On average, active small business contractors invested $103,827 seeking federal contracting opportunities over the course of 2010 while procurement leaders invested over twice as much– $233,457. Procurement leaders, those with 10+ years of procurement experience and $1 million+ in federal contracts, reveal the most successful ways to win federal contracts, including: getting on the GSA Schedule; weaning away from performing as a subcontractor and going after prime contracts; and acting as a prime contractor by employing other small firms as subcontractors.
A new survey of 740 active small business contractors looked at what makes procurement leaders different from other small firms in the government contracting marketplace. The findings are from the fourth and final summary which is published as part of the second annual government contracting survey from American Express OPEN.
Notable findings from the study include:
• Procurement leaders do not differ significantly from the average small business contractors in terms of owner characteristics (e.g. gender or race), but are more likely to be located in the Washington DC metro area and to be in a goods-producing industry, in professional/ scientific/technical services, or in the information services industry.
• Location matters, but not a great deal. The regional distribution of firms does not vary significantly by level of procurement experience or financial success. Many firms outside the Capital Beltway make the time to regularly visit federal agencies in and around the Capital Beltway. As procurement leaders point out, relationship building is a key element of success.
• A higher investment means greater bidding activity – and procurement leaders are active bidders, submitting an average of 18.9 prime bids and 5.6 subcontract bids over the course of the past three years. This represents 83% and 37% more bids, respectively than all active contractors.
• Procurement leaders’ greater investment has resulted in significantly higher success rates. As firms learn the procurement process, their success rates improve. New to market firms are winning just over 20% of their prime contract bids. Casual contractors are only slightly better, winning 24% of bids. Experienced contractors improve upon those “batting averages,” winning 34% of bids. Outslugging all others, procurement leaders are winning just over half (53%) of their proposals submitted. They have definitely learned the tricks of the trade.