Top Myths About Government Contracts
Federal, state, and local governments spend billions of dollars annually on a wide variety of goods and services. Even so, most small businesses don’t go after these potentially lucrative contracts.
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Federal, state, and local governments spend billions of dollars annually on a wide variety of goods and services. Even so, most small businesses don’t go after these potentially lucrative contracts. Why? Because the government has a bad reputation as a customer, and small businesses don’t want to deal with the hassle. However, much of this reputation is based on misperceptions and outdated information. We’ve collected some of the most prevalent myths about doing business with the government to help you separate fact from fiction.
- Myth: The government isn’t a reliable client
Fact: Regardless of how the economy is doing, the government is always in business. During times when the private sector is scaling back, the government still needs to maintain its infrastructure and go about its business. As a result, government contracts can be a steady source of revenue regardless of the highs and lows of the economy.
- Myth: The government doesn’t have any money to spend
Fact: That couldn’t be further from the truth. Although government spending is under close scrutiny, there is a great deal of money out there. In many cases, state and local governments are the single largest buyers in their area. Look at your local government’s fiscal-year budget to learn when, where, and how much money is being spent.
- Myth: It will take too long to get paid
Fact: The Prompt Payment Act of 1982 stipulates that federal contractors receive payment within 30 days of submitting a properly prepared invoice. Most cities, states, and other local jurisdictions have followed suit with similar regulations. If payment is late, you are usually entitled to interest for every day it is overdue. In addition, more and more agencies are using purchase cards and electronic funds transfers, which make payments fast and efficient.
- Myth: Government paperwork is too long and too confusing to manage
Fact: In the past several years, the government has decreased and simplified paperwork on every level. Also, many agencies now put their contracting forms, regulations, and instructions online, making them easily accessible. That said, the government still takes its paperwork seriously. Contractors must pay careful attention to every detail when working with any government agency.
- Myth: Small companies don’t get government contracts
Fact: Federal, state, and local agencies have programs in place to ensure that small and disadvantaged businesses get a share of government work. For example, the federal government enacted the Very Small Business Program to increase the number of contracts going to businesses with fewer than 15 employees and annual receipts of less than $1 million.
- Myth: Contracts only go to companies that already work with the government
Fact: These days, many government agencies go out of their way to recruit new contractors, especially among small businesses. There are also systems of checks and balances in place to prevent contracting officials from playing favorites with a particular company.
- Myth: Government agencies don’t communicate, so I’ll never know why I didn’t get a contract
Fact: Many jurisdictions now mandate that contracting officials list the reasons why one company was chosen over the competition. You can also request a debriefing with officials to sort out your shortcomings and the winning bidder’s strengths.
Source: Onvia (www.onvia.com) is a firm that helps business-to-government (B2G) companies achieve a competitive advantage by delivering timely and actionable government procurement opportunities and information. Contact them at 1260 Mercer Street, Seattle, WA 98109; 206-282-5170.