Government Contracts a Lesson in Patience

An Original Article from The Wallstreet Journal

Like many business owners who have suffered during the downturn, Randy Lebolo decided the most reliable client for his small construction firm would be Uncle Sam.

When the real-estate market was in free fall nearly two years ago, Mr. Lebolo decided to shave staff, negotiate with his landlord for a lower lease, and begin the long process of becoming certified to bid on federal work opportunities. He finally won his first government contract recently to remodel a courtroom in a Fort Lauderdale, Fla., courthouse. But the job pays just $250,000, not nearly the lucrative amount Mr. Lebolo—who says his Boynton Beach, Fla., firm had a history of multimillion-dollar commercial construction jobs before the downturn—thought he’d land.

Many small businesses are learning that it’s not always easy to get a foot in the government’s door, and the rewards might not always seem worth the hassle. Winning a government contract can require massive amounts of research, long wait times and capital—all difficult investments for a struggling enterprise.

Documentation is required to prove small-business eligibility and to obtain a number of certifications and registrations. Owners need to learn which agencies are best to target, how to write a government proposal and how to network with procurement agents.

The process requires lots of patience. On average, businesses have found that winning a contract takes nearly two years of trying, according to a recent American Express survey of about 1,500 businesses either engaged or interested in federal procurement opportunities. Some 42% of business owners who haven’t landed their first contract said they registered in the government’s procurement system for the first time within the past two years.

That means government work might not be a viable lifeline for businesses on the brink of shuttering. Despite an influx in training and networking events, some sponsored by the Small Business Administration, winning an initial contract can require more time, energy and money than some business owners can afford. Mr. Lebolo, for instance, spent months traveling the country to attend events, and hired advisers, lawyers and accountants to help him file all the necessary paperwork.

Still, the federal government is an attractive source of money for many businesses that have lost private-sector work or clients. Roughly one in five business owners who are seeking government contracts say they are doing so to counter the ebb and flow of their business, according to the American Express survey.

The federal government is mandated to award 23% of its prime contracts to small businesses every year, which amounted to $97 billion in 2009, according to preliminary data from the SBA. And contracts from the February 2009 stimulus have been particularly lucrative for small businesses, as nearly 30%, or $7.4 billion, have gone to Main Street firms.

Stimulus opportunities will continue to flow in coming years, given that only a third of allocated funds have been paid out thus far.

Mr. Lebolo is optimistic his recently won contract will lead to more. “You need to learn the [government contracting] process slowly, take a smaller job and understand what the requirements are,” says Mr. Lebolo, who has taken a few small commercial jobs to keep his firm, Lebolo Construction Management Inc., afloat. “If they ask you to paint a door, then take it,” he says.

But even business owners who are growing and interested in new revenue streams find the government-contracting process less than attractive.

A few weeks ago, Ben Engber attended an informational event in New York City sponsored by American Express OPEN, the company’s small-business division, to learn how his Brooklyn-based software development firm, Thumbtack Technology Inc., could land government projects.

“The biggest takeaway was that it’s a different world than the one I’m used to,” Mr. Engber says, adding that government agencies “want a specific service, and have set criteria to evaluate you.” With commercial work, “you can go in and explain what you do and why it’s superior,” he says.

Mr. Engber says he’d likely need to rebrand his firm and tweak his business model before diving into the process. Knowing the amount of time and energy that would take, he has decided to hold off on pushing into the federal arena, especially since his company is growing in other areas, he says.

Mr. Lebolo, however, is shifting his firm’s strategy to primarily focus on government work. “I made a determination to look hard into the federal market because it was the only place with money,” he says.

He says he’s not frustrated by the relatively small price tag of his first government assignment. Now that the process of landing a contract is behind him, he says there is no going back to commercial construction. He hopes to grow and begin hiring again by the end of this year. “This is a long-term decision,” he says.

Write to Emily Maltby at

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Trying to Win a Government Contract? Avoid These 3 Mistakes

An Original Article from

When you’re looking to grow your small business, one option is to tap into the steady flow of federal contracts offered by Uncle Sam. Doing business with the federal government can provide a reliable revenue stream, if you’re persistent and plan properly.

There is a lot of money to be made: In its 2011 fiscal year, the federal government awarded $91.5 billion in contracts to small businesses, according to the Small Business Administration. The government’s goal is to award 23 percent of its contracts to small businesses. However, in 2011, it fell short, awarding only 21.7 percent. Billions of dollars that should have been awarded to small businesses weren’t, and there lies the opportunity for entrepreneurs, says Lourdes Martin-Rosa, the American Express OPEN adviser on government contracting.

Since the federal government’s fiscal year ends at the end of September, the last quarter for government agencies to meet their small business quota “is hunting season,” she says. So this is an especially good time to apply. Check the government’s small business dashboard to see where each agency currently stands in meeting its quota.

Furthermore, the Obama administration announced Wednesday that it will order federal agencies to speed up payments to businesses doing work for them. Once paperwork is in, Uncle Sam will cut a check within 15 days in most circumstances, compared to the usual 30 days.

Related: 5 Ways to Get Paid Faster

If you are interested in doing business with Uncle Sam, here are three common mistakes to avoid:

1. Don’t market to every federal agency. Instead of blindly casting the widest net, take time to understand each government agency’s mission by checking the “procurement forecast” on their individual websites. This will detail what the specific agency needs, when it needs it, and what kind of business is eligible.

Another way to see what contracts are available is to check the Federal Business Opportunities website under the “Opportunities” tab. As you scroll down the column showing the “Type” of jobs, look for those that are titled: “Sources Sought.” These are potential opportunities the government is researching and it’s looking for small businesses that can take it on. Look closely at those postings as they often include an agent’s contact information, so you can reach out directly, Martin-Rosa says.

Related: 5 Steps to a Successful Business Turnaround

2. Don’t pass up a face-to-face meeting. Getting government contracts is about networking and building relationships. There are many opportunities to meet with federal officers who make the contract decisions. Go to them, says Martin-Rosa.

For example, there’s a National Small Business Contracting week every year and the National Association of Business Contractors offers information about upcoming meetings and conferences. American Express also hosts a series of free conferences called the Victory in Procurement series and Women Impacting Public Policy (WIPP) “Give me Five!” group hosts webinars and conferences for women business owners.

3. Don’t dress casually. It may seem obvious, but Martin-Rosa says when you meet with a federal officer, you have to dress to impress. “You don’t want to walk in wearing a pair of jeans and tennis shoes,” says Martin-Rosa. And remember to tailor your sales pitch to the needs of the specific agency you think is the best fit. Approaching a federal agency with the attitude that it owes you the work because it is not making its quota will not fly, she says.

Related: 4 Ways to Weed Out Rotten Clients and Grow Your Business

What is your best tip in getting a contract with the federal government? Leave a comment below and let us know. 

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