With about $500 billion spent annually at the federal level on goods and services, there is plenty of room for all types of businesses in 2018 to have a profitable year from government contracts. In fact, many businesses find that government contracting is their secret weapon for profits. According to “Trends in Federal Contracting for Small Businesses,” a report by American Express OPEN, 50 percent of government contractors reported that their profitability rose as a result of federal contracting.
Here we break down three considerations for your government contracting business in 2018 to ensure that your company is prepared for the year ahead.
Understand the changes to the NDDA
Approved in late 2017, updates to the National Defense Authorization Act will impact government contractors directly as changes concerning set-asides are meant to encourage the federal government to diversify its contracts.
Among the changes, the NDAA will now require agencies to establish small business government subcontracting goals to encourage greater opportunities for small businesses to win and perform on contracts. This change will complement the existing annual goal of awarding 23 percent of federal contracts to small businesses and each agency’s individual small business goals. While this is obviously good news for small contractors, it also provides big opportunity for large primes to team up with smaller companies on projects — potentially opening up doors that might otherwise not be open for them.
Another noteworthy change to the NDAA is the freeze to the current HUBZone map until new tools are rolled out in 2020. The federal government has a goal to award 3 percent of prime contracts and subcontracts for HUBZone small businesses. This freeze provides an extended advantage for HUBZone certified businesses and an attractive opportunity for non-certified companies currently residing in a HUBZone to pursue the certification.
In addition to these changes, the newly signed NDAA also brings with it other changes, including improved means for more accurate contract reporting and increased transparency to promote competition. Combined, the NDAA’s changes will make 2018 a good opportunity in particular for small business contractors.
Reclassify your business with new NAICS codes
While changes to the North American Industry Classification System (NAICS) codes may seem a minor detail, the shift could be quite beneficial to some businesses.
The Small Business Administration recently adopted the Office of Management and Budget’s NAICS standard to classify businesses by size and industry. In doing so, the SBA is using the 21 new NAICS industries — created by either redefining, combining or dividing the industries as defined in 2012. The result: your business could potentially qualify for new types of contracts.
What’s more, in some industries, business size has been redefined. In other words, some industries such as appliance manufacturing have broadened what is meant by “small business,” opening up new possibilities for numerous companies to count towards the small business goal.
It’s relatively easy to determine whether your business will be affected by the NAICS code changes, and the implications are important. After all, NAICS codes are used to qualify any contractor for small business and other set-asides, state and local procurement efforts and even administrative and tax purposes. The full rule change is outlined at www.regulations.gov.
Prepare for weather disasters
If we learned anything in 2017, it’s that preparedness is integral for a business of any size.
From earthquakes to wildfires to snowstorms, weather patterns over the last year have disrupted government contractors across all corners of the country. According to the report from the National Oceanic and Atmospheric Administration, extreme weather caused $306 billion in damage nationwide in 2017. Take time in early 2018 to create a disaster plan and appoint an Emergency Project Manager to help ensure work can still get done in event of unforeseen circumstances.
As a government contractor myself, I was able to see firsthand this past year how critical proper disaster planning is. With my business based in Miami, we were greatly affected by Hurricane Irma. Thanks to planning, we were able to stay operational, despite a power outage and the collapse of part of our office’s ceiling. I knew we still had deadlines to meet for various government agencies, so we made sure that our designated emergency project manager, based in our Washington, D.C., office and not impacted by Irma, was up to speed on all of our project needs. Because we had these plans in place, we were able to fulfill a local contract to provide emergency staffing for Miami-Dade County.
Even if you have a plan, you may need help for your business during a disaster. Small businesses can look to the local SBA office, which works directly with FEMA to provide business assistance and disaster loans. For other businesses, resources and assistance are available directly through FEMA at www.disasterassistance.gov.
With plenty of time before the end of the federal fiscal year in September, use these early months to adapt your business for 2018.
Departments of Lourdes Martin-Rosa is the president of Government Business Solutions and the American Express OPEN Advisor on Government Contracting. Since winning its first contract from the U.S. Department of Homeland Security in 2009, GBS has worked with numerous federal agencies, including the Department of Energy, Department of State and Department of Defense.