President-elect Barack Obama has his incoming team drawing up an economic stimulus plan that is, by all accounts, mammoth. With private work drying up, can small businesses get in on the government contracting bonanza? Mark Amtower, a partner in consultants Amtower & Co. in Highland, Md., says yes—but they shouldn't expect quick results if they're just starting now. He recently spoke to Smart Answers columnist Karen E. Klein about how small companies can achieve long-term success through selling to the government. Edited excerpts of their conversation follow.
We keep hearing about how much money the government is going to spend on things like infrastructure projects to stimulate the economy next year. Will some portion of that work go to small businesses?
Definitely. These large infrastructure contracts will mostly be administered and bid out by the states, even for things like federal highway projects. So there's plenty of room for small businesses in government contracting, but only if they're selling something the government needs. The good news is that the government buys all kinds of stuff, even personal items for people who are traveling for the government, or moving their families. The bad news is that this is an incremental market. There are no quick hits, and learning the system is not easy or fast.
What advice do you give clients who are interested in getting into government work?
Identify no more than three federal agencies to target and home in on them first. And if you target federal contracts, you should also target state and local contracts in the jurisdictions where you pay taxes. It's a lot easier to raise a stink about the government buying from the big-box guys on the local level than it would be on the federal level.
For very small companies, I always tell them to start local. Putting a face to the company provides the same comfort factor for business-to-government as it does for business-to-business transactions. There are 37,000 government-occupied sites in the U.S.— not including military installations or postal offices—so the government is never far away from you. That includes things like the courts, VA hospitals, IRS tax offices, and even the animal and plant inspection guy who's attached to your local university. The blue pages of most phone books identify the government offices near you.
What kinds of companies get local—or federal—government contracts?
Name a business, and the government is buying from one like it. The federal government accounts for more than 15% of gross domestic spending. Throw in state and local governments and you get to over one-third of gross domestic spending. There are 20 million full-time government employees, and they are buying from independent office suppliers, companies that build or supply trucking equipment, companies that do grounds maintenance—you name it. Think of all the post offices and military bases—who's mowing the grass at those sites? There are a lot of ways that local businesses can play in this market.
Getting into the government contracting pipeline is complicated, as you mentioned. Where can small businesses get help with the process?
The Procurement Technical Assistance Program has 90-some offices around the country whose job is to help small businesses understand the mechanics of selling products or services to the government. They'll teach you the rules and regulations involved, which are substantial. The program is sponsored by the Defense Logistics Agency, and it provides low-cost or no-cost training that's held at universities or economic development agency offices. There's a list of the local centers available here.