By JULIE WEEKS
The US government is the world’s largest single purchaser of goods and services, offering a worthwhile market opportunity for many small businesses – including minority-owned firms. Federal goals for agency spending with minority-owned firms as well as the 8(a) program, which offers restricted competition for qualified firms, can help minority-owned firms gain experience and greater contracting opportunities.
Minority business owners are making a greater investment to gain federal contracts but their efforts are paying off, according to a recent survey of 740 active small business contractors conducted by American Express OPEN. The survey examined the successes and challenges among minority and women business owners in government contracting.
Findings specific to Asian business owners from the survey:
¥ It took active Asian business owners 1.3 years to win their first federal contract – on par to the average small business contractors.
¥ Asian-American federal contractors are more likely than non-contracting peers to exceed $1 million in revenue: 48 percent of Asians who are active federal contractors have business revenues in excess of $1 million, coming in just over the average among all small business contractors (47 percent). This far exceeds the 5 percent of all small businesses that have achieved that level of business success.
¥ Asian-American federal contractors, like other firms owned by business owners of color, are more active than average in the bidding process, although overall bidding activity has declined by nearly half. They are submitting 13.3 bids for prime Federal contracts compared to the average 10.3 bids submitted by small business contractors.
¥ Their higher bidding activity appears to be paying off – the success rate in prime contracting among Asian-American contractors improved 22 percent between the 2007-09 and 2008-10 periods in contrast to the 8 percent decline in overall prime contracting success rates among average small business contractors in the same period. Their subcontracting success rate also improved 5 percent compared to the 27 percent decline among average small business contractors.
¥ What’s their advice to other businesses seeking federal contracts? Find another business owner who is willing to share their experiences (40 percent) and to narrow your focus to one particular agency rather than taking a shotgun approach (29 percent).
This is the second in a series of four reports to be published from the second annual Victory in Procurement survey. The first report, Trends in Federal Contracting for Small Businesses, focused on the overall situation for small firms in the federal marketplace today as well as key trends seen over the past year. Other upcoming reports will focus on how strategies and outcomes change with level of procurement experience, and what lessons can be shared from firms that focus on subcontracting as a procurement strategy.
To download and read the entire 11-page report visit http://media.nucleus.naprojects.com/pdf/VIP_Survey2_Final.pdf, and to learn more about American Express OPEN’s VIP® program, visit www.openforum.com/governmentcontracting.
Julie Weeks is a Research Advisor with American Express OPEN.