Posted By: brianac Category: Government Contracting 101

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In Fiscal Year 2005, the federal government wrote 10.3 million "actions," commonly referred to as "contracts," for products and services needed during the year. In addition to this activity, the federal government's use of credit cards resulted in another 26.5 million transactions. This is a lot of activity, but what are the dollars? The contracts represented about $400 billion, while the credit cards amounted to sales of an additional $16.4 billion.

Since any contracts that fall between $2,500 and $100,000 are reserved for small, small disadvantaged, small women-owned, and small veteran-owned businesses, that means that almost 10 million contracts were reserved for small businesses in just one year! Only 5 percent of the contracts were for more than $100,000 in value, and many of those were for major weapon systems, information management services, or large construction projects.

Looking at it from a small business perspective, most contacts use simplified procedures and are not much different that those found in the commercial world. According to a recent congressional report, government contracting has increased 86 percent between 2000 and 2005, so the opportunities are great for companies that follow a planned strategy.

Government Prime Contract Goals

The government has the following designated goals* for awarding prime contracts to small businesses:

• 23% to small businesses
• 5% to small disadvantaged businesses for prime and subcontracts
• 5% to small women-owned businesses for prime and subcontracts
• 3% to HUBZone small businesses
• 3% to small service-disabled, veteran-owned businesses for prime and subcontracts

*Keep in mind that these are government goals, not government quotas. Quotas are set objectives that one must achieve; goals are set objectives that one must attempt to achieve. In any event, you probably will not get a contract just to help the government reach its goal. As in any commercial setting, contracts are awarded on the basis of what makes good business sense, with price, quality, and performance being the ruling factors.