Why Should Small Businesses Respond To Public Sector RFPs?
Building your business and stabilizing your revenue may seem like a daunting task. Responding to public sector RFPs offers you the chance to gain experience while leveraging your position as a small business.
Government contracts encourage small business participation.
Some government RFPs are classified as having a “small business set-aside.” This means that the agency will only accept bids from certified small businesses. The goal is to level the playing field. As a result, small businesses are able to compete for and win government contracts. Examples include:
- Small Business Enterprise (SBE).
- Women-Owned Small Business (WOSB) or Women Business Enterprise (WBE).
- Minority-Owned Small Business (MOSB) or Minority Business Enterprise (MBE).
- Veteran-Owned Small Business (VOSB) or Veteran Business Enterprise (VBE).
- Disabled Veteran-Owned Small Business (DVOSB) or Disabled Veteran Business Enterprise (DVBE).
- Historically Underutilized Business Zones (HUBZone) Small Business.
- Small Disadvantaged Business (SDB) or 8(a) Small Business.
- Native American-Owned Small Business (NAOSB).
More often, government RFPs require large companies (Prime) to team with certified small businesses (Subcontractor) to fulfill a percentage of the Statement of Work (SOW). Again, the goal is to create more opportunities for small businesses to participate in government contracts. As a result, this may be a good option if your business is not quite ready to take on a contract alone.
Government contracts are often extended.
When building your small business, being able to forecast revenue is key. Many government RFPs begin with a base period of one to three years. Many opportunities also have the option to renew the contract in subsequent years (usually no more than five years total). Therefore, if your business is just starting out, the financial security of a government contract can provide the revenue stability required for growth and strategic planning.
Government contracts are clearly defined.
Winning a government contract can assure your business will earn a set dollar amount for a set period of time. Additionally, each contract explicitly defines the SOW. This means fewer surprises along the way. Small businesses must remain agile, but because procurement policies require governments to be transparent, you can plan accordingly. Most government contract and work order changes must be pre-approved. This allows you to evaluate your bandwidth in advance.
Note: Some government opportunities are intended to pre-approve a pool of vendors rather than approve a specific scope of work. The government entity that pre-approves your company will then invite only pre-approved vendors to bid on certain projects and services.
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