Closing deals with the government means potentially huge, company-changing deals. For many technology and STEM companies, gaining federal contracts is a goal for growth, notoriety, and financial gain. But it doesn’t work without bureaucracy.
Before you even think about bidding on a federal contract, it’s a good idea to determine if you’re eligible for any certifications of particular interest. These certifications can give your business a boost and make all types of businesses more competitive by preventing large corporations from monopolizing federal contracts.
You may know that there are certifications for socially and economically disadvantaged business owners, women, veterans, disabled business owners, and businesses operating in certain underdeveloped areas.
Small businesses, regardless of their ownership, can also get certification that gives them access to state shutdowns — that is, contracts only available to small businesses.
Small business defined
If you can think of a small business like a convenience store with five or ten employees, think again. The federal government’s definition of a small business varies from industry to industry, but on average, a business is considered small if it has fewer than 500 employees or average annual revenues of less than $7 million. In technology and STEM, where most companies are measured in millions of dollars, a small engineering firm makes $41 million or less and a small lab services company makes $30 million or less. If your graphic design business has less than $8 million in annual revenue, it is considered small. You can download the full table on the US Small Business Administration Website.
Once that’s out of the way, all you have to do is complete your System for Award Management (SAM) registration and you’re ready to start bidding. Right?
Not exactly. (No one ever said bureaucracy was easy.) If you really want to win business, you must comply with federal contractor regulations.
Requirements for dealings with the federal government
That Office of Federal Contract Compliance Programs (OFCCP) ensures your business is compliant and conducts audits to ensure you are compliant.
Most of the provisions of the OFCCP concern discrimination policies. Your company must not discriminate against any group and it must be an official company policy.
There are very few exceptions to this requirement. Religious organizations can legally reject applicants based on their religion and only hire members of their religion, and that’s about it.
This regulation not only serves to protect socially disadvantaged people. In 2020 the University of Delawarewhich has multiple federal contracts resolved a case of non-compliance with the US Department of Labor when an OFCCP evaluation found that the school’s rejection of 210 male applicants for a job as a janitor constituted gender discrimination.
Is affirmative action required?
With affirmative action on university admissions in the news, it might seem that procedures to eliminate systemic discrimination are some kind of lofty, elitist thing. In reality, affirmative action is a requirement of every federal agency and contractor, from caterers to construction companies to defense.
If you want a federal contract, you must have an Affirmative Action Program (AAP) if you have 50 or more employees and at least one contract of $50,000 or more. If you don’t meet that threshold but have at least one contract for $10,000 or more, you won’t be penalized for not having an AAP, but you will still be bound by regulations prohibiting discrimination based on race, color, sex, sexual orientation, gender identity, religion and national origin. Also protected are the disabled, veterans, and workers who disclose their earnings to other workers.
What does an AAP look like?
The OFCCP offers resources to help business owners create and certify their AAP, including templates. AAPs vary by industry, location, and company size, but there are a few things that matter most:
- Organization profile with headcount including race, ethnicity, gender and other available data
- A job group analysis estimating the availability of qualified minorities and female applicants
- Naming responsibilities and identifying problem areas
- Action-oriented programs to address identified problem areas
- Placement Goals
- An internal audit and reporting system
- Records of letters to suppliers, vendors, and recruiters citing your AAP
The sort of strict quotas a college or university might have isn’t required, but the plan and evidence that the company is actually implementing it to the best of its ability is required.
Reporting incidents is mandatory, whether it is a complaint of sexual harassment, racial abuse, or wrongful termination. Unreported incidents are likely to be found during an audit.
The Drug Free Workplace Act of 1988
Yes, a drug policy from the 1980s is still a requirement for government contractors.
Under the Drug Free Workplaces Act 1988, a drug-free workplace policy is required for any organization receiving a federal contract of $100,000 or more. (It’s also required for any organization that receives a federal grant.)
Some companies cite this as a reason they continue to drug test for THC (or as the government commonly calls it, marijuana), even though it’s legal in many states for medical use, recreational use, or both. THC is still classified as a controlled substance at the federal level, but as a business owner who contracts with the federal government, you don’t have to test employees for compliance.
What you need is a formal, written company drug policy that clearly prohibits the manufacture, use, and distribution of controlled substances in the workplace and provides specific consequences for violating the policy, which can range from rehabilitation classes to dismissal.
You need to make sure your employees know that if they are convicted of drug-related offenses, they must report to the company within five days; the company itself has 10 days to report the conviction to the federal client. The agency will anticipate the consequences for the employee as set out in company policy.
in October 2022, President Joe Biden released a statement on marijuana reform, calling on the Secretary of Health and Human Services and the Attorney General to review the classification of marijuana under federal law. Until then, it will be legally treated like heroin, fentanyl and methamphetamine at the federal level. State laws vary, but even if you live in a state where THC is legal, federal laws supersede state laws when working with the federal government.
Any questions? Visit usa.gov for help.