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The Mahoning Valley Technical Procurement Center (MVTPC) is a non-profit program operated by the Eastgate Regional Council of Governments, and the Mahoning Valley Economic Development Corporation(MVEDC) mvedc.com to assist local businesses in identifying and securing federal, state and local government contracts, and sub-contracting opportunities at no cost. The MVTPC offers small businesses the technical expertise, resources, and specialized assistance, guidance and counseling necessary to enter and remain in this highly competitive market place, enabling a small business to expand its sales opportunities and increase opportunities for financial growth.

FlagThe MVTPC provides assistance to businesses in Columbiana, Mahoning and Trumbull counties in Ohio. For assistance elsewhere in Ohio, check the Ohio PTAC map or the Nationwide list of PTAC's http://www.sellingtothegovernment.net/ptac_map.asp for assistance in other states.

Should You Consider Government Contracting?
Some small businesses are well positioned to pursue and win contracts from the government given their type and their business status. For other small businesses, government contract work may not really make sense. Given this reality, it's important to evaluate your businesses strengths and weaknesses, cash flow situation, level of technical sophistication, and a variety of other characteristics before pitching the government for business.

Use the questions below to help you gain insight into whether or not government contracting is for you.  

 
Do you sell business-to-business products or services?
Government contracting is very similar to business-to-business selling in that the products and services it procures are generally for its internal use. Many of the methods used in B2B commerce - such as competitive bidding and purchasing from "authorized" vendors - are also used in many government sales. If you're comfortable doing business this way, then the transition into government sales might be fairly straightforward. On the other hand, if your product or service is aimed primarily at consumers, you might not find a significant government market for it.

It is also important to understand what kinds of products or services governments typically buy. In many cases, there is not a great deal of "customization" - open bids are often for standard items that can be easily compared. According to the U.S. Small Business Administration, federal purchasing breaks down along these categories: 36% for supplies and equipment (including electronic, transportation, and metal products); 35% for services (including engineering, R&D management, business, and health); 19% agriculture, transportation, communications, utilities, finance, and administration; 7% construction; and 3% wholesale/retail.

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Can you qualify as a woman-owned or minority-owned firm?
Government programs often set aside a certain percentage of their contracts for women- or minority-owned businesses. At the federal level, special programs provide set-asides as well as special assistance in order to level the playing field for what it terms "small disadvantaged businesses." Many states and municipalities also have similar programs. Although qualifications for woman- or minority-owned status can vary, it generally requires that at least 51% of your business be owned and operated by qualifying individuals.

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Do you feel comfortable writing proposals or responding to RFPs?
Many - although not all - government contracts are awarded through a competitive process that requires potential suppliers to respond through formal bids. As a result, there are certain proposal-related skills that are necessary to have in order to compete for these orders. The most important of these may be proposal writing and costing, since you will need to show that you can supply the necessary materials at a competitive price. If you don't have these skills in-house, you might want to take advantage of the services of a professional proposal writer with experience in the areas where you are competing.

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Are you e-commerce ready?
An increasing number of government purchases are being handled via electronic commerce applications as a way of simplifying procurement. At the federal level, Internet and electronic commerce solutions are highly encouraged, with many contracting opportunities posted online on agency Web sites, with proposals submitted through that site. Similarly, many contracts require you to participate in the government's Electronic Data Interchange (EDI) program, which is a form of "paperless" bidding.

It is also important to be able to have the technology in place to receive payments for contracts. In many cases, electronic funds transfer is used to "wire" payment directly to your company's bank accounts. Smaller purchases (often those of less than $2,500) are done via credit cards, so you may need to have a merchant account in place.

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Do you have good credit?
Expect government agencies to closely review your credit - both that of your business and the personal reports of your company's principals. Bad debts, collection accounts, and other blots on your record could impact your ability to receive government contracts, since agencies want to be assured that your business is in solid financial shape. In addition, good credit will improve your chances should you require security clearances for selling to any particular agencies (such as defense or intelligence departments).

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Do you have strong cash flow?

Government agencies are often not known to be the speediest payers, and first-time contractors may find that slower-than-expected payments can damage their cash flow. This is often more so the case when small companies become subcontractors, as they may need to wait for the prime contractor to get paid before they see any money. As a result, it may be important to have resources available to your business to weather any cash flow issues. These tools might include such as revolving lines of credit, or loans that can be secured against the value of a government job.

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Can you compete profitably?

Many government contracts tend to go to the lowest bidder, so small companies eager to pursue government jobs often land contracts by under pricing their products or services. This can be a big mistake, making it hard for you to meet your costs much less turn a profit, and potentially putting your business at risk. While undervaluing your products or services may help you get business, it can land you in hot water when customers come back for repeat orders and refuse to renegotiate prices. Be sure to analyze your costs closely before you complete a bid, keeping track of both the prices you charge and the expenses you will incur managing the contract.

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