Yesterday, we wrote an article on the Stimulus Package and what it may mean to the construction industry. Today, we’re focusing on what it may mean to your specific construction business.
While the private contracting business has suffered setbacks in the current economy, one bright spot has remained: the growth of public and federal construction spending.
The passing of the new stimulus build with large investments into America’s infrastructure and other public works promises to put even more money into the public contracting business.
ConstructionBusinessOwner.com published two very informative articles about how your business can take advantage of the increased public spending.
The Differences Between Public and Private Projects
The first article, titled Three Key Steps for Shifting To Public Works Projects, explains some the key differences between private works and public works, and identifies common mistakes made by companies when entering the public sector.
The article encourages companies to consider bidding for and taking on more public work, but warns against doing so without proper preparations. Here is a revealing quote:
Making the shift to prevailing wage jobs takes preparation. Without proper planning, contractors run the risk of underbidding jobs-and, subsequently, losing money-or getting slapped with steep penalties for improper recording keeping. Establishing protocols for certified payroll and AIA progress billings and having solid audit trails for each transaction are vital if you want to succeed in the government-financed construction market.
So what are the 3 Key Steps to shifting from private to public work?
- Get Educated
- Automate Your Accounting Practices
- Bid on Projects Based on your Strengths
How To Get Federal Work
The second article, Claim Your Share Of Rising Federal Construction Spending, was published immediately after passage of the new stimulus package, and really explains how businesses – and especially small businesses – can intervene in the federal works bidding process and claim some work.
In its discussion of why small or minority owned businesses have a dog in the federal contracting fight, the article states as follows:
Unfortunately, far too few small businesses take advantage of federal contract opportunities, even though the federal government is required by Congressional mandate to direct 23 percent of its contracts toward small businesses. Despite this mandate, the latest figures from the Small Business Administration indicate that the federal government fell short of this figure.
Although there are various factors behind this shortfall, two things are pretty clear. First, if more small businesses were competing for these contracts, more would win them. And second, small business owners who are savvy about the process of securing government contracts are the ones most likely to land them.
Summary of the article’s tips for preparing to bid on federal projects:
- The government will want basic information and methods of Identification. Get a DUNS number (free from Dun & Bradstreet), a Federal Tax ID number (EIN), understand your NAICS and SIC classification, and have accurate financial routing information for your business available.
- Create a profile on the Central Contractor Registration database. The CCR is where all government agencies and prime contractors turn when they are looking for potential vendors.
- The federal government is obligated to award a certain percentage of its contracts to various underrepresented and disadvantaged groups. If you think your business may qualify, you should register with the U.S. Small Business Administration (SBA), whose Small Disadvantaged Business (SDB) and 8(a) programs are designed to help specific groups secure federal contracts and subcontracts.
- Consider Subcontract work. Getting your foot in the door is sometimes the hardest part in landing government contracts. First-time bidders can be at a disadvantage because the government often relies on established relationships when selecting contractors. Fortunately, large construction projects often depend on a host of subcontractors, which could be your ticket in.
See also Industry Week’s article, Your Best New Customer May Be Uncle Sam, for other helpful information.