preparing your small business for the federal market...small disadvantaged businesses (sdb)...
TRANSCRIPT
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Preparing your Small Business
for the Federal Market
Presented by: Karen Williams, Certified Mentor, DC SCORE
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With SCORE, You Are Not Alone on Your Journey
For over 50 years, SCORE has served
as America’s premier source of free
business mentoring and education.
As a resource partner of the U.S.
Small Business Administration (SBA),
SCORE has helped more than 11
million entrepreneurs through
mentoring, workshops and educational
resources since 1964.
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SCORE Can Help You Find the Way Ahead
• Free one-on-one business counseling
and mentoring
• Business advisory services
• Low cost local workshops
• Free templates and recorded
webinars
To meet with a mentor or learn more
about SCORE’s resources, visit
washingtondc.score.org
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Today’s Session Objectives
• Develop an understanding of the reasons to consider selling to the
Federal Government market
• Develop an understanding of the different types of Federal
Government certifications
• Determine if you qualify
• Steps to Sell to the Government
• Market Research – how to do it; why is it important
• Subcontracting Strategies
• Next Steps – find out how to move forward
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Government Contracting
• The U.S. Government is the largest buyer in the world, outsourcing
$400B - $500B annually on products and services
• 40% spent on products; 60% on services
• Less than 5% of the businesses in the United States do business with
the U.S. Government
• Approximately $1 billion in new opportunities are available to be bid
on by private businesses every day
• The Federal Government signs over 10 million contracts a year
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Government Contracting (cont.)
• Companies are awarded new contracts daily
• Approximately 95% of federal contracts are awarded to small and
medium-sized businesses
• The U.S. Government procures everything from armored vehicles
and cutting-edge scientific research, to paper clips and super
computers
• A significant share of those contracts are specifically available for
award to small businesses
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What Can a Federal Contract Do for Your Business?
• What a Government Contract can do for your business:
• Diversify your customer base
• Cover overhead/G&A costs
• Even out cash flow
• What a Government Contract cannot do for your business:
• Jump-start your business
• Save your business
• Be the sole source of your business (especially for start ups)
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Benefits of Contracting with the Federal Government
• You get paid regularly
• Your client won’t move away, run away, hide and/or not pay their bills
- you will get paid!
• Government contracting allows businesses, many small and mid-sized
businesses, to have a bevy of profitable, long-term contracts
• The high profile your company achieves as a result of Government
contracts can be a good advertising tool for your firm
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SBA Small Business Certifications
Provided by SBA - For more information go to www.sba.gov
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Contracting Goals
PROCUREMENT TARGETS:
Small Businesses: 23%
SDVOSB: 3%
SDB: 5%
WOSB: 5%
HUBZone: 3%
$500 Billion per
year
U.S. Government: The World’s Largest Customer
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Small Business Prime and Subcontracting
• Prime contracting is where you have a direct contract with the
Federal Government
• Subcontracting is where you have a contract with a Prime contractor
• Large Businesses may have small business subcontracting goals for
large contracts – approximately $80 billion/year in opportunities
• SBA Procurement Center Representatives (PCRs) advocate for small
businesses at buying activities, along with Agency’s Office of Small and
Disadvantaged Business Utilization
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What is a Small Business?
• The SBA defines a "small business" either in terms of the average number of
employees over the past 12 months, or average annual receipts over the past
three years. SBA defines a U.S. small business as a concern that:
• Is organized for profit
• Has a place of business in the U.S.
• Operates primarily within the U.S. or makes a significant contribution to
the U.S. economy through payment of taxes or use of American
products, materials, or labor
• Is independently owned and operated
• Is not dominant in its field on a national basis
• The business may be a sole proprietorship, partnership, corporation, or any other
legal form. In determining what constitutes a small business, the definition will vary
to reflect industry differences, such as size standards.
