Government contracting in India is a very lucrative business opportunity even though most times it can be a little bit challenging to register as a government contractor and win contracts. Landing your first government contract can be a time consuming and difficult ordeal. This can be a bitter pill to swallow especially for a lot of small businesses that need to start making money now.
In fact, as of recent, about 80 percent of all contracts were given to large companies such as Microsoft, GE, and Boeing etc. However, by marketing properly, building your outreach and having a pro-active business approach, small businesses can get a contract in india or even anywhere else in the world.
Government contracts in India are basically divided into Central and State government contracts. Central Government Contracts are made under the name of the President, while State Government Contracts are made with the name of the particular state issuing out the contracts. Some Central Government Contracts may also be issued under the specific Government department that needs the particular service or product.
The government pumps money into the economy on a regular basis and one of such ways of doing this is through the award of contracts. Government contracts provide the federal state and local governments with products and services. Contracts with the federal government of India are made under section 299 and 300 of the country’s constitution.
Unlike what is obtainable in commercial businesses, government contracts are usually open to negotiations. The government usually awards the contract to not necessarily the cheapest or lowest bidder but rather to the bidder who provides the best value for the least amount of money. The final price that the government pays for a contract is also subject to negotiations.
We have put together some of the basic steps you would have to take in order to successfully obtain a government contracting certificate, and start winning contracts.
How to Apply for Government Contracts for Small Businesses in India
To apply for any government contract you will have to be a registered contractor with the appropriate certificate to go with your assertions. Each and every government department usually issues a tender for any work that it needs to get done.
To be able to bid however, you must pass through certain eligibility criteria. The criterion may differ from government department to government department. There must not be any case of misconduct in your past services and you must comply with all the provisions of the constitution regarding government contracts.
You will first have to bid for a tender. Your bid will have to contain your certificates and all other required documents. It will also have to contain a cost estimate of the project you are bidding for. These tenders can be found in certain government websites and in addition, they are available in almost all major prominent newspapers in India.
The tender will come with instructions on how it should be filled, requirements, specifications, legal requirements, company qualifications etc. These instructions should be followed to the latter if you want to stand a chance of winning the tender.
You can’t get a government contract directly. After you have submitted your bid, it will then be vetted by the agency and ranked alongside other bids. If the result of their appraisal proves that you are eligible, have met all the stated criterion and have the best bid, then, the contract will be awarded to you. Websites such as Tenders mines and tenders tigers can provide you with online assistance to bid for the tender.
Tips for Small Business Owners Who are Bidding for Contracts
Table of Content
- 1 1. Incorporate your Business
- 2 2. Register as a Government Contractor
- 3 3. Don’t Spread Yourself Too Thin
- 4 4. Satisfy a Need
- 5 5. Be Certified for Federal Set-asides
- 6 6. Check Sub-contracting Opportunities
- 7 7. Build Credibility as a Sub-Contractor
- 8 8. Search for Tenders
- 9 9. Use your Resources
- 10 10. Market your Business
- 11 11. Get a Mentor
1. Incorporate your Business
Before you can register as a contractor and bid for contracts in India, you would need to first register your business with the Ministry of Corporate Affairs. The first step is to acquire a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) from the Ministry of Corporate Affairs.
When this is completed, you would be required to fill an online form for business registration via the Ministry of Corporate Affairs (MCA) Online business registration portal. You would have to provide four unique names for your business, from which one available name would be chosen for you by the MCA. The entire process is quite easy and can be completed online by visiting the website.
You will then have to reserve the company name with the registrar of companies (ROC) and get the memorandum and article of association. Next you have to stamp your company document at the state treasury or any other authorized bank. After completing these tasks, you can then obtain your certificate of incorporation along with your task account number (TAN). This process usually takes 7010 days to complete.
2. Register as a Government Contractor
Next, you have to register with the government of India as a contractor under the Ministry of Housing and Urban Affairs, Central Public Works Department. You would need to present some documents before your registration including Income tax clearance certificate, certificate of company registration, Bio-data of the sole proprietor, a list of machinery owned by the company for executing projects, and passport photographs of the business owners.
3. Don’t Spread Yourself Too Thin
One major mistake that is usually made by small business owners while trying to win a contract is to make their businesses appear to be a jack of all trades. The government does not care about your incredible multi-tasking abilities. What they want to know is what task you have mastered the best.
