Strategies to Overcome Having No Past Performance for Government Contracting
by Brad Mix | June 01, 2023
Overcoming the obstacle of having no past performance with the federal government is a common challenge that small businesses face. The government requires contractors to have past performance experience, but how can a small business gain experience if the government won’t give them a chance? This article discusses ways to gain past performance experience with the following:
- Using relevant commercial or work experience in your proposal
- Considering micro-purchases
- Obtaining subcontracts
- Teaming up with an experienced contractor
- Obtaining Set-Aside Contracts
- Adjusting your Capability Statement
Using Relevant Commercial or Work Experience in Your Proposal
The government typically evaluates past performance based on a track record of successful projects and customer satisfaction. However, this presents a challenge for new small businesses that do not have a record for the government to evaluate. In this case, companies can use their relevant commercial or prior work experience in their proposal. The key is to write the bid proposal in the government’s language. Use the terminology in the Request for Proposal (RFP), describe the project’s scope, processes, and requirements, and align the project’s attributes with the evaluation criteria in the RFP.
Considering micro-purchases
Micro-purchases are small purchases generally under $10,000 that do not require competitive bids. Seventy percent of government procurement transactions are micro-purchases, and they are processed on credit cards. Micro-purchases offer a streamlined entry point into the federal procurement market, allowing small businesses to gain experience, develop relationships with government agencies, and better understand the procurement process. This can help them overcome the initial hurdle of not having a past performance history. Winning a micro-purchase provides a small business with government past performance that can be put on their Capability Statement.
Obtaining Subcontracts
Subcontracting is the most common method for obtaining past performance. By operating as a subcontractor, a small business not only gains the opportunity to execute the work but also acquires valuable experience with the government’s contracting processes without bearing the associated risks. Subcontracting opportunities can be found on SBA’s subcontracting database, SUBNet.
Teaming up with an Experienced Contractor
Teaming with an experienced contractor is an effective way to win a contract. However, a small business should be careful with whom they team. They need to do their homework on their proposed teaming partner. Good questions to ask when deciding on a partner include:
- Do they have a good reputation with the federal government?
- Do they have any current teaming relationships?
- Do they have working capital?
- How is their past performance?
Testing a relationship by doing a small contract together is the best way to gauge compatibility. Find Awarded Contracts on the Federal Procurement Data System – Next Generation where you will learn about the repository of all federal contracting data for contracts over $25,000. With this system, you can see which agencies have contracts and with whom they have contracts, what agencies buy, and which contractors have contracts. Small businesses can also search for recently awarded contracts on System for Award Management (SAM). This information can be used to establish a relationship with the awarded company, which may lead to a teaming opportunity in the future.
Obtaining Set-Aside Contracts
Set-Aside contracts, facilitated by the U.S. Small Business Administration (SBA), as well as certifications like 8(a) Business Development program, HUBZone, Women-Owned Small Business (WOSB), and Veteran-Owned Small Businesses (VOSB) offer a solution for small businesses grappling with the hurdle of no past performance in government contracting. These programs offer advantages such as:
- limited competition
- contracting preferences
- mentorship
- government support
By qualifying for these set-aside contracts, small businesses can showcase their capabilities, gain valuable experience through subcontracting opportunities, and receive guidance to navigate the complexities of government contracting. These programs empower small businesses, enabling them to compete and succeed in the government sector, despite the absence of a significant past performance track record.
However, it is important to note that these certifications do not guarantee contract awards on their own. Government agencies prioritize selecting contractors based on their capability and capacity to fulfill the requirements or complete the project successfully. While socio-economic certifications can help small businesses stand out from competitors and increase their visibility, it is crucial to demonstrate the necessary skills, experience, and resources to meet the specific contract requirements.
Adjusting Your Capability Statement
Business owners encountering the obstacle of lacking past performance often seek guidance on what to include in the past performance section of their Capability Statement. For new businesses without industry experience or prior government contracts, it is advisable to omit the past performance section from the Capability Statement. Since there is no relevant past performance to showcase, including an empty or minimal past performance section may not add value and could potentially raise questions about the business’s readiness to handle government contracts.
For a startup business with no track record, it is crucial to emphasize the business owner’s industry experience gained from previous employment. Highlight the owner’s previous roles, responsibilities, achievements, and industry expertise, demonstrating their understanding of best practices and regulations. Showcase how this experience directly translates to the current business’s capabilities and its ability to meet the requirements of potential government contracts. Include transferable skills, client success stories, and emphasize the business owner’s expertise in delivering similar services or products. By leveraging the owner’s industry experience, the Capability Statement can instill confidence in potential clients and contracting officers, showcasing the business’s competence despite its limited track record as a startup.
Gaining past performance experience is crucial for small businesses to win government contracts. The ways to gain past performance experience discussed in this article can help small businesses overcome the obstacle of having no past performance. By leveraging commercial or prior work experience, considering micro-purchases, obtaining subcontracts, teaming with an experienced contractor, finding awarded contracts, and obtaining certifications for set-aside, small businesses can gain the necessary past performance needed to win government contracts.
Brad Mix
Consultants, Growth Acceleration Consultants, Manatee, Mix, SarasotaFlorida SBDC at USF
Specialty: Disaster Assistance, SBA Lending, Startup
Brad Mix has more than 20 years of experience in the financial services industry and as a business consultant. Prior to joining the Florida SBDC at USF, Mix provided consulting services to more than 2,500 businesses and assisted business owners in securing more than $100 million in capital and $60 million in government contracts. He has extensive experience with SBA loans, including 504s, Community Advantage loans, and microloans. In addition, he assists business owners in preparing business plans, financial projections, profitability improvement, business acquisitions, business valuations, marketing and capital solutions.