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Successful Small Business Contractors Invest More in Time and Money to Pursue Federal Contracts

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April 16, 2010

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The first American Express OPEN Victory in Procurement (VIP) Small Business survey was released, reporting on findings from more than 1,500 business owners listed in the Federal Procurement Data System (FPDS) and registered on the Central Contractor Registration (CCR), the primary vendor database for the federal government. 

Including active contractors, currently inactive, and non-contractors1, the survey revealed compelling best practices for small businesses to succeed in government contracting.  The two most important pieces of advice that successful contractors offered are to start with small contracts since they can lead to larger opportunities and to be persistent. 

Active contractors made an estimated $86,000 investment in time and money in 2009 seeking federal contracts.  The median sales for active small business contractors was between $1 and $4.9 million, and federal contracts accounted for 38% of their revenues.  

Many small business owners who have not yet won their first prime contract are just getting started.  Four in ten (42%) non-contractors have started pursuing federal contracting only recently, having registered on the CCR (a necessary first step in the federal procurement process) in 2008 or later.  Thus, many of them will become successful – if they keep bidding – over the next year.  

The survey also found that getting on the General Services Administration (GSA) Schedule can be an important strategy for winning federal government business.  The GSA Schedule is a list of approved vendors for the products and services the government procures. One-third (34%) of active small business contractors are on the GSA Schedule while only 13% of currently inactive contractors are on it.  There is a significant gender difference in the firms who are seeking procurement opportunities through the GSA Schedule: 40% of women business owners who are active contractors are on the GSA Schedule versus 31% of men business owners.  

In another marker of success, fully 80% of active small business contractors who are on the GSA Schedule have annual revenues of $1 million or more and derive 47% of their annual revenues – at least $500,000 per year – from federal contracts.  

Click here for the full release, including survey methodology.

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