Winning a Department of Defense (DOD) contract can be a substantial financial opportunity for businesses of many sizes. However, before you bid on DOD contracts, it’s important to understand how these contracts work and what businesses can do to become competitive. Here are some answers to commonly asked questions about working with the DOD and government contracting jobs in general.
What are DOD Contracts?
The federal government purchases the bulk of its goods and services from the private sector, and DOD contracts are legally binding agreements under which a business supplies products or services to a Department of Defense agency or military branch.
Opportunities can range from construction, transportation, and administrative support to cybersecurity, software, research, manufacturing, and advanced weapons systems. Of course, while we often equate DOD with military and security, they also need office chairs, paper products, food services, cleaning services, HVAC repairs, and other services.
Who Can Bid on DOD Contracts?
Businesses of many sizes and industries can compete, provided they meet the requirements of the particular solicitation and can provide the product or service the government needs. A company does not have to manufacture military equipment to become a defense contractor. Again, DOD also purchases commercial technology, professional services, office products, training, maintenance, food, medical supplies, and numerous other goods and services.
All contractors do have to complete registration in the System for Award Management (SAM). This is the central database for federal contracting, and you must have an active listing in SAM to bid on any federal contracting jobs.
Additionally, some contract opportunities are open to all businesses, but some are reserved or “set aside” just for eligible small businesses. These are known as a small business set aside, and the Small Business Administration (SBA) offers several contracting programs for small business owners.
These programs include the 8(a) Business Development Program, HUBZone certification, the Woman-Owned Small Business (WOSB) program, and the Service-Disabled Veteran-Owned Small Business (SDVOSB) program. You must sign up with SBA and apply for these programs. If approved, you will be eligible to bid on applicable set-aside contracts, such as sole-source contracts.
What Must Business Owners Do Before Bidding?
As explained above, a company that wishes to bid directly on federal contracts must have an active registration in SAM. If you plan to work as a subcontractor, SAM may not be a requirement, but generally it is wise to complete SAM registration as some subcontracts are required to take this step.
The government does not charge a fee for SAM registration, but it can be a complicated and time-consuming process. Many business owners hire a third party to complete this process. At Federal Contractor Registry, we can provide you with fast and 100% accurate SAM registration and SAM renewal services.
If you qualify as a small business, we can also help you sign up with the SBA and determine if you qualify for any small business set-aside programs, such as WOSB, SDVOSB, HUBZone certification, or perhaps 8a certification.
In addition to completing SAM registration, businesses should create a quality capability statement, which is a type of resume specifically designed for federal contracting. This document highlights what differentiates you as a provider of goods or services as well as past performance. You also will include contact information, certifications, and other important data.
Contractors also are expected to comply with all Federal Acquisition Regulations (FARs), so you will need to establish reliable accounting and recordkeeping practices in case of an audit to show that you were in compliance throughout the contract.
In some cases, you might need to obtain any solicitation-specific registrations, security clearances, or security assessments. We also highly recommend all potential DOD contractors learn about the Cybersecurity Maturity Model Certification (CMMC), which is the DOD’s program for verifying that contractors and subcontractors adequately protect sensitive federal information on their computer systems.
Of course, not all contracts include sensitive information. For instance, if you are supplying copy paper to DOD, this likely won’t be an issue. However, all contractors must adhere to all FARs, and this includes subcontractors. So, whether you must follow CMMC guidelines or not, read each contract carefully so that you fully understand all the regulations that pertain to the contract.
What Are the Most Common Types of DOD contracts?
There are several different types of government contracts, and a single contract can contain line items with different pricing arrangements. Common contract structures include:
- Firm-Fixed-Price Contracts: The contractor agrees to perform for an established price and generally assumes more of the cost risk.
- Cost-Reimbursement Contracts: The government reimburses allowable costs within the contract’s limits. These arrangements impose more demanding accounting and oversight requirements.
- Time-and-Materials Contracts: Payment is based on specified labor rates and the cost of allowable materials.
- Indefinite-Delivery Contracts: These provide flexibility when the government cannot determine the exact quantities or delivery schedule in advance.
- Incentive Contracts: Payment can be adjusted based on factors such as cost, schedule, or performance. For instance, if you are providing repairs and finish the contract ahead of the deadline, you may receive more pay for the contract.
Where Can Businesses Find DOD Contract Opportunities?
The principal public source is SAM.gov. Businesses can search by keyword, North American Industry Classification System (NAICS) code, federal agency, notice type, set-aside status, location, and response deadline.
We recommend using your NAICS codes and perhaps the location options for your initial search, as this often generates the best matches for your business. NAICS codes describe the precise goods or services that you can provide to a federal agency.
Additionally, be sure to check out the official websites of the DOD and other federal agencies for opportunities. Agencies also sometimes host workshops and industry days where you can make contacts and learn more about each agency’s needs as well as contracting in general.
If you qualify as a small business, the SBA operates a search engine for federal subcontracting opportunities. Subcontracting can be an easier path into federal contracting because the prime contractor handles the bidding and communication with the federal agency while you fulfill a portion of the contract. This can serve as an easier way to build a government contracting resume before you go after contracts on your own.
How Should a Business Evaluate an Opportunity?
Once you find federal contracting jobs that might be a match, you should study each contract carefully and ask yourself the following questions:
- Does the scope match my company’s proven capabilities?
- Can the business satisfy every mandatory requirement?
- Does it have the necessary staff, equipment, certifications, and financing?
- Can it meet the delivery schedule?
- Does it possess relevant past performance?
- Is the opportunity a good match for its size and resources?
- Can it offer a competitive price without creating unacceptable risk?
The business owner should also review amendments, attachments, clauses, security requirements, and submission instructions. A promising opportunity can still be unsuitable if the business cannot meet one mandatory condition. Basically, read the contract carefully to make sure you understand all requirements.
What Should a Strong DOD Proposal Include?
A strong proposal should demonstrate that the bidder understands the contract requirements and can fulfill the contract to the federal agency’s specifications.
Effective proposals typically include:
- A checklist showing where each requirement is addressed in the proposal
- A clear explanation of how the company will complete and manage the work
- Specific staffing, scheduling, and quality-control plans
- Relevant past-performance examples
- Specific, measurable results instead of general marketing claims
- Accurate and realistic pricing that is consistent throughout the proposal
- All required forms, supporting documents, attachments, and signatures
Business owners should follow all page limits, formatting rules, file-naming instructions, and submission procedures exactly. A strong proposal may still be rejected if it is late or missing any of the mandatory requirements.
Get Started with Federal Contracting!
While working with DOD can be profitable, completing SAM registration allows you to bid on contracts with any federal agency, so even if you don’t win a DOD contract, there are plenty of opportunities out there. At Federal Contractor Registry, we can provide you with fast and accurate SAM registration services so that you are able to bid on contracts as soon as possible. To get started, head to our homepage and click on the green New Registration tab.