The federal government represents a massive market opportunity for commercial tech companies. But many aren’t sure how to get started and are left asking themselves how to become a government contractor.
The government has a lot of money to spend on tech — the federal government spends about $500 billion in contracts every year — and though the procurement process is notoriously lengthy and complex, the payoff can be long, stable, reliable revenue that makes government contracting a worthwhile endeavor.
What kinds of companies win federal contracts?
In our experience connecting tech and government, we’ve seen companies of all sizes and stages compete for and win federal contracts, but we’ve also picked up some key considerations.
While the government has an extraordinarily broad set of needs — let’s focus on tech. Dcode works primarily with software companies in areas like DevOps or DevSecOps, cybersecurity, big data and analytics, artificial intelligence, space tech, and health tech, where the government has a demonstrated need for innovative solutions.
Profitability is less important than a demonstrated track record of success, but ideally, any company hoping to enter the federal market should have enough runway to weather the procurement process.
When awarding contracts, agencies will be looking closely at venture funding. Venture capitalists can be an asset here. Working with VCs familiar with the federal market can equip you for success in the long run.
The procurement process is lengthy, which means working with the government requires a lot of foresight. Be sure to consider that the government is sensitive to where a company’s ownership, headquarters, and financial backers are located. So, do your due diligence before turning to foreign funding.
For more information on what kinds of companies are a good fit for the federal market, download our checklist and read more about how agencies should evaluate tech.
How can tech get started with government contracting?
A good place to start is the Small Business Administration. The SBA has helpful guides with information on how to become a federal contractor, including a government contracting 101 workbook. These resources are a good starting point — almost a “government contracting for dummies” if you will.
To dig a little deeper, learn about opportunities that are relevant for your tech. While many program offices are thinking outside the box and traditional communication methods, understanding how federal agencies are conducting market research is important, and meet them where they are looking for you. You can discover existing contract awards on GovTribe and compare your capabilities with other companies, or find prime contractors that have relevant needs.
Beta.sam.gov is the official site for managing federal awards, so use that to look for relevant open opportunities. There are also an increasing number of government innovation hubs in places like San Francisco and Austin that are designed to bridge the gap between commercial tech and the agencies. Government innovation shops can provide insight into the government contracting process, and introduce you to a community of innovative government leaders.
Learn about the government
The government has a very complex organizational structure. In the federal market, the purchaser isn’t the end user — and this is intentional. The program managers that will be the users of the tech are not the ones in charge of purchasing. The responsibility falls on contracting officers. Understanding the structure will be vital to your sales process.
That sales process will be a learning curve for both you and the federal buyer. Think of it as an education process: identify your government use cases and target customers from the very beginning, and then work to educate them on your solutions, because the acquisitions team will not be tech experts.
The procurement process has a lot of different paths, and you need to familiarize yourself enough to know how to steer the process so you have the best chance of getting on a federal contract.
Find a partner
Federally-focused consulting firms or accelerators can offer guidance and connections to help you on how to break into government contracting. Identify consulting firms and systems integrators that work with the federal government to help you get on government contracts quickly. Federally-focused accelerators can provide a crash course in government contracting, help you navigate the procurement process, and cut time to revenue. Partners with proven results and deep federal expertise can help you break into government contracting, without breaking a sweat.
You can also consider subcontracting. Subcontracting is mutually beneficial for prime contractors and emerging tech companies, allowing primes to expand their capabilities for government customers, and tech companies can focus on how their solutions can improve mission outcomes. Over 100,000 prime contractors work with the government each year — pooling resources with a larger company can expand your reach into the world of federal contracting.
When you work with a federally-focused partner, you can cut time to revenue in the federal market. Dcode alumni companies Trueface, Ion Channel, and Amp Human have all recently won Phase II Small Business Innovation Research (SBIR) contracts. Tamr won the first-ever Phase 5 Silicon Valley Innovation Program (SVIP) award from the Department of Homeland Security, and Teal Drones is on a short list of drone companies approved to work with the Department of Defense.
Is entering the federal market right for your tech company? Don’t go it alone. Get in touch with Dcode to learn how we help tech companies kickstart their entry into the federal market →