Good afternoon, my name is Joe Whitcomb. I am the founder and president of Whitcomb Selinsky PC, a veteran owned, operated, and centric law firm located in Denver, Colorado. Today I'm going to take some time and talk to those of you that are beginning to consider government contracting. We represent a lot of veteran business owners across the country in the space of government contracting and we regularly get the question either by email or by phone call “Hey, I'm interested in government contracting. How do we get started?” So, today's video is going to cover about ten topics on exactly what it takes to get started in government contracting.
[Why do business with the Federal Government?]
The first topic we're going to cover is why do business for the federal government in the first place. Most companies will have defined themselves as either a B to B or B to C enterprise depending on whether their business focuses on other businesses or consumers. That said, many understand that the federal government is a huge consumer of goods and services. In fact, they are the largest consumer of goods and services in the United States with about a 4.5 trillion-dollar budget and about $560 billion of that going to government contractors. So, one reason to be in the government contracting space is that there's a lot of money in it. Also, usually there are contracts involved that give business owners a little bit of a little bit of runway. Meaning, if you win a five-year contract, of course it is not guaranteed, but in most instances the five-year contracts last five years. Additionally, once a contractor has won a contract, they are now incumbents and have an increased chance of winning on recompete.
If a client were to ask me, I would typically advise them to diversify and do business with consumers, commercial businesses and with federal, state, and local governments. However, those are business decisions that are made by business owners and their consultants. So that’s my answer to the question “Why do business with the federal government in the first place?”
[Where do I start?]
Once you’ve made the decision to do business with the federal government the question becomes “Where and how do I get started?”
Once you have created articles of organization and filed them with your state’s secretary of state, the next thing you will do is get a federal Dun’s number. On your screen there should not be an image of Dunn & Bradstreet’s “iUpdate.” You can Google that or you can follow the link that is in the blog post that accompanies this video. That link will take you out to a website where you just begin populating it with information; i.e. the names of the owners, business addresses and so forth and eventually what you'll get is a number we typically refer to as a DUNS number. That DUNS number becomes the number by which the federal government will identify your company. It is important to note that the U.S. government does not use your company’s EIN. There are instances in which you will need to supply the government with your EIN, but most times, the government will use your DUNS number which is free. An important note, your company should not have to pay anybody for a DUNS number.
It is also important that when you apply for your DUNS number that the information on the Secretary of State's website is accurate, because that is the information that DUNS will use to populate important matters like your company’s address. So, make sure to keep your company’s information up to date on your State’s Secretary of State page. Now that you have your DUNS number, what's next?
The next thing you're going to do is go out to the Census Bureau website and find out what your NAICS code is. The link to this website is also in the text version of this blog post. NAICS stands for the North American Industry Classification System. You may not know this, but if you've filed federal income taxes for your business, there's a NAICS code on that tax form. As an example, for an office of attorneys that number is five four triple one zero. That is the NAICS Code associated with an office of attorneys in the United States. If we were a general contractor, we'd have a different NAICS code. If we were a company of electricians, we'd have yet another. That six-digit code tells the government what the company does generally. It does not, for example, tell the government that my office practices government contracts law, patent law or intellectual property law. It just tells the government that my Company practices law. You will need to know what your NAICS code is, because from there you will learn whether or not your company is “small.”
[Am I a small business?]
The odds are good if you are viewing this video, or you are a fairly new business, you are small. The federal agency that determines the criteria for being “small” is the Small Business Administration. The SBA creates a table, usually about once a year. The link for that table is in the text version of this blog. In the table, you can look up your NAICS code and determine whether or not your company is small by virtue of its annual receipts. As I mentioned, we are an office of attorneys, designated by the NAICS 541110 with a size standard of $12 million per year. On January 6, 2020, a new rule went into effect that changed the number of years for which receipts are averaged from 3 to 5 years. The implementation period will be through 2022 during which time companies will be allowed to choose between a three-year averaging period and a five-year averaging period.
So, if you had a big year followed a small one, your company’s average annual receipts could still fall below the total three or five-year threshold for your company’s NAICS. It is important to check the table, because the size standard for different NAICS codes varies dramatically. For example, if your company is a manufacturer, then your size standard will be based on the number of employees working for your company. This could be between 500 to 1250 employees depending on what your company manufactures. If you run a general contracting firm, then your side standard would be 39.5 million in receipts. An important fact for a general contractor to consider in calculating whether your company is small or not is that you do not get to subtract subcontractor costs from your top line. Your company must qualify as “small” in order to qualify for any other socio-economic programs, such as HUBZone, 8A; Woman owned, SDVOSB or VOSB.
