Category: Government Contracts Bootcamp

The Geographical location of your company has an impact on winning government contracts. One of the small business set-aside programs SBA manages is the Historically Underutilized Business Zones or HUBZone.  It’s a program where the U.S. Government limits competition for certain contracts to businesses located in specific regions of the country.  Several sets of government data are used to help determine which areas are designated HUBZones such as U.S. Census and labor statistics data.  In many cases theses areas have high unemployment rates, low household incomes, and can be located in Military base closures areas.

The HUBZone program is probably one of biggest unadvertised and underutilized programs (by government contractors) the government has based on some research we performed. It’s actually sad how few government contractors participate in the HUBZone program.  If you simply look at the land mass and HUBZone maps you’ll see.  The entire state of California only has 0.96% certified HUBZone companies, the entire state of Pennsylvania only 0.54% and Vermont 1.5%.

We decided to look a little deeper into the state of Vermont HUBZone companies. Currently there are 1,330 active Cage codes in the state of Vermont as of July 2018.  Only 21 are of them are HUBZone certified companies a mere 1.5%.  How is this possible when most of the entire state of Vermont is listed as a HUBZone?  Are companies not looking to see if they reside in a HUBZone?

There are few qualifications a company must meet to be certified HUBZone. You must be a small business, your principal office must be located in a HUBZone and at least 35 percent of its employees live in a HUBZone.  If you look at the HUBZone maps you’ll see if you’re located in one.

To continue with our research we had the question – Are companies missing out on certification?

We randomly checked a few of the Non-HUBZone Cage codes and based on the companies zip codes and they all fell within in a HUBZone. So they potentially could qualify for certification if they meet the other qualifications.  If the U.S. Government is offering preferential consideration, companies should at least take a look into it.

We dove a little further into this research using the BidLink database and search engine, this is where the majority of research was performed for this article. We had a few questions about the distribution or the type of company and sales they had in order to prove a few theories for the Vermont HUBZone companies.

What basic service or function did the companies provide?

• Services (other than construction): 11 Companies listed
• Manufacturing: 5 Companies Listed
• Construction: 5 Companies listed

Which Group was most successful (sales) over the past 20 years?

• Two (2) of the Five (5) manufacturing companies were very successful and currently active selling to DoD.
• Both the construction and services group had little to no sales at all.

One reason why the manufacturers are successful is because when DoD buys things the location of the production facility is usually irrelevant – you ship the item to them. Whereas if you provide a service to DoD it may require you to physically be at that location to provide the service.

Currently the U.S. Federal Government’s goal is to award at least three percent (3%) of all federal contracting dollars to HUBZone-certified small businesses each year. Every day I see solicitations with HUBZone set-asides for items the DoD is looking to buy, and some cases no one answers them. Individuals or companies looking for some preferential treatment should at least check to see if you qualify for HUBZone certification.

BidLink has been a leading provider of industry marketing data relating to DoD procurement for the past 18 years. Find defense contracts and research competition. Learn more at www.bidlink.net

HUBZone Maps https://maps.certify.sba.gov/

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The U.S. Military is a reliable source of revenue, purchasing almost a quarter Billion dollars of fasteners last year.

Readers asked us how to get started with defense contracting, how to search for bids and look for specifications.  Although working with the Defense Department may seem foreign at first, it is actually a very structured process that’s easy to understand.

The CAGE code

Companies that wish to sell directly to the Department of Defense (DOD) must register with the government.  As of February 2011, there are 600,119 active registrants  in the Central Contractor Registry (CCR).  This is the central database where you register your company to do business with the DOD.  This step is easy; simply go to www.ccr.gov and choose “Central Contractor Registration”.  Fill in your company details and in three to five days, you’re registered.  They will issue a CAGE code; a five character alphanumeric sequence that is used to identify your company to the DOD.

What’s nice about the U.S. Military is that they have a database for everything. There is a database of companies, a database of awarded contracts, solicitations, part numbers, military specifications and on and on.  When you combine these databases you can do some pretty powerful things.  Since the CCR database contains a list of all companies registered to sell to DOD, you can easily find all of your competition.  They are even broken down by industry using FSC or NAICS codes.  By combining the CCR database with procurement history, you could look at all of the contracts awarded to your competition and analyze pricing for previous bids.  This can be used to determine  a competitive price that undercuts your competition while maximizing profit.

