Simplified Acquisition Program White Paper: Why do small business get less than 22% of Federal contract awards?

Summary

Small businesses are at a major disadvantage when it comes to government contracting. In 2017, the federal government awarded a total of $507 billion in contracts. About $395 billion of that total was awarded to large businesses.

To put things into perspective, about 0.06% of American businesses fit into the category of large business. Last year, about 78% of all the revenue allocated for contractors went to less than 1% of businesses.

What causes this major disparity and how can a small business compete under these circumstances?

Federal Contracts Awards 2012-2017

2012 –
Total Contract Awards: $404,108,126,265
Contracts Awarded to Small Businesses : $89,923,198,457
Disparity: $314 billion

2013 –
Total Contract Awards: $355,413,247,812
Contracts Awarded to Small Businesses: $83,142,807,957
Disparity: $272 billion

2014 –
Total Contract Awards: $366,824,039,527.35
Contracts Awarded to Small Businesses: $91,681,658,658.85
Disparity: $272 billion

2015 –
Total Contract Awards: $439,360,022,696
Contracts Awarded to Small Businesses: $90,701,727,944.11
Disparity: $350 billion

2016 –
Total Contract Awards: $471,005,228,199
Contracts Awarded to Small Businesses: $104,833,970,507
Disparity: $367 billion

2017 –
Total Contract Awards: $507,191,367,156
Contracts Awarded to Small Businesses: $109,792,253,749
Disparity: $398 billion

Part 1: Reasons

In July 2012, the General Services Administration (GSA) formed the System for Award Management (SAM). This was achieved by merging the Central Contractor Registration with the Online Representations and Certification System. The original intent of this merger was to simplify the contracting process.

This resulted in the exact opposite. Many small businesses owners were left unsure of how to complete the SAM registration. Others struggled keep their status as government contractors. There was also a significant portion of business owners who attempted to handle registration on their own.

In 2014, the Georgia Tech Procurement Office (GTPO), “estimated that at least 20% of the 600,000 firms presently registered in the SAM Registration had errors … [including] misspelled words, empty data fields, incomplete entries, incorrect procurement codes, and other flaws.”

Companies with inaccurate SAM Registrations cannot win a government contract. It’s that simple. The GTPAC explains that they’re eliminated from consideration for not exhibiting “attention-to-detail” or because a procurement officer did not have enough information to identify them nor the services and/or products they provided.

Offices of the Small Business Administration (SBA) and Procurement Technical Assistance Center (PTAC) offer some assistance, but this assistance is extremely limited. It does not include hands-on training, it’s often only available during business hours, and does not include an expert completion or submission of the form.

Part 2: Interpretation

According to the federal government, not enough qualified vendors exist. Although the federal government is required to make these contracts available, they’re not required to provide the tools or strategies that have helped successful vendors in the past. There is some “assistance” provided, but it’s ineffective.

The PTAC has been around since 1985, but their influence has been dismal. The organization has not even allowed the government to fill the guaranteed set-aside contract requirement of 23%. As the federal contracting budget grows, so does the number of lost opportunities for small business.

Part 3: Necessities for Success

Look at how the government buys. Purchasing agents love stable, low-risk companies. These are what they consider to be “qualified companies.” Your goal as a small business owner should be to make your company look and operate like a large, low-risk company.

The three tools that a small business owner needs achieve this are:

  1. Training
  2. Technology
  3. Resources

Training

The first part of training is to show vendors the where and the what. They should know where to look for work and what kind of registrations boost the chances of a small business vendor succeeding.

The three best registrations to do this are simplified acquisition contracts, set-aside contracts, and FEMA contracting.

Simplified Acquisition Contracts

Simplified Acquisition contracts offer an easier federal buying process for purchasing officers and small business vendors. In normal bids, vendors must supply an exact quotation for the requested (solicited) services and/or products. Simplified Acquisition Contracts allow procurement officers to pay with SMART Pay Cards or blanket purchase agreements. These contracts can be awarded less diligence and are the perfect way for a vendor to get his or her first contract.

Simplified Acquisition Contracts are awarded between $3,500 and $150,000. For commercial item purchases, this can range between $3,500 and $5,000,000.

Also, these contracts are not required to be entirely entered into the Federal Awardee Performance and Integrity Information System (FAPIIS) and the past performance retrieval system.

Simplified Acquisition contacts are:

  • Designed for small businesses
  • Can be awarded without the contracting officer referencing FAPIIS since they are under the $150,000 threshold
  • Give an edge to businesses with limited or no past performance

Set-aside Contracts

When market research conducted by the federal government finds that a small business can fulfill a procurement, the opportunity is “set-aside” This means that small businesses will have exclusive access to these contracts. Official goals or quotas are set up by the government when buying from vendors. In total, they aim for:

  • 5% of prime and subcontracts for women owned small businesses.
  • 5% of prime and subcontracts for small disadvantaged businesses
  • 3% of prime and subcontracts for HUBZone small businesses.
  • 3% of prime and subcontracts for service-disabled-veteran-owned small businesses
  • 7 % of other total small business government contractors

Purchasing officers will favor vendors with the above registrations. The federal government will often pay a premium to deal with a vendor with the set-asides above.

