Small and medium-sized manufacturers (SMMs) can seek government contracts for stable revenue and growth opportunities. However, the government contract application process often seems overwhelming to businesses that don’t have prior experience.
While some steps can be intensive, the overall process is much more straightforward than you might think. There are also readily available resources for SMMs to utilize when bidding on their first government contract. To help, our blog breaks down everything you need to know about how to find and bid on government contracts.
Government manufacturing contracts are lucrative business opportunities available to SMMs that operate much like normal business contracts, except the buyer is a government entity. As a result, there are generally more requirements and scrutiny placed on government contracts.
In practice, a government contract will establish an agreement on deliverable products and their pricing. More complex contracts may allow some fluidity (e.g., deliverable quantity and pricing), but the terms must be met to receive payment. For the length of the contract, an SMM will have the benefit of guaranteed income — making these contracts a great way to lock in scalable production and revenue.
The government relies on the North American Industrial Classification System (NAICS) - or NAICS Codes - to designate the manufacturers that are eligible to apply — and SMMs should too. So, before checking databases for open contracts, be sure to confirm your exact NAICS code to the number of digits specified for the government funding. Note that the classification system is highly specific, returning thousands of results for "manufacturing."
Once you've confirmed your NAICS code, you can use it to search for open federal contract opportunities on the System for Award Management (SAM) or state and local procurement sites. For California's SMMs, state-level government contracts are listed on Cal eProcure.
Government contracts may be structured in any manner, but they typically fall into one of three categories:
SMMs exploring their first contracting opportunities should note that many large contracts require subcontractor involvement. Partnering with a larger manufacturer to “get your foot in the door” with government contracting is a reliable way to position yourself as the primary or solo business for future opportunities. And many contracts carve out “set-aside” subcontractor opportunities for SMMs that meet specific criteria such as being majority-veteran-owned.
SMMs applying for their first government contracts will generally follow the consistent, four-step process outlined below.
Unique Entity IDs (UEI) are 12-character alphanumeric identifiers used to designate businesses or other entities within the System for Award Management — and they are mandatory for submitting government contract applications. You can think of them as your business's social security number, granted upon registering for SAM or requesting a UEI.
Before the government adopted UEIs, they relied on the Data Universal Numbering System (DUNS). However, DUNS numbers have been phased out as of April 4th, 2022, and all entities must have a UEI moving forward.
SMMs pursuing their UEI numbers and SAM registration should never pay for it or related services, as they are freely available to all businesses. And, although SMMs must renew their SAM registration annually, UEI numbers never expire.
After registering with SAM and procuring your UEI number, you can browse through the myriad of open contracting opportunities on government websites. Virtually every SMM can find applicable opportunities, with SAM's listings returning roughly 50,000 results for "manufacturing" searches.
The two most important contract portals for California's SMMs to familiarize themselves with are SAM for federal opportunities and Cal eProcure for those at the state level. However, you should also check for other portals, including any run by local government entities.
The biggest challenge with these portals is learning how to use the search capabilities effectively and efficiently. Once you're comfortable with the system, you can set up automatic email notifications to inform you of any newly posted contract opportunities that match your NAICS code. Setting up these alerts is especially helpful for smaller manufacturers that can't dedicate resources to periodically browse databases.
Identifying the right government contracts for your company first involves checking the specified NAICS code and then evaluating the available opportunities (as you would with any business contract). It’s important to ensure that the production quantities and deliverable schedules are a good fit and can be met reliably throughout the contract's duration before continuing the time-intensive application process.
It’s also important to check the open contract opportunities for “set-aside” requirements. These stipulate that the contract (or subcontract) must be awarded to businesses holding stated certifications, meeting ownership criteria, or operating in specific locations. With government contracting being hypercompetitive, every advantage you can use counts — and set-aside opportunities increase your chances of winning by considerably narrowing the eligibility pool.
Set-aside opportunities include dedicated awards for:
SMMs should note that applying for set-aside contracts will require proof that your business meets the eligibility requirements.
Once you’ve determined which government contract opportunities to pursue, the application process begins. This will be the most time-consuming step, requiring SMMs to provide all of the requested information.
Government contract applications generally fall into two categories:
Especially when first submitting government contracting applications, it’s crucial for SMMs to remain persistent. You won’t always win your first opportunity — or even your first few. While the process is straightforward overall, there can be a learning curve, such as figuring out the proper way to frame information or leveraging networking events.
But, the more you stick with government contracting opportunities and the more applications you submit, the more familiar the process becomes. Eventually, you will identify the right opportunity, provide the correct information, and secure your first contract.
Most importantly, SMMs should remember that they aren’t alone when pursuing their first government contract. It’s easy to learn how to get a government contract with the right partner, and by utilizing the business resources that are readily available, including:
And, in California specifically, CMTC helps to connect SMMs with consultants and partners that can help with the application process.
Contact us today to learn how we can help your company bid and win government contracts.