Do This Before Pursuing Federal Contracts As an Independent Consultant

Federal government contracts offer a valuable opportunity for independent professionals looking to grow their businesses. These contracts are a form of procurement through which the government acquires services for its direct use.

Winning federal government contracts requires thorough preparation and a proposal process that’s different from commercial businesses. These contracts come with strict terms, conditions, and regular reporting requirements. However, they offer a valuable financial opportunity to compete alongside larger businesses.

There are specific opportunities for women-owned, veteran-owned, and small businesses. These contracts are typically well-managed, with clear scopes and deliverables. The government is also highly attentive to worker misclassification issues, ensuring independent contractors are treated appropriately.

What Is Involved in Seeking a Federal Contract? 

Before you decide to seek federal contracts, make sure you understand what’s involved. The number of hours and resources required to pursue and manage a government contract can be quite high. For example, part of the process to apply for federal contracts involves completing Representations and Certifications. These provisions require you to represent and certify to a variety of statements ranging from environmental rules and compliance to entity size. 

Here are some additional points to consider: 

• Legal assistance: In addition to taking a great deal of time to complete paperwork, there are legal implications. If you’re going through this process on your own, it’s a good strategy to obtain a legal review.
• Liability insurance: Liability insurance is a common feature of federal government contracts. Even if you already have liability insurance, you may need to increase or add to your policy so that you can qualify.
• Invoicing requirements: There may be special invoicing requirements. Government contracting requires you to keep track of your funding and notify the government when you’ve reached 75% of your funding limit. Failure to do so may carry a penalty. It’s important to read contracts very carefully to ensure that you understand your responsibilities as a contractor.
• Payment terms: Payment terms may differ from standard business contracts. It’s common for government contracts to be monthly, net-60, which means you may not receive payment for 90 days. Any mistakes can lead to a delay in payment for several months.

How Do You Pursue a Federal Contract? 

If you decide that you want to pursue federal contracting opportunities, you need to make sure that you have what you need to register your business in the System for Award Management (SAM). SAM is an official website of the U.S. government that houses a database of companies interested in government contracts. You’ll need to create an account and complete your profile to become searchable. 

Here are the tasks you need to complete to register in SAM: 

1. Obtain an Employer Identification Number (EIN): While some small businesses prefer to operate off of the owner’s social security number, the government does require its contractors or vendors to have an employer identification number (EIN). If you need to obtain an EIN, you may do so for free through the IRS.  Think of this number as a social security number for your business.
2. Establish a physical address: The government does not allow you to register a P.O. Box in SAM, so you will need to obtain a physical address. If renting office space is not right for you, there are options to utilize a virtual office space or a registered agent to meet this requirement.
3. Obtain a D-U-N-S Number: To be eligible to win government contracts, you will first need to obtain a D-U-N-S number—a unique 9-digit number for each physical location of your business. Dun & Bradstreet (D&B) provides this number within one business day at no cost to you.
4. Determine your NAICS Code: The North American Industry Classification System (NAICS) classifies businesses to collect data related to the U.S. economy. You’ll need a NAICS code to register your business and to apply for certain federal contracts. For more information about NAICS codes, check out guidance from the Small Business Administration (SBA).
5. Establish a Contractor and Government Entity (CAGE) Code: A CAGE code is another unique identifier for your business that is designed to be publicly available and has been required to do business with the federal government since 2014. These codes allow the government visibility into company ownership and contracting activity through various payment systems. If you are not yet a government contractor and need to apply for a CAGE code, you may do so through the Defense Logistics Agency’s website.

When you have completed all these tasks, you can complete your SAM registration. From there you can begin looking for opportunities, either on your own or as independent talent engaged by an established government contractor. If this is your first time applying for a government contract, seeking expert support can be invaluable. There are many regulations, rules, and laws that apply to federal contractors, and ensuring everything is done correctly will put you in the best position to secure a contract.