Finding Bids

The Department of Defense issues open solicitations (Bids) for fasteners using some basic categories. Knowledge of how these categories are structured and classified can greatly increase your chances finding and winning the bids for items that you supply.

In this example we will examine the fastener industry.  The Federal Supply Class (FSC) and item name categories are accurate ways to search for bids.  Fasteners are categorized under 7 basic FSC’s, they are:

5305 – Screws
5306 – Bolts
5307 – Studs
5310 – Nuts and Washers
5315 – Nails, Machine Keys, and Pins
5320 – Rivets
5325 – Fastening Devices

Information such as the National Stock Number (NSN), part number, specification(s), preferred manufacturers, and item names are commonly listed in a solicitation. Searching for open solicitations using classifications such as the FSC or the item name (or combination of both) can greatly increase the accuracy of your search and decrease the amount of time you spend searching.

The National Stock Number is the official label for items the military repeatedly purchases. It is a 13-digit number consisting of basically a Federal Supply Class (FSC) (the first 4 digits), a country code (the next 2 digits) and a unique serial number (the remaining 7 digits). The important one to remember is the FSC.  For example if the NSN listed in the solicitation is 5305-00-071-2078 you know it is some type of screw because the first 4 digits are 5305.

When searching for bids, it is advantageous to have multiple types of searches.  For example, a Federal Supply Class search for 5305, plus an item name search for “Screw, Cap” would produce solid results.  You could also use the NSN lookup to search for competitor’s part numbers and add that to your search.

Item Names and Specifications

Each NSN has a title, officially known as the item name.  The item name is very specific word or group of words used to describe the NSN. The item name contains a basic name and possibly a modifier such as “Screw,Cap”, the basic name is “Screw” and the modifier is “Cap” describing the type of screw.

The NSN 5305-00-071-2078 is assigned the item name “screw,cap,hexagon head”. If you wanted to search for bids on hexagon head cap screws you could try the item name “screw,cap,hexagon head” and would get accurate results. If you searched on the word “cap screws” you would return little or no results as that’s not how the government classifies screws. If you tried simply the item name “screw,cap” you would see many results including both hexagon head, socket head, etc. When using the official government item name your results will be plentiful and accurate. By searching the government’s item name database you can find all item names pertaining to your products.

Every NSN will have at least one or more reference numbers associated to it.  These reference numbers can either be a manufacturers’ part number, military specification/standard, commercial specification/standard (such as ASME) or a combination of all. These reference numbers may be listed in either the solicitation or in the part number cross reference (MCRL / MCRD) of the military NSN database.

The above example is BidLink’s NSN lookup display for the NSN described above.  It shows a list of company part numbers registered with the Government, which relate to the NSN, as well as two specifications.  Control Flow and Bosch both have their own unique part/reference number.  Their manufacturers’ numbers are listed in the left column. The other two rows pertain to the ANSI and Military standards, so you can figure out if this is something you can supply.  The Defense Department is moving away from using Military standards by allowing commercial standards bodies to define and manage the standards.  If you wanted to make this part, you would start by acquiring the ANSI and Military standards to determine if this is something you can produce competitively.

BidLink.net is a provider of defense industry information for contractors worldwide.  This data includes millions of defense contracts, procurement history, part numbers and vendor details.  This unique combination of resources allows BidLink to monitor and extract important information for the defense contracting industry.  BidLink.net, based in Washington, D.C., provides bid consolidation, searching and notification services, as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.

This article was written exclusively for Fastener Journal.  http://fastenerjournal.com/

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What is a National Stock Number (NSN)

The concept of the NSN was established by the U.S. Military more than 60 years ago. It gives the military services (Army, Navy, Air Force, Marines, etc.) the ability to accurately describe an item of supply using a common name and description. This standardization allows the services to share stock and accurately procure an item which is repeatedly used within their supply system using a single number “The NSN”.

NSN’s describe every imaginable item from the simple metal washer to complex military hardware and systems used in military aircraft and vehicles etc. There are millions of NSNs used within the current U.S. military supply system. Each NSN contains a set of data fields such as Item Name, part number, technical characteristics etc. Within the BidLink database you can look up any NSN by NSN, Part Number, etc. Go to the section labeled “NSN Lookup” to try.