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SBA Size Standards
• Manufacturing 500 to 1,500 employees
• Non-manufacturers 500 employees
• Servicing $7.5 Million/ $38.5 Million
• Construction $7 Million/ $36.5 Million
• Agriculture $750,000/ $27.5 Million
https://www.sba.gov/sites/default/files/files/Size_Standards_Table_2017.pdf
Size Standards are based on NAICS (North American Industry
Classification System) Codes
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Types of Federal Contracting Certifications
• Self-Certified:
• Small Businesses
• Small Disadvantaged Businesses (SDB)
• Service Disabled Veteran-Owned Small Businesses (SDVOSB)
• Women-Owned Small Businesses (WOSB)
• (Self-certified, but must upload documents to SBA portal or be 3rd-
Party certified)
• SBA-Certified:
• Historically Underutilized Business Zones (HUBZones)
• 8(a) Business Development Program
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Small Disadvantaged Businesses (SDB) Eligibility Criteria
• Since October 2008, small businesses can self-represent their status
as a small disadvantaged business (SDB)
• To self-represent as an SDB, register your business in the System for
Award Management (SAM). However, you and your firm must still
understand the SBA eligibility criteria for SDBs:
• The firm must be 51% or more owned and controlled by one or more
disadvantaged persons
• The disadvantaged person or persons must be socially disadvantaged
and economically disadvantaged
• The firm must be small, according to SBA’s size standards
https://www.sba.gov/contracting/government-contracting-programs/small-
disadvantaged-businesses
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Service-Disabled Veteran-Owned Small Business
• Must self certify in SAM
• The Service Disabled Veteran (SDV) must have a service-connected
disability that has been determined by the Department of Veterans
Affairs or Department of Defense
• The SDVOSBC must be small under the NAICS code assigned to the
procurement
• The SDV must unconditionally own 51% of the SDVOSBC
• The SDV must control the management and daily operations of the
SDVOSBChttps://www.sba.gov/contracting/government-contracting-programs/service-disabled-
veteran-owned-businesses
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Service-Disabled Veteran-Owned Small Business (cont.)
• The SDV must hold the highest officer position in the SDVOSBC
• The SDVOSB is eligible for Set Asides and Limited Sole Source
opportunities
• For Department of Veterans Affairs (VA) procurements, firm must be
certified by the VA
• Vets First Verification Program
• https://www.va.gov/osdbu/verification/
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Women-Owned Small Business Program
• Firm must meet the small business size standard for the contract and
be at least 51% unconditionally and directly owned by women who
are U.S. citizens
• Woman (or women) must manage the day-to-day operations on a
full-time basis
• A woman must the hold highest officer position in the business
• Personal net worth (assets minus liabilities) is less than $750,000 for
EDWOSB
www.sba.gov/contracting/government-contracting-programs/women-
owned-small-businesses
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Women-Owned Small Business Program (cont.)
• Set-asides and limited sole source awards are permitted
• The set aside or sole source procurement must be in the industries
designated by SBA as underrepresented or substantially underrepresented.
SBA has designated six-digit NAICS codes to denote the industries where
WOSBs are underrepresented or substantially underrepresented. Current
list of six-digit 2017 NAICS codes eligible for use under the WOSB Program
may be viewed at the link below.
www.sba.gov/contracting/government-contracting-programs/women-
owned-small-businesses
• 364 six-digit NAICS industries are WOSB eligible Industries
and 80 six-digit NAICS industries are EDWOSB
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HUBZone
HUBZone - Historically Underutilized Business Zone
• Program is designed to stimulate economic development and create
jobs in urban and rural communities
• HUBZones are defined by Census Tract or counties
• Map will not change until after 2020, then every 5 years thereafter
• HUBZone Map found on www.sba.gov
• Set asides and limited sole source for certified HUBZones
https://www.sba.gov/contracting/government-contracting-programs/hubzone-program
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HUBZone (cont.)