FEMA Contracting

When disaster strikes, the government will need all the help they can get. FEMA offers great opportunities for vendors seeking their first-time contract. In these type of situations, the federal government will be more concerned with getting the job done than finding the top candidate. Not only is this a way to get your foot in the door, but many of the times, these contracts pay top-dollar.

Part II of Training

Knowing what and where is just half the battle. The next and most difficult step is actually getting that opportunity. To increase the likelihood of being awarded, small business owners need to learn how to build relationships with procurement officers and get their bids noticed.

Technology

In this day and age, it’s no longer practical to have a team of people sifting through information about government contracting. Instead, you’ll need programs that can find the data you need at a moment’s notice.

Without it, you’ll be left searching for a needle in the haystack. Your properly equipped competitors on the other hand, will be picking up contracts left and right.

Having the right information immediately provides a significant advantage. It’s not just about finding those big opportunities. Having access to a wide array of information can also help you pick up smaller contracts. This, in turn, can have a snowball effect in building your brand with purchase officers.

Resources

By default, large companies are going to be your greatest competitors. When it comes to personnel and resources, they’re armed to teeth. Most likely, they’ll have someone in-house who is a seasoned veteran of filling out and submitting registrations properly. They’ll also have access to proper technology to find the newest and latest opportunities. Plus, they probably already have a good standing reputation with plenty of purchase officers.

So what can you do?

Outsourcing is your best option. The scale is always going to be tilted in favor of large companies. On top of that, you have your own businesses to look after. Effective contracting experts, experts with the right technology, and experts who specialize in helping small businesses win bids are out there to help. As a small business, it’s your most practical option for a fighting chance.

Part 4: Solution – The Simplified Acquisition Program™

At US Federal Contractor Registration, we developed The Simplified Acquisition Program to take on this exact problem. As the world’s largest third-party government contracting firm, we know the obstacles that small businesses face when competing for contracts. This program was designed specifically to give small businesses what they need to have a fighting chance.

Training

Clients enrolled in the program will have access to comprehensive training in the following areas:

  • Building relationships with purchasing officers
  • Setting up bids that will get you noticed
  • Adapting your company to the changing demands of the federal government

Technology

The Simplified Acquisition Program also gives access to USFCR’s Advanced Procurement Portal (APP). Information that would take an entire team to gather is just a few keystrokes away. On top of that, APP is available 24/7. This portal features:

  • Notifications of contract awards
  • Competitor updates
  • Relevant purchasing officer leads
  • Comprehensive information on everything federal

Resources

SAM Registration

The Simplified Acquisition Program will streamline the process of your SAM registration. To receive a government contract, your business must have an accurate, current, and complete SAM Registration.

As mentioned earlier, the implementation of SAM caused many businesses to become ineligible for government contracts. If your business hasn’t already been registered in SAM, USFCR’s Simplified Acquisition Program will make sure that it’s done properly.

Dynamic Small Business Search (DSBS)

Clients enrolled in our Simplified Acquisition Program are automatically added to the DSBS. The DSBS is an internal database of small business government contractors who have been certified by the SBA under the 8(a) Business Development, HUBZone programs, and other federal set-asides. DSBS also populates certain fields in SAM. Each DSBS profile includes:

  • Optimized SEO Keyword Searches
  • Work Experience/Past Performance
  • Matching Set-Aside Qualifications
  • Capabilities Narrative
  • Geographic Location

Formatted Website

Clients enrolled in the Simplified Acquisition Program also receive a customized government-formatted website. These websites are designed to bypass government spyware and firewalls.

They also include the all the information a procurement officer needs when awarding contracts.

Another important aspect of a government-formatted website is that it provides branding for the federal marketplace.

This website will be the main tool to make your businesses message congruent with the larger businesses. These federally formatted websites feature:

  • Home Page
  • Vendor Profile
  • Capabilities Statement
  • Services Page
  • Past Performance
  • Photo Gallery
  • Contact Us Page

Part 5: Case Studies of The Simplified Acquisition Program™

Below are two case studies of two small businesses who enjoyed financial success from The Simplified Acquisition Program. They both went from being unregistered in SAM to receiving their first federal contracts.

Greatrex Global Learning

Greatrex Global Learning provides leadership development as well as training modules for businesses and agencies. In August 2014, they enrolled in our Simplified Acquisition Program.

USFCR trained their staff, gave them guidance, and provided all the services as described in The Simplified Acquisition Program above.

We also provided Greatrex with a list of top procurement officers in their industry. This list included optimized contracting officers and prime contractors who may have subcontracting opportunities available.

