Monday, November 8, 2010

It Takes Time and Money to Win Government Contracts

We came across an interesting survey not long ago from the small business division of American Express. Last April, American Express released a government contracting survey of 1,500 small businesses. These businesses include active contractors, inactive contractors, and some that are simply registered in the CCR but have not yet landed a contract.

This survey revealed some best practices for small businesses to succeed in government contracting. The two most important pieces of advice that successful contractors offered are to start with small contracts since they can lead to larger opportunities, and to be persistent.

According to American Express, active contractors are more successful in winning government contracts in part because they are more vigorous in the bidding process. They take an average of 1.7 years to win their first federal contract, submit an average of nearly 7 federal prime contracting bids and win almost 3 contracts per year.

Active contractors made an estimated $86,000 investment in time and money in 2009 seeking federal contracts. The median sales for active small business contractors was between $1 and $4.9 million, and federal contracts accounted for 38% of their revenues.

Many small business owners who have not yet won their first prime contract are just getting started. Four in ten (42%) non-contractors have started pursuing federal contracting only recently, having registered on the CCR (a necessary first step in the federal procurement process) in 2008 or later. Thus, many of them will become successful -- if they keep bidding -- over the next year.

The survey also found that getting on the General Services Administration (GSA) Schedule can be an important strategy for winning federal government business. The GSA Schedule is a list of approved vendors for the products and services the government procures. One-third (34%) of active small business contractors are on the GSA Schedule while only 13% of currently inactive contractors are on it. There is a significant gender difference in the firms who are seeking procurement opportunities through the GSA Schedule: 40% of women business owners who are active contractors are on the GSA Schedule versus 31% of men business owners.

In another marker of success, fully 80% of active small business contractors who are on the GSA Schedule have annual revenues of $1 million or more and derive 47% of their annual revenues -- at least $500,000 per year -- from federal contracts.

If you wish to read more about this survey, go here.


  1. I'm a small IT company based out of Portland and I agree completely with you. I'm 4 years into being a dedicated USG contractor and here are a few lessons I learned the hard way. 1) Be patient. Developing a government practice can take just as long as developing a commercial practice. 2) Partner or "team" with current contractors in the DC area. They'll teach you best practices. 3) Hire a good consulting partner to teach you the ropes. We worked with Winvale and they saved us lots of money and time and helped me win my first bid, and 4) Get a GSA Schedule contract. You're essentially pre-qualified to sell to the USG and respond to RFQs and RFPs.

  2. Thanks for sharing your valuable insight and experience.