The US government spends a significant amount of funding on contracts every year. In 2020 alone, they spent $680 billion on contracts. Finding a way to start securing government contracts can quickly increase your potential revenue and bring in high-quality projects for your company.
Knowing how to apply for government contracts and securing them can have a tremendous impact on your business growth. In fact, the government can become the best client you've ever had business with.
Government contracts have many big benefits. These contracts often have good pay, reliable income, and provide long contracts with high business value. However, securing a government contract is a barrier to entry that many companies are uncomfortable approaching. There are lots of regulations, procedures, and rules dictating government contracts.
While there are many hurdles to starting, it doesn't mean you shouldn’t try to prepare to bid on government contracts. But there are things to consider when applying for a government contract. Keep reading to find out what those considerations are, and along the way, get tips and gain insight into how to apply for government contracts.
Types of Government Contracts
Knowing the different types of government contracts is a good starting point. Different types will have different requirements. For the federal government, the main types are cost reimbursement and fixed-price contracts.
In cost-reimbursement contracts, there's the determination of total allowable costs after the project completion. The contractor gives the estimated total costs before the contract starts. This becomes the ceiling beyond which final costs should not exceed.
In fixed-price contracts, the contractor provides services or supplies for a specific price. The set price is non-adjustable based on costs incurred by the contractor.
Others include letter contracts, incentive contracts, time-and-materials contracts and indefinite-delivery contracts.
The type of contract will vary according to the timing and degree of risk assumed by the contractor. And the nature of profits the contractor will get for achieving expected standards.
By understanding the available types of contracts, you’ll know how a contract will affect your business, including its benefits and drawbacks.
Government Contracting Tips
Check Your Business Performance
While the federal government offers a wide variety of contracts, you can't bid in any field. The government requires contractors to be experts in the field they are bidding for. This guarantees quality and efficiency in offered supplies or services.
When pursuing a construction contract, you must prove your expertise in your respective field. A key government contracting tip is It helps if you can show previous infrastructure work you have completed that is related to your bid. If you've previously been a government contractor, another tip is they check your past contract performance.
The best thing is, there are lots of opportunities for various expertise and projects. The government needs services or supplies for all of them.
Check on Contract Requirements
Different government contracts will have varied requirements. It's important that before bidding, read through the solicitation with a critical eye. Get every detail, terms and condition that you should fulfill.
For instance, some contracts need a business to sustain itself until after payment. Again, the requirements vary depending on the contract, and you want to be sure you can fulfill them.
When it's your first time contracting, the details in solicitation documents can be overwhelming. You may want to find an advisor who can elaborate or make you understand what they mean.
Government Auditing
Did you know bidding will involve business audits and investigations? Government auditors scrutinize books of account as per the firm, federal standards. Also, some contracts warrant an audit by the Defense Contracting Audit Agency.
Recently, financial scrutiny in government contracts has been more intense. This is to ensure compliance with financial reporting standards.
To get yourself started in government auditing, you may want to consider attending a seminar. You’ll be trained on government auditing in the contracting process.
If you are thinking of applying for a government contract or have questions about how to apply for government contracts, consider turning to the right professionals to get you ready.
Invoicing and Payment Terms
Another tip for government contracts is understanding how they differ compared to standard contracts. One of the key differentiators with government contracts is invoicing and payment. Any mistakes in invoicing can result in delays. Also, some contracts have special invoicing requirements. This includes where the contract requires you to keep your funding on track. After reaching 75%, they need the contractor to notify the government failure to which penalties occur.
Read the contract and understand every responsibility you have as a contractor.
Also, if you win a government contract, don't forget certified payroll reporting. This involves accounting for everything paid to the employees when working on a government contract. Certified payroll reports can be a very time-consuming and laborious task. The Department of Labor reports that on average, it will take companies 55 minutes to complete one report. They must be submitted on a weekly basis to ensure all workers are not being paid less than the proper Davis-Bacon prevailing wage rate for work completed.
Both contractors and subcontractors file the reports, and the government assumes the oversight role. The authorities verify that workers involved in the contract are fairly paid with respect to the prevailing wages.
Liability Insurance
Another key government contracting tip: If you don’t have liability insurance, you may not qualify for some contracts.
Most government contracts will need contractors to have liability insurance. You can check the required type of insurance coverage when applying for the contract.
Time and Resources
As a business owner, you will spend hours and dedicate lots of resources toward managing government contracts. For instance, in federal contracts, you need to complete many certifications and representations. These range from accounting rules, environmental standards and even compliance to business size.
The documents ensure compliance with the set regulations and laws in government contracting. They form the most detailed part of the bidding process that consumes a lot of time and resources. There are legal implications to this, and this is in addition to the time it takes to complete paperwork.
First-time applicants should seek professional help when pursuing a government contract. This relieves stress and pressure on you since you can lean on someone else to help guide you through learning how to apply for government contracts.
Consider All the Factors When Applying for a Government Contract
Government contracting is a huge task that takes lots of time and resources to complete. Also, applying for government contracts doesn't guarantee you'll get the job. But, checking requirements before pursuing a government contract and following our government contracting tips increases your winning odds.
Are you looking for a certified payroll reporting provider? Points North is here to help.
We pride ourselves on years of experience to offer clients compliance reporting. We also offer data aggregation solutions. Contact us today to learn more about certified payroll reporting and the services we provide.