• Must be a small business for its primary NAICS code
• Owned and controlled at least 51% by U.S. citizens
• Principal office of the concern must be located in a HUBZone
• At least 35% of the concern’s employees must reside in a HUBZone;
residency means to live in a primary residence for at least 180
days, or as a currently registered voter, and with intent to live
there indefinitely
• For additional information please refer to:
www.sba.gov/contracting/government-contracting-
programs/hubzone-program/applying-hubzone-program
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8(a) Business Development Program
• Nine-year business development program
• Training in business management & marketing
• Access to set-aside contracting opportunities
• Sole Sourcing Direct Award Contracts
• U.S. citizen, own unconditionally at least 51% of concern
• Business must be small per SBA’s size standards
• Two (2) years in-business requirement (may sometimes be waived)
• Social and Economic Disadvantage required
https://www.sba.gov/contracting/government-contracting-programs/8a-business-development-
program/about-8a-business-development-program
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8(a) Eligibility Criteria
Economic Thresholds - Assets, Income, Net Worth
• Before SBA can approve an application, the individual(s) claiming to be
disadvantaged must submit supporting documents to prove their assets,
income, and net worth fall below certain threshold amounts. These include:
• Assets cannot exceed $4 million
• Personal income cannot exceed $250,000, averaged over 3 years
• Adjusted net worth must be less than $250,000, excluding equity in
business, primary residence, and retirement account
• 13 CFR 124.104
*When married, separate statements from each spouse are required to show each individual’s joint or community
property shares and separate property - http://www.sba.gov/content/economic-disadvantage-eligibility
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For additional information please
refer to: www.sba.gov/allsmallmpp
Applications now being
accepted, via certify.sba.gov.
for All Small/8(a), or through
District Office for 8(a)
8(a) and All Small Mentor Protégé Program
Protégé Needs: Six categories
1. Management &Technical
Assistance
2. Financial
3. Contracting
4. Business Developing
5. General/Administrative
6. Trade Education
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Mentor Protégé and Limitations on Subcontracting
• Approved Mentor Protégés may joint venture and be considered
small and socioeconomic status of the protégé
• Set aside or sole contracts, there are limitations on the amount that
can be subcontracted
• Supply set aside or sole source contracts, prime must supply the
product of a small business unless SBA has issued a waiver
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SBA Certifications Handout
• The following handout provides a
summary of all the Small Business
Certifications:
https://www.sba.gov/sites/default/fil
es/articles/Small%20Business%20C
ertifications.pdf
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Questions re Certifications?
?
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Steps to Sell to the
Government
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Steps to Sell to the Government
• Business must be established in the commercial marketplace with EIN and
DUNS numbers
• Identify your product or service
• Identify your NAICS code(s)
• Register in the System for Award Management database (www.sam.gov)
• Determine small business program set-aside eligibility – do you qualify?
• Conduct Market Research
• Look at what the Federal Government has purchased previously
• From whom did they purchase – at what price?
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Market Research
• Where to start?
• Federal Resources:
• FPDS.gov
• USASpending.gov
• Agency Forecasts
• Begin searching by Agency
• Continue searching FPDS by Date Signed, NAICS, Socio-Economic
Indicators, etc.
• Search USASpending by contractor, location, fiscal year, etc.
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Market Research (cont.)
• Become a “sponge” – learn how the Federal process works
• Attend Workshops
• Buy books on the Federal process
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Market Research (cont.)
• Let’s do it together
• Scenario – you’re an IT support contractor looking for opportunities
at the Department of Justice
• Steps:
1) Review DOJ’s FY19 procurement forecast to identify potential
opportunities
2) Identify applicable NAICS codes (e.g. 541511, 541519) or key
words
3) Pinpoint specific opportunities
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Market Research (cont.) DOJ’s FY19 Forecast
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Market Research (cont.)
4) Cross reference with FPDS.gov
5) Cross reference with SAM.gov/Dynamic Small Business Search
(http://dsbs.sba.gov/dsbs/search/dsp_search-
help.cfm?goto=Certs)
6) Find a contractor/research their corporate website – look for
mutual connections on LinkedIn
7) Find a contract/request a copy under Freedom of Information
Act (FOIA) - learn what DOJ is actually buying – read the
Performance Work Statement
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Market Research (cont.) FPDS.gov
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Market Research (cont.) SAM.gov
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Market Research (cont.)
