Is Government Contracting Right for Your Business?
Before investing time and resources into federal contracting, honestly assess whether it’s a good fit. The government is a demanding but fair customer. Payment terms are usually 30 days (often faster with prompt payment clauses), contract terms can span multiple years, and the volume of purchasing is enormous. But the sales cycle is long, compliance requirements are significant, and cash flow management during startup can be challenging.
Government contracting works best for businesses that already have a track record of delivering their product or service to commercial customers. The federal government rarely takes a chance on unproven concepts or brand-new companies with no operating history. If you have at least two years of relevant commercial experience and can demonstrate competence, you’re in a good position to start.
Consider your financial readiness. Many government contracts require you to perform work and incur costs before receiving payment. Some contracts require performance bonds or other financial guarantees. Having sufficient working capital or access to a line of credit is important for managing the financial dynamics of government work.
Registration and Certification Fundamentals
Your first step is completing your SAM.gov registration. This is the non-negotiable prerequisite for any federal contract. The process is free and can be completed online, but allow 2-4 weeks for entity validation. Don’t wait until you find an opportunity to start — register now so you’re ready when the right solicitation appears.
While your SAM.gov registration processes, evaluate whether you qualify for any SBA certification programs. If you’re a disadvantaged business owner, an 8(a) certification dramatically expands your opportunities. If your office is in a HUBZone, that certification opens another set of set-asides. SDVOSB and WOSB certifications are similarly valuable if you qualify.
Even without socioeconomic certifications, make sure your SAM.gov profile accurately reflects your small business status under each applicable NAICS code. The simple act of being a qualified small business gives you access to the largest category of set-aside contracts.
Building Your Capability Statement
A capability statement is the government contracting equivalent of a resume for your business. It’s typically a one-page document (two pages maximum) that summarizes your company’s qualifications, past performance, and differentiators. Government contracting officers, prime contractors, and small business liaisons use capability statements to quickly assess whether a company might be a good fit.
Include your company overview, core competencies (3-5 bullet points), past performance examples (2-3 relevant projects), differentiators (what makes you different from competitors), and company data (NAICS codes, UEI, CAGE code, certifications, contract vehicles). Design it cleanly and professionally — first impressions matter.
Prepare different versions of your capability statement tailored to specific agencies or opportunities. A generic capability statement is a starting point, but a version customized for the Department of Defense should emphasize different qualifications than one targeting Health and Human Services.
Starting Small: Micropurchases and Subcontracting
You don’t have to win a multi-million dollar contract right out of the gate. In fact, starting small is usually the smarter strategy. The federal micropurchase threshold is $10,000 (and $25,000 for certain acquisitions), below which the government can buy directly from any qualified vendor without formal competition. These purchases are often made using Government Purchase Cards.
The simplified acquisition threshold ($250,000) covers purchases that use streamlined procedures with less paperwork and shorter evaluation periods. These smaller contracts are excellent opportunities to build past performance, learn the government’s processes, and establish relationships with contracting offices.
Subcontracting with established prime contractors is another proven path to building federal experience. Large businesses that win government contracts are often required to subcontract a percentage of the work to small businesses. Reach out to prime contractors in your industry and offer your capabilities. Successful subcontracting relationships frequently evolve into mentorship and teaming arrangements.
Finding Your First Opportunity
With your registrations complete and capability statement ready, it’s time to find opportunities. Set up systematic search processes using your NAICS codes, target agencies, and set-aside categories as filters. Monitor SAM.gov daily, or use an automated service like FedOverwatch to deliver matching opportunities to your inbox.
Focus on opportunities where you have a clear competitive advantage. For your first contract, look for requirements that closely match work you’ve already done commercially. The closer the match, the easier it will be to write a compelling proposal and demonstrate relevant experience.
Pay special attention to sources sought notices and requests for information (RFIs). These pre-solicitation activities are low-risk ways to get your company on the government’s radar and demonstrate your capabilities before a formal solicitation is released. Agencies sometimes identify small business contractors through sources sought responses and reach out directly for small procurements.
Submitting Your First Proposal
When you find the right opportunity, give yourself adequate time to prepare a strong proposal. Read the solicitation thoroughly, build a compliance matrix, and outline your technical approach before you start writing. For your first proposal, consider working with a more experienced contractor or consultant who can review your work.
Don’t be discouraged if your first proposal doesn’t win. Government contracting is a long game, and even experienced contractors have win rates of 15-30%. Every proposal you write makes the next one better. More importantly, request a debriefing after every loss to understand specifically where you can improve.
If you do win, execute flawlessly. Your first government contract establishes the past performance record that future opportunities will be evaluated against. Deliver on time, within budget, and with high quality. A strong first contract creates momentum that makes winning the second and third contracts progressively easier.
Building a Long-Term Government Practice
Winning your first contract is a milestone, not a destination. Successful government contractors build sustainable practices by continuously expanding their pipeline, diversifying across agencies and contract vehicles, and investing in their competitive positioning.
Consider pursuing GSA Schedule contracts, which give you access to a pre-negotiated pricing agreement that agencies can order from directly. GSA Schedule holders often receive more opportunities because the streamlined ordering process makes it easier for government buyers to purchase from them.
Network continuously. Attend industry days hosted by the agencies you want to work with, participate in SBA matchmaking events, and join relevant industry associations. Government contracting is relationship-driven, and the connections you build today become the opportunities of tomorrow.
Your First Contract Is Closer Than You Think
Winning a government contract for the first time requires preparation, patience, and persistence. But the market is real, the money is reliable, and the opportunities are abundant for businesses that do the work to compete effectively.
Start today: register in SAM.gov, identify your NAICS codes, build your capability statement, and begin monitoring for opportunities. The federal government needs what your business offers. Your job is to make yourself visible, credible, and ready when the right opportunity appears.