Federal Government Contracts Under $25,000 for Small Businesses

“Federal Government Contracts Under $25,000 for Small Businesses”

© Copyright 2005

By Robert Moment

Did you know that federal procurements under $25,000 don’t undergo the normal bidding process? That means that if you’re a small business selling products or services, landing a federal contract may be easier than you think.

The federal government is the ideal resource for small businesses and independent contractors to tap for projects. Here’s why: The federal government…
• Assigns billions of dollars in contracts annually.
• Often gives preference to smaller contractors and consultants
• Is mandated to target smaller firms for contracts less than $100,000
• Has a huge budget and is frequently a repeat customer
• Will never go out of business

Locating Smaller Contracts
“Smaller” contracts under $25,000 represent special opportunities for small businesses and independent professionals. However, contracts at this level aren’t publicly advertised, so you have to know where to look to find them.

You can locate smaller contracts through a “hidden market,” where business deals are driven by relationships with federal buyers. Incidentally, federal agencies generally purchase products and services from small businesses in their local market. Establishing relationships with these agencies can be a smart move for small businesses because it:
• Can reveal unadvertised contracts
• Is less competitive
• Results in prompt payment
• Offers the potential for ongoing and repeat business

How the Government Awards Smaller Contracts
The federal government procurement system for contracts under $25,000 isn’t overly extensive or competitive. The government generally makes hiring decisions for smaller contracts through micro purchases or simplified acquisitions. Both of these methods are relatively streamlined, compared to the more formal process of requests for proposals, quotes and invitations.

Micro Purchase Market
The micro purchase market enables federal managers in the field to buy goods and services under $2,500 quickly and easily. Managers normally make these purchases with a government credit card, although a purchase order can also be used. Government credit cards—GSA SmartPay cards—are widely used and are the government preferred method of payment.

Accepting credit card payments offers government contractors a variety of benefits. It eliminates the use of purchase orders, which means fewer forms to complete. It speeds up payment processing and reduces billing, collection and other administrative costs. But more importantly, accepting GSA SmartPay, allows companies to remain competitive and become strategic suppliers to government purchasing card users.

Using credit processing to capitalize on the micro purchasing system is easy. You simply set up a merchant account that allows you to accept credit cards. Then conduct business with your local federal agencies the same as you would with your commercial customers.

The micro market offers contractors the benefit of receiving same-day purchasing decisions from government agencies. It also allows you to avoid spending hours putting together bid packages and waiting weeks for responses. Plus, the system makes it easy to receive repeat business from government organizations that are satisfied with your work.

Simplified Acquisitions
Simplified acquisitions are more involved than micro purchasing; yet, they’re more straightforward than formal bidding processes. With simplified acquisitions, managers solicit three to four informal quotes by telephone, email, fax or mail. These direct and unadvertised contracts can range from $2,500 to $100,000 in value. Contracts between $25,000 and $100,000 are publicly advertised.

As with micro purchasing, contractors can receive quick responses through the simplified acquisitions process. Decisions for project awards are delivered within one to several days, instead of weeks.

Before you set out to win government contracts, be sure to define your contracting niche—whether it’s the micro purchase or simplified acquisitions market. This will help you effectively focus your marketing efforts for the best possible results. Good luck!

Robert Moment is a successful business coach, consultant and author of “It Only Takes a Moment to Score”, which is currently available at Amazon.com and Barnes and Noble. His company (www.winfederalcontracts.com), has been winning federal government contacts for 17 years and offers powerful insight to help other businesses do the same.

 Robert Moment

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