This post was written by Gary Vogelsong, contracts manager for RedViking.
Although it may at first seem intimidating, careful preparation can pay off when you have access to the huge defense market. Market forces like reshoring, an aging workforce, and greater requirements for sustainability continue to drive demands for manufacturing automation. This is just as true for military as it is for commercial organizations. It is imperative for defense to work with factories and repair centers that are efficient, safe, and cost effective.
Defense contracts are available in virtually every country. In the U.S. alone, more than $50 billion is awarded annually to small business contractors. It may seem intimidating to sell to the government, but the opportunity is there if you are financially sound, well prepared, and persistent. Here are five steps you need to take to become a small business defense contractor:
The government defines small businesses in two ways: by revenue and by number of employees. Select the North American Industry Classification System (NAICS) codes that best describe your business. NAICS codes are six-digit codes that categorize a business’ section and industry. The National Technical Information Services site has the official NAICS manual with industry descriptions and codes. You can determine if your business meets small business size standards with the Small Business Administration size standards tool. To be eligible as a small business concern, your business must satisfy the SBA’s size standard for your industry, be operated for profit, be independently owned and operated, and be based in the U.S. and making significant contributions to the U.S. economy.
You know you are a small business, and you have identified your NAICS codes. Next, know your data universal numbering system (DUNS) number. The DUNS number is a unique nine-digit identification number provided by Dun & Bradstreet. Before you can bid on government proposals, you need to obtain a DUNS number for each physical location of your business. The DUNS number assignment is free for all businesses that are required to register with the federal government for contracts or grants.
Register and create a profile in the Federal Contractor Registry, System for Award Management. This is a database of companies wanting to do business with the federal government. You need to have a profile in place before you can bid on any projects.
The federal government posts all opportunities greater than $25,000 on the Federal Business Opportunities website. Learn how to identify which opportunities pertain to your business. Once you find an opportunity, you can either add yourself as an interested vendor or add it to your watched opportunities list.
For lower-priced items often ordered in multiples, search for the Defense Logistics Agency Enterprise Business Systems Internet Bid Board System in your browser. (Note that you will get a certificate warning from your browser.)
Finding appropriate opportunities is one of the biggest challenges. Learn about new opportunities as early as possible by looking for long-range acquisition plans. The U.S. Air Force Long Range Acquisition Estimate website is an example .
It is important to have a company champion or team of people who are committed to understanding federal guidelines. Contract management is a critical part of becoming a successful small business defense contractor. When you are writing your first proposal, that person or team must be established to manage communication with the project’s contracting office.
The government will typically evaluate your proposals in three areas: technical capabilities, price, and past performance. Write up brief descriptions of your past projects and keep them up to date. Understand and describe why your customer chose you over your competitors. Government agencies want to see that you have a history of success, so it is important to maintain this past performance library.
Once you narrow your focus and establish relationships, you will find it is easier to succeed. As in any industry, networking is critical. One of the best groups for learning the defense market is the National Defense Industrial Association, with chapters in every state.
About the Author
A version of this article also was published at InTech magazine.