The structure of an NSN can be thought of in two ways:

With three (3) distinct parts:

First four (4) numbers represent the Federal Supply Class (FSC)
5th and 6th numbers represent the Country of Origin – All US NSN’s will be either 00 or 01
Numbers 7 through 13 are sequentially assigned and are unique to each NSN

With two (2) distinct parts:

First four (4) numbers represent the Federal Supply Class (FSC)
Last nine (9) numbers represent the National Item Identification Number (NIIN)

For example take the NSN 5305-01-142-6280
Just by looking at the first four (4) numbers (the FSC) you can make a quick determination that this item is some kind of screw since the FSC 5305 is the code for Screws.

Try this yourself in the ‘NSN Lookup’ to see the kind of details a NSN can provide.
Look this number up by either the full NSN: 5305-01-142-6280 or the NIIN: 011426280.

After looking up the NSN or NIIN note all the data associated to this single NSN, you will see the Item Name, Part number cross-reference, Procurement history, NSN Status, Management data, Technical characteristics, Packaging data, Forecast data, etc.

The first block of data shows the “Item Name” for this specific NSN
It is labeled “SCREW,CAP,SOCKET HE”
Just by knowing the FSC for Screws is “5305” you have determined that this NSN is some sort of Screw, as that is the reason behind the FSC coding; giving the ability to categorize an item of supply with just 4 specific numbers. There are lookup tables in BidLink that will cross-reference FSC’s to their specific titles and descriptions, so use them.

The official Item Name, in this case is “SCREW,CAP,SOCKET HE”. This is how the Government describes this item using a name. You might find the commercial industry describing the same item it in a catalog something like this “Socket Head Cap Screw”. Remember, when looking at Government data either when searching for Bids or looking to source items – Be sure to use the Government terminology, such as Item Names and FSC’s. See the examples within the help section, other news articles or contact your BidLink representative for assistance when searching for Bids.

DLIS a division of the Defense Logistics Agency (DLA) is the agency responsible for the creation and management of NSN’s. They are the only organization authorized to assign NSN’s; requests for the creation of new NSN’s can only come from a military service, not a commercial company or individual. When a new product is introduced to the military, the military will initiate their own request from within, for the creation of new NSN’s. This process can take time as each item is carefully reviewed by the Cataloging department assigned to that specific classification of item.

Note: An official Item Name will be a maximum of 19 characters. Click on the INC code number to see the details and a short description for the Item Name, in this case click on the number “16282” in the first bock of information after looking up the NSN in “NSN Lookup”

http://www.dlis.dla.mil/PDFs/NSN.pdf

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Basics about the NSN:

A National Stock Number is basically a number which identifies a specific item of supply that is repeatedly procured, stocked, stored, issued, and used throughout the federal supply system. Every NSN (National Stock Number) has at least one reference number/ logistics/ part number or specification associated to that specific NSN. That same NSN will also have at least one CAGE code associated to that specific NSN. The associated CAGE code(s) will represent either a manufacturer or non-manufacturing organization such as a Government agency. This information on all NSN’s is listed in BidLink.

When a single NSN is introduced to the Governments supply system there are many departments and agencies involved with the proper labeling and cataloging of the individual NSN. Since the introduction of the NSN over 50 years ago millions of NSN’s have been added to the supply system. The Government has sources for some of these NSN’s however some NSN’s have only one supplier known as a “Sole Source” and NSN’s are not available at all from any company known as a “zero source” (as the original manufacturer(s) are no longer in business). When the government has an NSN with no source or a sole source and the item is currently in use they have a reason to look for other sources. Also when an NSN has limited competition, is overpriced or low reliability there is reason to search for additional sources.

Many company’s say “there is too much competition selling to the Government” – Only if you are selling items with many manufacturers or multiple sources. There are close to a million NSN’s with zero or sole sources, go after those.

Your company has the opportunity submit an alternate offer for evaluation to be listed as an approved source for a NSN. Once your company has made the determination that your part (or item) you wish to supply is equivalent to a specific NSN you must create a TDP (Technical Data Package) which basically proves that your item is “equivalent” to the current part (NSN) the Government is buying.

One of the first criteria the Government looks at when evaluating if they should accept your Alternate Offer is a “Savings Threshold”. A savings threshold is the total dollars saved, comparing your proposed unit price to the Governments average price, for the armed services actual demands over a four quarter time period, updated quarterly.

Once proper analysis is made on a specific NSN by your company that you can supply the item then the process of creating a Source Approval Request, creating a TDP should be considered. It can be a lengthy process as well as a potentially profitable one in the long run.

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