A major delusion that is experienced by some business owners is to think that the more goods and services they have, the more likely they will stand a chance to win a government contract. This is however very far from the truth. In fact, offering multiple goods and services can decrease your chance of winning a government contract.
Each contract that is doled out by the government is aimed to meet a specific need and as such they are most likely to seek out businesses that are focused on a specific line of work. Focus on your primary skill set instead of trying to be a one stop shop for all the government’s needs.
4. Satisfy a Need
Before you offer your services as a contractor to the federal government, make sure that you are able to not just satisfy a need but that you are also able to stand out from your fellow competitors. Even though there are a variety of government contracts, your product or service should be able to satisfy and proffer a solution to the departments’ biggest troubles.
5. Be Certified for Federal Set-asides
Don’t overlook any set-aside that your business may qualify for. It pays to educate and keep yourself up to date about the various certifications and programs you can take part in to place yourself at better advantage for governments contracts.
For example here are some questions you should think about; is your business minority or owned by a woman, veteran owned, do you qualify for the Hub zone program etc. In some cases, qualifying for the set-aside can mean a little or no competition for certain government contracts. You can find out about certain government set-asides in some websites.
6. Check Sub-contracting Opportunities
If you are having troubles winning a contract, why not check out sub-contracting opportunities? This is especially useful for companies that are new to government contracts. Sub-contracting is a very good way to get the much needed exposure that will count in subsequent bids. It will also help you to build relationships with other business the government agencies. Large companies usually sub-contract their excess work load to smaller companies.
7. Build Credibility as a Sub-Contractor
Experience is one of the factors that is considered before contracts are awarded. Scores are awarded based on experience, credibility, financial capability, and a number of other factors. As a greenhorn in the business, you might not have the necessary experience to successfully compete with other contractors who have been in the business for years.
You can however build experience by working under other contractors as a sub-contractor. What you should do is to look for bigger contractors, and talk to them about offering some services so that you can gradually build credibility and experience from there. You can also carry out some contracting jobs for private companies so as to be able to build more work history from there.
8. Search for Tenders
When you have completed the registration process and received your certificate of registration from the Central Public Works Department, you can now begin to search for available contracts that you can execute. There are a lot of free and paid resources that you can use to search for available tenders. Some of the most popular ones include:
These websites often classify available tenders by products/service, agency, location, and the financial value of the contract so that you can easily locate projects that you qualify for.
When you find contracts that you qualify for, apply for them by submitting your bid, along with the required documents and other extra documents that serve as proof that your business has the financial strength, labor, and equipment required to carry out the job.
You would get a response from the agency in charge of the contract within 90 days of submitting your bid if you are able to make an impressive bid. Don’t forget to network and be very patient too. Securing your very first government contract in India can take a very long time.
On average, it takes a new contractor about 12-24 months to secure their first contract, however after the first contract is well executed, it becomes easier to secure future contracts. So don’t give up when you don’t get a positive response after the first few bids; continue to search for available tenders and bid on them until you finally get your breakthrough.
9. Use your Resources
There are many resources available to small businesses to help them win government contracts. You can check out past contracts and track down existing contracts all through the internet.
10. Market your Business
Winning government contract takes a lot and it may include marketing your business. This step is often neglected and overlooked by small business owners who think that once they have registered as contractors that the contracts will automatically start pouring in.
This is hardly ever the case. It is very important that you build relationships with government agencies in your region and even with other business that may sub-contract the work they have to you. It can be difficult to contact these people by email or a phone call so a one-on-one meeting is the best.
Attend networking and match-making seminars, small business and government workshops, national small business contracting week that once a year, and reach out to agencies in your area. Granted, it will take time, effort, research and work but the result will be well worth it. Being successful in government contracting comes down to being patient and persistent.
11. Get a Mentor
A mentor is an extremely valuable asset to a small business owner who intends to venture into contracting for the government. Find someone whole knows the ropes of government contacting, who will help to guide and advice you. Networking events can also help you to connect with potential mentors.
Also you can try starting small by bidding for projects that are worth a little amount in order to get your foot in the door. By following these subjections and taking a proactive approach to this industry, you could increase your chances of winning a contract.
On a final note, learn to have a persistent and assiduous attitude towards contracting. Getting your first contract may even take up to a year or two. Therefore you have to be prepared to engage your time, resources and money.
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