Government Contracts for Minority Businesses
Government contracting can open many doors for new entrepreneurs and small businesses. The process requires hard work, but there are resources and programs that provide support and incentives to help minority-owned businesses succeed.
What is a minority-owned business?
For a business to qualify as minority-owned, it must meet one of these criteria:
- At least 51% of the owners belong to minority groups.
- At least 51% of the company stock is owned by members of minority groups (for companies traded on public exchanges).
- In the United States, major minority groups include Native American, Asian-Pacific, Asian-Indian, Hispanic/Latin American, and African American/Black. Minority-owned businesses must also be physically located in the United States or one of its territories.
Government Certifications for Minority-Owned Businesses
If your business qualifies as minority-owned, you have the opportunity to receive a certification. The certification process verifies your minority ownership status. It confirms that your business is registered and in good standing on the federal and state level.
When you are officially certified, you gain access to set-aside government contracts that aren’t available to other companies. A set-aside contract is exactly what it sounds like—a contract set aside for small businesses. This type of contract can even the playing field, giving a small business a better chance of winning government business.
Federal, state, and local government organizations are encouraged to buy products and services from certified minority-owned businesses. It is highly advantageous for minority businesses to utilize their time and resources to apply for and receive government certifications.
The 8(a) Business Development Certification is designed to limit competition for specific contracts, helping socially and economically disadvantaged business owners win government business. If your business qualifies for 8(a) certification, you’ll work with a Business Opportunity Specialist to learn more about the federal contracting system. The 8(a) program also provides business training, technical assistance, and other services to help minority-owned businesses succeed.
The Historically Underutilized Business Zone (HUBZone) Program aims to award at least 3% of federal contract dollars to HUBZone-certified businesses. The federal government specifically created this certification for small businesses located in a designated HUBZone, that are 51% owned and controlled by U.S. citizens and meet one of the following criteria:
- A Community Development Corporation,
- An agricultural cooperative,
- An Alaska Native corporation,
- A Native Hawaiian organization,
- Or an Indian tribe.
State and Local Certifications
More than 75% of states have certifications designed to help minority-owned businesses win state contracts. These are some of the most robust programs:
New York: New York aims to set aside 30% of its contracts for women-owned and minority-owned businesses. It does this through the MWBE certification program.
California: The Southern California Minority Supplier Development Council offers technical assistance and training to help certified minority business enterprises increase their revenue.
Illinois: The Illinois Business Enterprise Program is dedicated to creating an inclusive and equitable business environment for minority-owned and women-owned businesses. BEP certification is available to companies with less than $75 million in annual revenue.
Some states also offer Disadvantaged Business Enterprise (DBE) certification, which is available to business owners who are economically or socially disadvantaged and belong to one of the following groups:
- African Americans
- Native Americans
- Asian-Pacific Americans
- Subcontinent Asian Americans
Government Certifications for Minority-Owned Businesses in Virginia
Virginia operates the Small, Women-Owned, and Minority-Owned, or SWAM program. SWAM is designed to help women-owned, and minority-owned businesses navigate the complex world of government contracting within Virginia’s borders.
To qualify for the SWAM certification as a minority-owned business, a company must be at least 51% owned and controlled by minority individuals who are also U.S. citizens. The Virginia Department of Small Business & Supplier Diversity has a detailed video explaining the certification requirements and how to apply.
Benefits of Adding Government Contracting to Your Business
Winning government contracts can be challenging, but it also has great rewards. As a small business owner, you can bring in additional revenue, making it easier to grow your company, and leading the way to other business development opportunities.
Diversify Your Revenue Stream
When you think of government contracting, you may think your business needs to have a particular set of skills, products, and services. Federal, state, and local organizations hire small businesses in a wide range and variety of industries. Here are just a few examples:
- Catering Services
- Vending Machines
- Event Planning
- Administrative Services
- Marketing and Branding Services
- Research and Development
- Technology and Business Consulting
- Training and Education
- Childcare Services
- Real Estate
- Cleaning Services
- Office Supplies
- Human Resources
- Graphic Design
Remember that government agencies need your help buying bulk supplies, manufacturing parts, training staff, improving processes, and upgrading infrastructure. This list could go on and on. All that to say don’t count out your skills and what your business can offer. Take the time to research and see how government agencies could purchase your products and services.
