Many small businesses can find the path to government contracting confusing or overwhelming. There are registrations, requirements, and acronyms to navigate, and knowing where to start can be difficult.

One of the most valuable steps you can take before pursuing government contracts is to conduct some market research. Rather than immediately searching for open solicitations or contacting potential customers, take some time first to understand the government marketplace. Market research can help you answer important questions such as:

• Which government agencies purchase the products or services I provide?
• How much are those agencies spending?
• Who currently performs this work?
• How frequently is the work purchased?
• What types of contracts and contract vehicles are being used?

The answers to these questions can help you get a better understanding of where the money is and develop a more focused approach to pursuing it.

Foundations

An important first step to effective marketing is making sure your company is actually ready for government contracting. Before researching agencies and contracts, take some time to define your company’s capabilities and the types of work you are interested in pursuing. At a minimum, companies are advised to prepare the following:

• Industry and procurement codes: Identify the North American Industry Classification System (NAICS) codes, United Nations Standard Product and Service Codes (UNSPSCs), and Product and Service Codes (PSCs). Government buyers use these to find firms who provide the products or services they are looking for.
• Keywords: Develop a list of terms that agencies and prime contractors might use when searching for your products or services. These can be derived from your industry codes.
• Capabilities Statement: Create a concise, professional document that communicates your core competencies, differentiators, relevant experience, certifications, and contact information. A free downloadable template is available from the Norcal APEX Accelerator website.
• Past Performance: Identify relevant projects, contracts, or professional experience that demonstrate your ability to perform the work, even if that experience was not performed directly under your current business.
• Certifications and Designations: Highlight applicable federal, state, local, and industry certifications or socioeconomic designations. If you don’t have these yet, Norcal APEX Accelerator can help.
• Website and Online Presence: Make sure prospective customers can easily find basic information about your business and understand the services you provide.
• Capacity: Consider how much work your business can realistically take on based on staffing, equipment, facilities, financing, etc.

Researching the Government Marketplace

Once you have identified the products and services you provide, begin researching who buys them. A useful starting point is to look beyond currently advertised solicitations. Consider researching:

• Potential Customers: Identify federal, state, and local agencies that purchase the products or services your business provides.
• Spending and Purchasing Activity:  Research how much agencies spend on the products or services you provide and how that spending is distributed among agencies, locations, and contractors.
• Incumbent Contractors: Identify businesses that currently hold contracts for the work you are interested in pursuing.

Market Research Resources

Several tools are available to help small businesses conduct market research.

• SAM: The System for Award Management (SAM) is the federal government’s primary system for registering contractors and finding federal contract opportunities. SAM.gov can also be used to research federal contracting information and solicitations.
• Cal eProcure: California’s online procurement system can help businesses research California state contracting opportunities and learn how the state purchases goods and services.
• USASpending.gov: A free federal resource for researching government spending, including which agencies are spending money, what they are purchasing, and which contractors are receiving federal awards.
• Agency Procurement Forecasts: Many federal agencies publish forecasts of anticipated contracting opportunities. These can provide insight into what agencies expect to purchase before a solicitation is released.
• Prime Contractor Supplier Portals: Large government contractors frequently maintain supplier and subcontractor registration systems. These can provide another avenue for researching potential partners and subcontracting opportunities.
• GovSpend and Fedmine: Commercial market-research platforms that can provide additional information about government purchasing activity, incumbents, agencies, contracts, and potential customers. NorCal APEX Accelerator maintains paid subscriptions to both platforms and makes them available to clients.

Norcal APEX Accelerator is available to walk companies through the process of using these tools to conduct market research.

Subcontracting

Once you’re ready to act on the results of your research, it’s time to set your action plan. Subcontracting can be a particularly useful avenue for small businesses to gain valuable experience and build organizational capacity.

Working with established prime contractors can provide an opportunity to learn how government requirements are performed, understand customer expectations, build past performance, and develop relationships within a particular market.

Market research can help you identify prime contractors that are already performing the type of work your business provides. Rather than approaching every large contractor, you can focus on companies that hold relevant contracts in your geographic area or industry.

Getting Started

NorCal APEX Accelerator can help small businesses identify relevant market-research resources, analyze government purchasing activity, research potential customers and competitors, and develop a strategy for pursuing government contracting opportunities.

Ready to get started? Visit the NorCal APEX Accelerator website to discuss your business and the next steps in your government-contracting journey.

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Authored by: Benjamin Fordham, Norcal APEX Accelerator Procurement Specialist

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