Small businesses are essential for a strong American economy, so it's no surprise that the federal government has developed specific goals to ensure small businesses get their fair share of government work. According to the U.S. Small Business Administration (SBA), 23 percent of "prime" contracts and 33.7 percent of all subcontracts are now designated for qualified small businesses. With significant work available across multiple federal agencies, there's big opportunity for HVAC, plumbing and electrical companies. Here's a step-by-step guide on how to get government contracts for your small business.
1. Meet the Basic Standards
Businesses that fit the category of "small business" often self-identify their organization, but to ensure fair distribution of work among smaller companies the government has created standards that organizations must meet. For example, all small business concerns must:
- be organized for profit
- have at least one place of business within the United States
- operate primarily in the United States
- be independently owned and operated
- not be dominant nationally
This means that a smaller subsidiary of a larger company known nationally as an industry leader would not qualify as a small business, regardless of size or income.
2. Meet Size Guidelines
Size standards are a work in progress. They shift based on economic demand. As noted by the SBA, some business types are classified as "small" based on their total number of employees. For example, retail bakeries can employ up to 500 staff members and still be considered "small." Industries such as HVAC installation and maintenance, electrical work and plumbing are assessed using average annual receipts. Any company in these industries with receipts totaling less than $15 million per year is considered a small business.
3. Find Your Code
Getting your NAICS code is next on the list. Known as the North American Industry Classification System, these codes are used to collect, analyze and publish statistical data about the U.S. economy. They are also used for contracting and tax purposes. Visit the NAICS website and type in keywords associated with your industry to find the most applicable code. Plumbing and HVAC companies are both covered by code 238220, while electrical contractors should use code 238210.
4. Get It D-U-N-S
You also need a Dun & Bradstreet — or D-U-N-S — number for each of your physical locations. This number is obtained via the D-U-N-S request service and requires a variety of information, including:
- legal name of your business
- name and address of your business headquarters
- common name of your business
- physical address
- mailing address
- telephone number(s)
- contact name and title
- number of employees at each physical location
Without this nine-digit number you won't be able to apply for government work, even if you meet all other requirements.
5. Register With SAM
Finally, register with the government's System of Award Management (SAM) to ensure you're eligible for contract consideration. This self-certification process requires you to declare your business size and socioeconomic status, and allows government agencies and contractors to find your business online.
It's also a good idea to obtain past performance evaluations from Open Ratings, which conducts independent audits of customer references to create a small business "rating." This lets government agencies quickly determine if your track record meets their standards. There's also a system in place to assist small businesses that successfully make the lowest bid but are disqualified due to contracting officer rulings that the company is unable to fulfill specific contract requirements. In this case, the SBA's certificate of competency (COC) program lets businesses appeal the ruling, have a detailed review performed and, if successful, have the contract directly awarded.
Not sure how to get government contracts? With more work than ever earmarked for small businesses, it's worth taking the time to ensure you meet basic standards and size guidelines, get your NAICS code, D-U-N-S number and register with uncle SAM — for starters.
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