Build Small Business Partnerships and Relationships
With government contracting, it’s also possible to partner with other small businesses or larger companies to complete contracts requiring a minority certification. Once you finish the first contract, you may want to continue working with your partners, creating additional avenues to grow your business.
The companies you partner with on a government contract may even provide a source of support to your business long into the future. For example, you may benefit from another company’s technical expertise or experience working with firms in industries that are usually difficult to enter.
Where to Find Government Contracts
To compete for federal contracts, you’ll need to sign up for SAM, the System for Award Management. SAM lists all open federal contracting opportunities, giving you insight into all the options available to your business.
State and local agencies have similar databases where you can signup for free to filter and search for opportunities within your specific industry. For example, Virginia’s database is called eVA, where buyers can post their proposals and look for sellers with particular criteria, such as a minority-owned certification.
You can also take the initiative to reach out to your local government representatives within the procurement or supplier diversity departments to introduce yourself and start fostering a relationship.
How to Prepare for Government Contracts
Before you can bid on government contracts, you need to meet some basic requirements. First and foremost, you must have a registered business. An attorney or registered agent organization can help you set up an LLC or corporation if you don’t already have a formal business structure. You can also review our entrepreneurship for beginners guide to help you start your business on a solid foundation.
Here are a few additional steps to prepare for government contracts:
- Identify your industry’s North American Industry Classification System (NAICS) code. The government uses this code to classify businesses to collect and analyze economic activity data.
- Gather your legal formation documents and technical and business licenses (if applicable).
- Create a capability statement that outlines what your business can do; this statement should include your NAICS code, certifications, and a description of past performance.
Proposal Review and Writing Tips
When you find a request for a proposal (RFP) that fits your business, here are a few tips to consider:
- Download all of the documentation and attachments provided in the RFP.
- Read the RFP at least three times to understand the requirements and highlight any areas you need help understanding. Most RFP’s will provide a point of contact to ask questions about the proposal.
- Pay close attention to the scoring criteria and evaluation metrics. Proposals can take significant time and effort to win. You want to ensure you can meet the requirements or partner with another business that can.
- Create a schedule to complete the proposal’s various parts to meet your submission deadlines and avoid becoming overwhelmed.
- As you begin writing, follow the formatting requirements outlined in the RFP. Make it easy for the reviewer to see how your business meets the evaluation criteria.
- Make sure you can back up any claims that you make about your ability to complete the work. Highlight your strengths but ensure you can back them up with quantitative facts and metrics vs. subjective information.
- Finally, stay organized and find a qualified person to review and edit your proposal for clarity and thoroughness.
Resources for Government Contract Proposal Writing
To get help with proposal writing, take advantage of small business resources and consider participating in a free workshop or seminar offered by local or national organizations.
Association of Procurement Technical Assistance Centers
The Association of Procurement Technical Assistance Centers has local centers in various states nationwide. Their main goal is to support small businesses with contract and proposal writing efforts through workshops and one-to-one counseling free of charge. You can even contact the local centers to review your proposal before submission.
US Black Chamber of Commerce
Become a local Chamber of Commerce member to network with other business owners and find partnership opportunities. The US Black Chamber of Commerce is an excellent resource for minority-owned businesses.
Small Business Development Centers
The Small Business Administration operates Small Business Development Centers, which provide counseling and other assistance to help small businesses flourish. Research local centers in your area and network with the representatives to gain further insight into contracting opportunities.
Business Coaching and Resources
Having a solid business with valuable products and services and operations to fulfill and deliver orders and service requests is pivotal to being successful in government contracts. We can help you develop a product or service you can offer other organizations through our business coaching services. Visit our website to learn more.