Here are five ways it could help your company.
When it comes to selling to the government—whether you’re talking about the federal, state or local level—certifications can be important tools for gaining entry to this complex market.
Unfortunately, certifications are not standardized between these different levels of government. Getting certified can be a time-consuming endeavor.
An Alphabet Full of Certifications
How complicated can certification get?
In the federal space, businesses can self-certify as a small business (SB), a small disadvantaged business (SDB), a minority-owned business, a woman- owned business and veteran-owned and service-disabled veteran-owned small business (VOSB and SDVOSB). SBA’s woman-owned small business (WOSB) and economically disadvantaged WOSB (EDWOSB) certifications require additional documentation, though at the time of this writing, self-certification is still accepted but with pending changes.
SBA’s 8(a) certification (a nine-year mentoring program for socially and economically disadvantaged small businesses) and HUBZone (for companies located in underutilized business zones) are formal certifications. These require extensive documentation submittals such as tax returns, payroll and resumes.
To do business with Veterans Affairs, there is also a formal verification process for VOSBs and SDVOSBs.
To add to the confusion, state and local entities have different certifications with different acronyms, such as MBE (minority business enterprise) and WBE (women business enterprise). The disadvantaged business enterprise (DBE) program is a federal certification, but is administered at the state and local level for highway and construction projects.
Additionally, MBE and WBE certifications can also be obtained from local, regional and national councils for a fee. Large commercial customers may look to these certifications to meet subcontracting goals.
If the certification process is so demanding, why is this still a good idea for many small businesses? Here are five reasons that could make getting certified a worthwhile pursuit.
Government Prime Contracts // A prime contract is a direct contract with a government agency. The procurement process is set up to give additional consideration to the various small business socioeconomic groups seeking access to prime contracts.
In federal acquisition, sole-source and set-aside opportunities are allowed with some restrictions. A sole-source contract is one where the purchase of supplies or services is solicited and negotiated with only one source. Set-asides are bid competitions that limit the opportunity to certain groups, i.e. “set-aside for women-owned small businesses only.” This opens up the opportunities for small businesses by reducing competition.
State and local governments will set spending goals to do a certain amount of business with certain socioeconomic groups per project or per year.
Companies with prime contracts can subcontract a portion of the work to subcontractors, but they call the shots. It’s very desirable to be a prime contractor.
Government Subcontracts // Prime contractors are required to fulfill stated socioeconomic goals in their subcontracting plans. This adds another layer of opportunity for small businesses and helps them gain valuable experience working on a government contract.
Commercial (Private-Sector) contracts // Many large commercial companies have supplier diversity programs as part of their community outreach. These companies have specific types of certifications they will accept, and will typically note this in their vendor registration.
Increases Company Visibility // Once your company is certified, your contact information is listed online in a public database at no cost to you. Buying agencies and prime contractors review these sites when looking for potential contractors, subcontractors or teaming partners.
Access to Special Networking Events and Continued Education // Many government entities host special events to help you make connections and grow your business. Combine your certification with a solid marketing effort, and you will be on the right path to winning contracts.
For federal contracts, there is an additional reason to get certified. A new mentor-protégé regulation went into effect in August 2016. This regulation states that any small business type (the protégé) may team up with up a mentor (typically a large business) to bid on contracts. This type of teaming has previously been available in this sector. However, there are some significant changes this recent regulation brings.
Regardless of the reasons listed above, you must decide for yourself if obtaining a certification is right for you and your company. Keep in mind, getting certified is not a guarantee for winning contracts.
Best advice before making your decision? Reach out to other certified companies to discuss their successes. And contact a local business development organization specializing in certification assistance to answer any questions that you have.
3 Questions to Ask Before You Get Certified
Before diving into a pile of certification paperwork, you should be able to answer the following questions:
» Do I meet the qualifying requirements of the certification?
» What are the business reasons why I am considering certification?
» Do I need certifications from all levels of government?