Market research for first-time contractors

The federal government is often described as the largest buyer in the world, and that description is not much use to a small business. What matters is not how much the government buys in total, but which offices buy what you sell, how they prefer to buy it, how large their purchases are, and who is winning them today.

Answering those questions is market research. It is the step first-time contractors most often skip, and it is almost entirely free: the data is public, and the tools are official government websites.

Start with your codes

Market research begins with the vocabulary the government uses to describe purchases. That means your NAICS codes, which describe your industry, and Product and Service Codes (PSC), which describe what is bought. If you have not chosen them yet, our guide to NAICS and PSC codes explains how.

Write down your primary NAICS code, two or three secondary codes and the PSCs that best describe your services. These are the filters for everything that follows.

Question 1: who buys what you sell?

USAspending.gov (opens in a new tab) publishes federal award data. Use its award search to filter contracts by your NAICS code and a recent period, such as the last three fiscal years. Then look at the results by agency and by sub-agency or office.

You are looking for patterns:

• Which agencies and offices award the most contracts under your codes?
• Are those offices near you, or is the work performed where you can deliver it?
• Do the same offices appear when you search by your PSCs?

Most businesses find that a small number of offices account for much of the activity in their niche. Those offices are your first targets. Keep the list short: five focused targets are worth more than fifty names.

Question 2: how do they buy?

Agencies can buy the same service in very different ways, and each way favors different businesses. Look at the awards for your target offices and note:

• Award size. Are most awards small purchases, or multi-year contracts worth far more? Smaller awards are often more accessible to a new contractor.
• Set-asides. Are awards set aside for small businesses or for a particular SBA program, such as 8(a), HUBZone, WOSB or SDVOSB?
• Contract vehicles. Are orders placed against existing vehicles, such as GSA Multiple Award Schedule contracts or agency-specific multiple-award contracts? If the work flows through a vehicle you do not hold, you may need to team with a holder or pursue the vehicle itself.
• Timing. Federal spending is uneven through the year, with a well-known concentration toward the end of the fiscal year in September. Knowing when your target offices award helps you time your outreach.

Question 3: who wins today?

The recipients in the award data are your competitors, and some are your future partners. For each target office, note the businesses that win most often in your codes. Look at their size, their certifications and whether they hold the vehicles the office uses.

Some incumbents are large prime contractors that subcontract portions of their work to small businesses. Many large primes run small business programs and publish how to register as a potential supplier. For a first-time contractor, a subcontract with an incumbent can be the most realistic route to the past performance that later supports prime bids.

Question 4: what is coming next?

Past awards tell you what agencies have bought. To see what they plan to buy:

• Contract opportunities on SAM.gov (opens in a new tab). Search active and archived notices by your NAICS and PSC codes. Pay particular attention to sources-sought notices and requests for information, where agencies ask industry for input before deciding how to buy. Responding with a clear capability statement is one of the best ways to get noticed.
• Procurement forecasts. Many agencies publish forecasts of upcoming contracting opportunities, and the SBA and agency small business offices link to them. A forecast can give you months of notice.
• Agency small business offices. Every major agency has an Office of Small and Disadvantaged Business Utilization (OSDBU) or equivalent. Their specialists help small businesses understand how the agency buys and whom to talk to.

Put it into a one-page picture

Your research is only useful if you can act on it. For each target office, capture:

• What it buys in your codes, and how much, based on public data.
• How it buys: typical award size, set-asides and vehicles.
• Who wins today, and whether any of them might team with you.
• What is coming, from forecasts and current notices.
• Who to contact: the small business specialist and any program contacts from industry days.

Then decide what to do next for each target: request a meeting, respond to a sources-sought notice, approach an incumbent about subcontracting, or park it until your readiness catches up.

Common mistakes

• Researching the whole government. Narrow to your codes and a few offices.
• Looking only at opportunities, not awards. Award history shows what agencies actually buy and from whom.
• Ignoring how work is bought. A perfect-fit requirement ordered through a vehicle you do not hold is not open to you directly.
• Skipping the small business office. Specialists exist to help small businesses; use them.
• Not writing it down. Research you cannot find again has to be done again.

Free help

APEX Accelerators provide free, local counseling that includes market research, and can show you how to use the official data tools. Small Business Development Centers can help with the business planning around it.

How ONE VIEW Launchpad helps

The market research workspace gives you a guided form for each research area: agencies, industries, NAICS, PSC, prime contractors, potential partners, contract history and government buyers. Each includes prompts, links to the official data sources, and space to record findings and sources. Your saved research sits next to your readiness and roadmap, so the targets you find shape the work you do next, and when you are ready, the opportunities you track and the relationships you build all start from the same picture.