The next website that you will need to visit is a website titled Sam.gov. It’s the system for award management Sam.gov and it should be showing in your screen now. This is where you will register your company to do business with the federal government if you are a U.S.-based company. This website will take the average person about 45 minutes to an hour to complete that. You'll need to have your EIN and DUNS number handy before you begin. Much of the information at the beginning of this website will populate from Dun and Bradstreet’s iUpdate page. You will fill in the rest of your company’s information.
Typically, after you fill in your DUNS information on IUpdate, you will have to wait about 48 hours and then you should get an email that tells you your DUNS numbers is issued. About 24 hours after that, you’ll be able to begin your Sam.gov registration. Again, you should not have to pay anyone to do this registration. However, you will want to be conservative in answering questions, including the boxes that you check, because these will serve as your representations to the government when you submit an RFP or request for proposals response.
Once your Sam.gov registration is completed, your company will be issued a cage code. Simultaneously, you should get a notification that your company is eligible to compete for federal contracts. It is also in that sam.gov registry that you will check boxes indicating your socioeconomic status such as woman-owned, 8(a), veteran owned, service-disabled veteran owned small business. In order to be eligible to check one of these boxes, your company must be 51% owned by a qualifying individual or a group of individuals. So, if it's a woman-owned business, a woman must own 51% of company and must control the company. If it’s a veteran-owned business, a veteran must own 51% of the company, control the company, and handle the day-to-day management.
The next thing you will do is you will go out to beta.sam.gov. This website replaced what was previously referred to as fed biz ops or fbo.gov. I have included a screen capture that shows what the page looks like. In this screen capture I have done the search for 541110 which is, as I mentioned earlier, the NAICS for “office of attorneys.” So, no matter what kind of business you were in, you can do searches for that NAICS code and save the searches. If you want to do business in Georgia, you can look for construction contracts that are in Georgia. You can narrow all those things down and get notifications for business that you want to bid on. Once you have received notification, you can write proposals and bid on those jobs. Follow-on content will focus on the types of competition like lowest price technically acceptable and best value and how to best prepare for competition.
[Contracts set aside for veteran-owned businesses]
The last thing that you will want to look into is reserved for those interested in competing for contracts that are set aside for veteran-owned businesses. A lot of our audience are veteran-owned small businesses. If you plan to compete for veterans administration set aside for service disabled veteran owned small businesses or veteran owned small businesses you will want to follow the following link to the Center for Verification and Eligibility. This website is typically referred to as the vetbiz database. Again, I have included a screen capture so that you can see what the page should look like. Please keep in mind that you do not need to register for this database unless you answer yes to the questions “are we veteran owned and does my company want to do business with the VA?” If the answer to either question is “no” then do not spend the time, energy or money on doing this, unless you have a separate branding or marketing reason to do so.
However, if you are a veteran or service-disabled veteran owned small business and you want to compete for contracts issued by VA, then CVE verification will be very important. The verification process will typically take you anywhere from 45 to 60 days, which is a conservative estimate. I have seen it take as long as 90 days where there are more complicating factors like multiple non-veteran owners, a business owner who owns multiple entities, or situations where the owner lives in a different city or state then the company’s headquarters. These factors can cause things to take longer at the CVE. Help with CVE verification is a service that our law firm does provide. Typically, we use paralegals to do the lion's share of that work. However, if there are legal documents that need to be completed like operating agreements, by-laws, or other corporate governance documents, our attorneys are skilled in drafting those documents in ways that will be acceptable to the Veterans Administration for the purposes of verification. And this is the last stage you would need related to preparing for and becoming eligible to compete for government contracts.
If you still have a lot of questions related to government contracting, then you should check out our other blog posts including other videos on the subject. Of course, there are a lot of resources for new government contractors. For example, in many states including Colorado, there is an agency referred to as PTAC. They are a great organization that offers free education and networking events. You can subscribe to your local PTAC newsletter as well as get daily updates about competitions around the country relevant to your business area. PTAC he is a free and useful service.
Our website offers about 375 blog posts on our website, many of which have to do with government contracting. But, should you have other questions or concerns, please use the contact information on our website. There are also a number of fillable forms throughout our website that you can use to contact us and send us specific questions. We have been intentional in making ourselves available to you.
Thank you for joining us today for this video demonstration of government contracting basics. If you enjoyed the content, then please subscribe to receive weekly video updates. This way, anytime we create new video content, you will automatically be notified. Again, my name is Joe Whitcomb founder of Whitcomb Selinsky PC and this has been the vetbiz lawyer video and podcast.