Who’s getting government contracts and how you can take part

From paperclips to fighter jets and lawn care to funeral services, the United States federal government is the largest purchaser of goods and services in the world, accounting for more than $800 billion in contracts annually.

Despite preconceived notions, government contracts aren’t terribly hard to obtain as long as a company is prepared to do two things: a lot of paperwork and a lot of waiting.

“It’s a very competitive business,” said Allen Waldo, counselor for Springfield’s Missouri Procurement Technical Assistance Center. “That being said, it isn’t hard per se, there are just a lot of rules. You have to cross your t’s and dot your i’s.”

Tasked with helping business owners navigate government contract work, Mo PTAC, a joint venture funded by the University of Missouri Extension and the Department of Defense, is a free service since it is tax payer supported. Of the 76,909 and $10.03 billion in federal contracts awarded in Missouri for fiscal 2015, $464 million went to Mo PTAC clients. That’s up from $349.5 million in fiscal 2014.

Waldo said government contracts aren’t always large and sometimes don’t even make a profit, but getting your foot in the door can lead to bigger and better things.

The eFactory tenant F1 Computing Solutions LLC is looking to do just that.

“I’ve been to a few conferences, and I’m trying to get our name out there for cloud solutions,” said CEO Chris Kays, a PTAC client. “We can really build the business with this.”

Kays is one of Waldo’s 130 clients across 11 counties in southwest Missouri.

How does it work?
Government work starts with a lot of registration, mostly online, but it can take months to complete.

“This isn’t just a process you jump into,” Waldo said. “You can’t see a contract on Monday and have it on Friday. There is a process.”

Step one: Obtain a DUNS number.
The data universal numbering system is a proprietary system developed and regulated by Dun & Bradstreet that assigns a nine-digit unique numeric identifier to a single business entity for each physical location. It is required for any contract. The process to apply is free, but takes time, Waldo said.

Step two: Complete SAM registration.
A SAM registration – or the system for award management – is required for any business, organization or agency that is eligible to, or plans to, receive payments from the federal government. A business must be SAM-registered to even qualify, according to the U.S. Federal Award Management Registration.

Step three: Get assigned a CAGE code.
The commercial and government entity code is a five-number ID used by the government and assigned by the Department of Defense’s Defense Logistics Agency, according to the Federal Service Desk. The CAGE code supports a variety of mechanized systems throughout the government and provides a standardized method of identifying a given legal entity at a specific location. The code may be used for a facility clearance or a preaward survey and is a result of successfully completing the SAM registration.

Once those codes are in place, a company can bid on contracts via FedBizOpps.gov, where more than 29,600 contracts currently are out for bids. Only projects over $25,000 require a public bid process through the website, Waldo said.

“There are a lot of contracts out there, but not everybody qualifies for them,” he said. “There are these things called set asides.”

He’s referring to a specific number of contracts that are set aside for minority groups. Waldo said 5 percent are for women-owned, 5 percent for economically disadvantage, 3 percent for veteran-owned and 3 percent for historically underutilized business zones.

“Three percent doesn’t sound like a lot, but 3 percent of billions is,” he said.

An Air Force veteran, Kays’ F1 Computing qualifies as a service-disabled veteran-owned business, giving him priority – as soon as he’s certified through Veterans Affairs.

“It kind of gets my foot in the door, but it takes awhile,” he said, noting he already has his codes in place but the certification process can take up to 90 days. “We hope to have that in place by the end of the month.”

Who’s getting the contracts?
In Missouri, talk of government contracts usually means talk of aircraft manufacturer The Boeing Co. (NYSE: BA) – and with good reason. Of the top 10 largest contracts awarded to Missouri companies in fiscal 2015, Boeing accounted for six contracts and $2.4 billion of the state’s $10.03 billion total. At $854 million, the largest single contract however went to “McCarthy Mortenson NBAF A Joint Venture” for phase three construction of a national bio and agro-defense facility in Manhattan, Kan, according to USASpending.gov.

But not all companies on the list manufacture a widget; most are service providers with contracts as small as the singe digits. Adam’s Funeral Home in Nixa garnered 47 Department of Justice contracts in fiscal 2015 ranging from $2 to $4,461 for “care of remains and/or funeral” as part of an agreement with the United States Medical Center for Federal Prisoners. Companies around the Ozarks – Mercy Hospital Springfield, Leggett & Platt Inc. (NYSE: LEG), Wickman Gardens Inc., Hiland Dairy Foods Co. LLC, The News-Leader, Oke-Thomas Associates Inc., Paul Mueller Co. (OTC: MUEL) and Springfield Grocer Co. – are among the 1,997 contracts issued in the 7th Congressional District during fiscal 2015 accounting for $56.1 million. So far, in fiscal 2016, which ends Sept. 30, 7th district companies have garnered 806 contracts for $37.8 million in total awards.

“It’s about it heat up,” Waldo said. “About 35 percent of all contracts are awarded in the fourth quarter. They’ve got to use up that allotted money.”

Foxhole Technology Inc. is seeking to capitalize on that spend. The information technology engineer brought in $27 million last year, 98 percent of that from government  contracts.
 
A retired U.S. Army IT officer, CEO Wes Hester’s operation has headquarters in Fairfax, Va., but the 140-employee team is spread worldwide, across 17 states, into Germany, Korea and Afghanistan. Calling Springfield home, Hester and eight employees work from the Queen City.

Foxhole Technology handles a little but of everything from maintaining websites to cyber security for the likes of the departments of Education, Defense and Health and Human Services.

“The first year I opened this business, we didn’t take a paycheck for the whole year,” Hester says. “Government contracts have made it what it is today.

“About 2 percent of our work is commercial, companies like Blue Cross Blue Shield. It’s easier, but less dependable. They can hire you over coffee and fire you at the water cooler later that day. Government work may take more effort, but it’s dependable.”

Hester’s advice for startups like F1 Computing? Remember it’s a marathon, not a sprint.

“Have your back office in order, keep the accounting on track and network, network, network,” he said. “They don’t just hand out contracts to anyone, but if you have your ducks in a row, they can hand one to you.”