8) Attend DOJ events
9) Schedule an appointment with a DOJ Small Business Specialist –
discuss how your firm can help them meet their mission; have
specific “asks”
10) Develop a strategy
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Market Research (cont.) DOJ-OSDBU
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Subcontracting Strategies39
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Pursuing Subcontracting Opportunities
Treat subcontracting as part of your multiple revenue streams
• Perform market research to identify prime contractors
• Identify subcontracting opportunities
• Market your services and products to a prime contractor
• Develop a unique marketing strategy (more on this later)
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Perform Market Research to Identify Prime Contractors
• Utilize research tools such as FPDS.gov and USASpending.gov
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• Utilize SUB-Net: www.sba.gov
• Click on Subcontracting
• Click on SubNet
• Review Agency’s forecast
• Visit prime contractor’s website; introduce yourself to their Small
Business Liaison Officer (SBLO)
• Review solicitations on FBO.gov
Identify Subcontracting Opportunities
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Market Your Services/Products to Prime Contractors
• If it is an Agency of focus for you, treat it as such! Treat that large
business as a customer you are marketing
• Establish relationships with project managers and/or business
development staff
• Participate in events organized by industry associations – become an
active member – Network!!
• Attend pre-solicitation meetings hosted by Agencies and prime
contractors
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Develop Unique Marketing Strategy
Examples include:
• You have a contract with the Agency
• You have relationship(s) within the Agency
• You have recent and/or relevant past performance
• You have teamed with large businesses before
• You have the resident and/or unique expertise
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Becoming a Preferred Subcontractor
in the Federal Contracting Market
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How to Become a “Preferred Subcontractor”
Understand What Motivates Prime Contractors
• The only true mission statement:
• Provide owner(s) with a rate of return on their investment better
than they can receive by investing their resources elsewhere. We
do this by:
• Winning business
• Performing the business we win profitably
• A preferred subcontractor will support one or both of these
missions
Aronson information
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Deal with the Decision Makers
• Small Business Subcontractor Fairs are not productive
• Bidders list only work for commodities
• Business Development Professionals make the decisions
• You find them
• They find you
How to Become a “Preferred Subcontractor”Aronson information
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How to Become a “Preferred Subcontractor”
Be a Good Contractor
• Corporate experience
• Past performance references
• Relationships with key agency executives
Aronson information
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How to Become a “Preferred Subcontractor”
Other Attributes of Preferred Subcontractors
• Competitive prices
• Strategic hires
• Quid pro quo, you let us bid with you, we will let you bid with us
• Help with the proposal
• Handle staffing surges
• Ethical
• Adequate business systems, especially accounting
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How to Become a “Preferred Subcontractor”
Things NOT to do
• Don’t depend on your small
business status
• Don’t just provide staff
augmentation; you should offer
more
• Don’t be all things to all people;
develop a niche
Aronson information
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Next Steps
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Develop a Strategy
• Target 2 – 3 Agencies and 4 – 5 Prime Contractors
• Have clear discriminators and a value proposition
• Establish and build relationships with selected Agencies and Prime
Contractors
• Team with other small businesses
• Network, network, network
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Develop a Strategy (cont.)
• Develop a Federal Marketing Plan
• Capability Statement
• PowerPoint presentation
• Timeline
• Website
• Find a mentor; ask for help
• SCORE
• Women’s Business Centers
• Small Business Development Centers
• PTAC
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SCORE Help is Available
• Contact your local SCORE office; register for a mentor at
www.score.org
• Request a free 1:1 appointment with a SCORE mentor with
Federal expertise
• Watch Federal Webinars on www.washingtondc.score.org
• Attend Federal Procurement Workshops to learn how the
Federal Government buys goods and services
• Prepare for a long, but fruitful journey
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Questions?
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Contact our local Chapter for
more help
www.washingtondc.score.org
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