When we think of government contracts, we often think of large corporations producing necessary components, supplying products, or contractors working for the US government. Where does the small business fit into this picture? Until recently, it was very difficult for a small business to land a government contract.
It is so competitive as companies bid to underbid each other for the government contract. Larger corporations and companies could easily outbid their smaller counterparts by utilizing the overseas supply chain. They had the ability to cut costs and underbid their opponent. This effectively put many smaller businesses out of the opportunity because they are not using those same overseas sources and their costs are much higher.
The previous rule for a government contract was that 55% of the components had to be made in the United States. This rule is known as the Buy American rule.
The Buy American rule at 55% put many businesses out of the running if they were not using foreign components. The rule has now changed, and it is benefitting more smaller businesses than ever before.
The new Buy American rule states that 75% of a product has to be manufactured using American components. Perhaps your past experience with government contracts keeps you from getting registered and bidding on today’s contract. With the new Buy American rule, you may want to consider your business for the possibility of a government contract.
Smaller business is getting registered with the Small Business Administration in the federal contracting division.
Here are the steps necessary to open your business up to bidding on government contracts. Get the necessary registration and EIN number. The next step is to get a Unique Entity Identifier number. You then need to get a North American Industry Classification System number and classify your products or services with existing classifications. You must meet the small business size standard. This standard is fewer than 500 employees and revenue less than 7.5 million. Register with SAM as this is the system the government uses to find your products. Meet the cybersecurity standards and you are on your way to landing your small business a government contract.
