How to Get Federal Contracts: A Guide for Small Businesses

The federal government spends over $700 billion on contracts every year, and by law at least 23% of that must go to small businesses. That means roughly $160 billion in annual contract opportunities are specifically set aside for small firms. Getting started, though, requires understanding how the system works.

This guide walks through the process of entering federal contracting, from registration through winning your first award, with a focus on how to use contract data to find realistic opportunities.

Step 1: Determine If Federal Contracting Is Right for You

Federal contracting is not for every business. Before investing time in registration and proposals, consider whether your company meets these criteria:

• You sell something the government buys. The government purchases everything from IT services to janitorial supplies, but your product or service needs to map to a federal need. Check what the government spends in your industry by browsing spending by NAICS code.
• You can handle the paperwork. Federal contracts come with compliance requirements (FAR clauses, DCAA accounting, cybersecurity standards) that add overhead. Smaller contracts may not justify the administrative cost.
• You have patience. The sales cycle for federal contracts is typically 6-18 months from opportunity identification to award. You need cash flow to sustain operations during that period.
• You can deliver at scale. Even small business set-asides can be worth millions. The government needs confidence you can perform.

Step 2: Get Registered

Before you can bid on any federal contract, you need to complete several registration steps:

1. Get a UEI (Unique Entity Identifier). This replaced the DUNS number in 2022. You obtain one through SAM.gov during registration.
2. Register in SAM.gov. The System for Award Management is required for all federal contractors. Registration is free but takes 7-10 business days. You must renew annually.
3. Identify your NAICS codes. You can register under multiple NAICS codes that describe your business activities. This determines which opportunities you're eligible for. See our NAICS code guide for help choosing the right codes.
4. Get small business certifications (if applicable). The SBA offers certifications for 8(a), HUBZone, Women-Owned Small Business (WOSB), and Service-Disabled Veteran-Owned Small Business (SDVOSB). These open up set-aside contracts with less competition.

Step 3: Research the Market

The biggest mistake new contractors make is bidding on everything. Instead, research where the realistic opportunities are:

• Find your NAICS code's spending. Browse federal spending by NAICS code to see how much the government spends in your industry and which agencies are the biggest buyers. For example, aircraft manufacturing (336411) receives billions in annual federal spending, while hotels and motels (721110) sees significant civilian agency contracting.
• Identify target agencies. Browse spending by agency to find which agencies spend the most in your area. Focus on 2-3 agencies rather than trying to sell to all of them.
• Watch for expiring contracts. When an existing contract expires, the agency must re-compete or extend it. This is your best opportunity to compete against an incumbent. Use ContractCliff to find companies with upcoming contract cliffs.
• Study the incumbents. Search for current contractors in your space to understand contract sizes, agencies served, and concentration risk. A company with high HHI concentration may be vulnerable if their single-agency contract expires.

Step 4: Find Opportunities

Active federal contract opportunities are posted on SAM.gov (formerly FBO.gov). You can also find opportunities through:

• SAM.gov contract opportunities: The official source for all federal solicitations above the micro-purchase threshold ($10,000).
• Agency forecast pages: Many agencies publish annual procurement forecasts listing planned acquisitions. These give you advance notice before solicitations drop.
• Subcontracting opportunities: Large primes (Lockheed, Booz Allen, etc.) often need small business subcontractors to meet set-aside requirements. Check their supplier portals.
• GSA Schedule: Getting on a GSA Schedule contract streamlines the buying process for agencies and puts your company in their catalog.

Step 5: Build Relationships Before the RFP Drops

In federal contracting, the winner is usually decided before the RFP is published. Agencies engage with industry during market research phases, and contractors who participate in those discussions shape the requirements. Key relationship-building activities include:

• Industry days hosted by agencies considering new procurements
• Requests for Information (RFIs) where agencies solicit feedback
• Capability briefings with agency contracting officers and program managers
• Small business conferences like OSDBU matchmaking events

Step 6: Write Competitive Proposals

When an opportunity is posted, your proposal needs to demonstrate three things:

1. Technical capability: You can do the work, you understand the problem, and you have a specific plan.
2. Past performance: You have done similar work before, at similar scale, with good results.
3. Competitive pricing: Your price is reasonable for the scope. In best-value evaluations, the lowest price does not always win.

For your first contract, lack of federal past performance is the biggest hurdle. Mitigate this by starting with smaller contracts, subcontracting with established primes, or demonstrating equivalent commercial experience.

Common Mistakes to Avoid

• Bidding on everything: Focus on opportunities where you have a realistic competitive advantage. One targeted, well-written proposal beats ten generic ones.
• Ignoring the incumbent: Most re-competes are won by the incumbent. If you are going to unseat them, you need a clear differentiation strategy.
• Skipping market research: Before spending weeks on a proposal, verify that the contract size, agency, and requirements match your capabilities.
• Underpricing to win: The government evaluates "fair and reasonable" pricing. Prices that are too low raise performance risk concerns.
• Neglecting compliance: Missing a single proposal requirement can make your submission non-responsive and get it thrown out.

Start Your Research

The best place to start is understanding who currently holds contracts in your industry. Search for companies in your NAICS code, see when their contracts expire, and start planning your capture strategy 12-18 months in advance.