Within a month of enrolling, Greatrex Global Learning received two contracts. Their first was a $27,900 contract from the NSA/DoD and the second was a$17,500 contract from the Office of the Secretary of Defense. The following January, they had then received a $22,350 contract from the Department of the Navy.

Acquisition Specialist John Lynch guided Greatex Global Learning throughout the whole process. Within in six months of enrolling, the company – who had never before attempted to bid on government contracts – received $67,750 in federal contracts.

You can view these contracts and more won by Greatrex Global Learning via the Federal Procurement Data System (FPDS). The FPDS which provides information about previously awarded contracts, contract winners (aka potential competitors), NAICS Codes for which contracts were awarded, and more.

Robert Doscher Associates (RDA National, Inc.)

RDA National, Inc. is a woman-owned small business (WOSB) that specializes in fixture manufacturing. For decades, the company had worked with national chains which included Barnes and Noble, Best Buy, Home Depot, and Nike. They eventually wanted to obtain contract work from the federal government.

In the December of 2013, they enrolled in our Simplified Acquisition Program. Within that month, we launched their website and set in motion the other aspects of the program. USFCR advised RDA National, Inc. that the more targeted their marketing efforts, the more success they would enjoy.

USFCR also helped RDA National, Inc. get its certification as a small, disadvantaged, women-owned business. That year, WOSBs were awarded more than $15 billion, or about 4.32% of the $464 billion awarded in all federal contracts.

With everything implemented, RDA National, Inc. received a $23,000 contract in June 2014 from the Department of the Navy in Centerport, NY. Months later, they earned contracts valued at more than $147,196.

After a year of enrolling in USFCR’s Simplified Acquisition Program, the company was closing at around $200,000 in government contracts.

The Difference Our Program Makes

Despite these clear successes, if not for the Simplified Acquisition Program, they would have been ineligible for their contracts. Prior to their enrollment, these two businesses were lacking the following crucial materials:

  • DUNS Number
  • SAM Registration
  • CAGE Code
  • Marketing toward government agencies
  • Federally formatted website

Within a year, USFCR’s Simplified Acquisition Program can make a $67,750, a $ 200,000, or even greater difference to your small business.

Part 6: Further Success

The two case studies above weren’t just isolated incidents. As an overwhelming number of government contractors enrolled in our program, there was an overwhelming number of success stories to follow. We give our clients the tools they need to survey the federal landscape, search for new contracts, prepare a bid proposal, and pitch their products/services to government buyers.

Our Simplified Acquisition Program is for businesses of all sizes. The program is also open to all companies regardless of the products and services they provide. At USFCR we know that no two businesses are exactly alike. That’s why we tailor the program to best position each specific client for contracting success.

Here’s just a quick run-through of the program’s successes:

DLP Enterprises: $1,615,531

ECSI International: $1,499,992

Progress Solar Solutions: $965,386

United Grinding Technologies: $916,356

Fabricare Draperies: $817,498

AGM Container Controls, Inc: $801,394

Mac Made Easy, Inc.: $641,244

Suburban Surgical Company, Inc.: $556,380

Robert F. Audit, Inc.: $479,184

Creative Tent International, Inc.: $422,209

CAMF, Inc.: $394,437

Emergency 911 Security, Inc.: $370,172

SEACON Advanced Products, LLC: $240,000

Kingsbury, Inc: $189,000

Amerigas Propane LP: $113,000

Big Sky Industrial: $108,000

PCB International, LLC: $80,000

Heating and Air Conditioning Services: $79,117

Robert Doscher Associates $58,837

Conklin & de Decker Associates Inc.: $48,119

SciAps Inc.: $47,800

Otto Environmental: $46,266

MinnPar: $45,000

Gary Wolfe Toxicology, LLC: $37,500

Straight Stripe Painting, Inc.: $24,000

Ever-Green Communications Services, Inc.: $20,991

The Stage Depot: $18,075

Part 7: Findings

Clients enrolled in our Simplified Acquisition Program win government contracts by implementing the right strategies. Our Simplified Acquisition Program provides advanced registration support, leading-edge marketing, and professional technical support services.

After the first year of making the program available, we surveyed enrolled contractors about the program and how it helped them succeed. Here’s what we discovered:

  • Businesses were generally pleased with the results of the Simplified Acquisition Program.
  • The program provided all the tools required to fully develop a vendor’s federal brand and outreach
  • Providing a comprehensive list of buyer histories linked vendors with those who were looking for their products and/or services
  • Websites optimized for marketing toward the federal government helped procurement officers easily understand their business
  • Having a DSBS profile made connecting with a procurement officer easier to do
  • Businesses enrolled in the Simplified Acquisition Program earned more contracts on average than businesses who weren’t enrolled in the program
  • Enrolled clients reported higher receipts year over year