for a small business to gain a great deal of business when all of the steps are followed.  However, there is also a huge potential for loss if your service or product is poor or you are dishonest. Once you win that big federal contract and are on your way to the next step of financial success, don’t be disillusioned into a false sense of security, as funds that are given can easily be taken away if fraud, poor service, or dishonesty is suspected. The federal government takes the spending of taxpayers dollars very seriously and has recently taken a more strict stance on these fraudulent contractors. The suspension of services to small business contractors went from approximately 1900 in 2009 to over 3,000 in 2011.  So, read your award contract very carefully and follow each step or you could risk losing the account or even worse a loss of doing business with any government agency in the future.

Another great aspect of being a small business federal contractor is the ease of payment as there are very few worries about collecting from the government. Payments are most often very prompt and under some circumstances can be made in advance of services being offered.  However, some businesses can be disillusioned by this as well as their services were not performed according to the standards set out in the contract and they then had to repay the government for their under performance.  As a small business, there is an enormous amount of opportunity available to offer your services to the government.  However, with this opportunity comes the reality of a great deal of responsibility to ensure your agency customer is satisfied to ensure they will be a returning customer.


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