Taking Advantage of Government Contracts

The Federal government sets aside all purchases that are valued at between $2500 and $100,000 for small businesses as long as there exists at least two companies that are able to offer the product. For contracts that are above $100,000, small businesses may benefit from them by joining up to offer the good or service. Contracts that are larger than $500,000 have a requirement that a small business be sub-contracted in the contract. The government’s definition of a small company varies but it is generally accepted that it should be a company with less than 500 employees and revenue of not more than $500,000 per year (Kidalov, & Lee, 2013).

Hub Zone

In order to encourage small businesses to start working in certain designated areas, it employs a program known as Hub Zone. the regions selected are usually those with high unemployment rates, with low incomes. Hub Zone is a short form of “Historically underutilized business zones.” Businesses qualify on the basis of being small businesses with a 51% stake owned and controlled by US citizens. The company must also employ over 35% of its employees from the Hub Zone. The government also aims to contract up to 3 percent of all its business operations to HubZone businesses. It also offers a 10% price preference to HubZone companies. This implies that Hub Zone companies may place their prices 10% higher and still obtain contracts. The Small Business Association endorses HubZone companies upon filing with it an application with supporting documentation (Kidalov, & Lee, 2013).

The Company

My Company, Aquad Cleaners and Landscapers Company falls in the category of small businesses. It is therefore able to obtain government contracts more easily than other larger companies. The company has been operating exclusively in areas which are not considered as HubZone areas. The company, however, intends to expand to an area which falls under the HubZone so that it can become more competitive in offering our services to the Army barracks (McKernan, & Chen, 2005).

In this case, the company will need to make certain arrangements so that it can become more competitive in the industry. First, it will need to apply for an endorsement to become a HubZone company as soon as operations are initiated in the area. Second, the company needs to keep its accounts in order to make its endorsement easier. Third, the company needs to make arrangements to start employing locals immediately the branch is opened. Finally, the company needs to find out as much information as possible about contracts in our area of specialization to ensure it understands the range at which it will price its products.

SmartPay program

Another opportunity that exists for the company to obtain government contracts is through the smartpay program. The smartpay program enables small businesses to take advantage of business opportunities without the need for bidding. In this case, the government vests in certain individuals the authority to make purchases of up to $3,000 without the need for tendering. Attending workshops in the Army Barracks will enable the company to take advantage of small contracts of this kind (Frey, 2012).

In conclusion, the government has been instrumental in working towards the growth of small businesses. It has put up policies like the HubZone policy which give priority to small businesses to obtain government contracts. This company’s expansion to an area near the army barracks will enable the company to take advantage of government contracts that are available in the area. It however needs to make courageous steps towards its own growth.

References

Frey, R. S. (2012). Successful Proposal Strategies for Small Businesses:: Using Knowledge Management to Win Government, Private-Sector, and International Contracts. Artech House.

Kidalov, M. V., & Lee, J. L. (2013). Increasing the Department of the Navy’s Opportunities for Small Businesses and Non-Traditional Suppliers through Simplified Acquisitions Contracting and NAICS Targeting (No. NPS-GSBPP-13-003). NAVAL POSTGRADUATE SCHOOL MONTEREY CA.

McKernan, S. M., & Chen, H. (2005). Small business and microenterprise as an opportunity-and asset-building strategy. Urban Institute Issue Brief, (3).