In the world of government contracting, it’s no secret that registering your business as a disadvantaged or minority owned business enterprise can be the thing that tips the scales of opportunity in your direction. But what if you don’t happen to meet the requirements for such a designation? Or maybe you’re a prime contractor who would love to break into the lucrative arena of doing business with the federal government. And when you consider that the federal government spends billions of dollars every year and buys more goods and services than any entity around the globe – why wouldn’t you?
The good news is that you can still take advantage of the government’s commitment to distributing federal contracts to minority owned or disadvantaged businesses. How? In a word – teamwork!
But before we talk about how, we should explore the way government contracting works in general.
Who is this SAM?
If you’re new to government contracting, you might be wondering who the heck SAM is. Well, SAM is not a person but a system. System for Award Management to be precise. All businesses who wish to do business with the federal government must first register their business in the government’s procurement database – SAM. SAM is the place where RFIs and RFPs for government contracts get posted for all the world to see. And to bid on. So, just sign up and start rolling in those federal contracts, right? Wrong. The government has a broader agenda than just procuring goods and services. And part of that agenda is to support the efforts of ALL business enterprises. Or more specifically, to encourage and support the growth of minority owned and/or disadvantaged businesses.
How does it work?
The federal government has established guidelines for distributing contracts to disadvantaged or minority businesses. Each year, all government agencies sourcing goods or services are required to meet certain mandatory minimums as it relates to awarding contracts to businesses with minority or disadvantaged designations. What are those designations you ask? Let’s break it down –
- SBC (small business certification – 23% of federal contracts awarded to certified small businesses.)
- WOSB (woman owned small business – 5% of federal contracts awarded to certified WOSBs.)
- VOSB/SDVOSB (veteran/service-disabled veteran owned small business–3% of federal contracts)
- 8(a) MOSB (minority owned small business – 5% of federal contracts) Hubzone.
The government takes things a step further by establishing set-a-side and sole sourcing contracts specifically for each designation. In these cases, bidding as the prime contractor is typically limited to businesses possessing that designation. There are also other set-aside requirements for small businesses that are intended to minimize competition. One such example is that any contract under $150K must be set aside exclusively for small businesses. Or if a contract exceeds the limit, it will go to a small business if there are two or more qualified, competing small businesses with similar market price, quality and delivery, which is known as the “Rule of Two.”
It’s pretty clear that having a designation that offers some preferential treatment can open the door to a lot more opportunities in the world of federal contracting. But back to the benefits of partnering with one particular type of business entity – the SDVOSB (or service-disabled veteran-owned small business.) It’s all about the team. If you’re bidding on a contract as a prime contractor, including a SDVOSB on your team could potentially increase your chances of successful award. After all, the agencies are required to meet the 3% quota for the year, so having an SDVOSB on your team could be the reason you are selected.
But that’s not all –
You can also imagine that there are certain government agencies who would just naturally prefer companies with SDVOSB status. For example – the Veteran’s Administration. In 2020, the VA awarded over $2.1 billion in government contracts. And while it may not always be possible for the VA to award the contract to an SDVOSB, for larger companies bidding as a prime – you could certainly be viewed more favorably if you’ve partnered with an SDVOSB.
There’s also the simple truth that the DoD tends to favor SDVOSB businesses because they have not only offered the ultimate sacrifice by serving their country, but they also understand the needs of the military far better than a non-veteran owned business.
Tax Incentives
If all of the above isn’t enough incentive to consider partnering with an SDVOSB on federal contract opportunities, there’s also a tax incentive to consider. The government offers corporate tax incentives to reduce tax liabilities for companies partnering with SDVOSBs on federal contracts.
No matter what products or services your business – is in the business of selling, competing in today’s hyper-competitive marketplace – is no joke. So, give yourself an edge over the competition and build your A-team with Precision Solutions. With a proven track record of success getting the right equipment into the right hands – at the right time, we’re committed to delivering innovative, cost-effective solutions to some of the government’s most challenging supply chain and procurement issues. Contact Us today to learn more.
