Breaking into government contracting can feel overwhelming for startups. Acronyms, compliance requirements, and an unfamiliar bidding process often make founders hesitate. Yet, the U.S. government is the world’s largest customer, purchasing everything from IT services to food supplies. Understanding the basics of how federal contracts work and who the key players are is the first step to unlocking this massive market.
Federal contracts are legally binding agreements between the U.S. government and private companies to provide goods, services, or solutions in exchange for payment. These contracts range from simple purchases of office supplies to complex multi-billion-dollar defense systems, with bid opportunities spanning every industry and business function.
The government contracts for virtually everything it needs to operate: information technology services, professional consulting, construction, research and development, maintenance services, training programs, food services, and thousands of other categories. This diversity means that almost any legitimate business capability has potential government applications.
Before we dive into the basics, explore our complete guide: Government Contracting for Startups. It walks you through every step of securing your first federal contract.
The Federal Acquisition Regulation (FAR) serves as the primary rulebook governing how federal agencies purchase goods and services. Understanding the FAR framework is essential for successful government contracting, as it establishes the legal and procedural requirements that govern every federal procurement.
The FAR System: The FAR is supplemented by agency-specific regulations (such as the Defense Federal Acquisition Regulation Supplement for DOD contracts) that add additional requirements for particular agencies or contract types. While comprehensive, these regulations are designed to ensure fair competition and protect taxpayer interests.
The contracting cycle for government bids typically follows this pattern:
The key players in issuing government contracts for bid are a mix of federal agencies, procurement officers, and support organizations. Here’s a breakdown of the most important players startups should know:
These are the entities that define requirements and request government contracts for goods or services. Each agency has its own mission, priorities, and budget.
Top Contracting Agencies:
Each role within the federal government’s procurement process serves a unique purpose, and understanding who these individuals are and their value to businesses is crucial. This includes industry resources that help meet federal government small business contracting goals.
They help agencies meet small business goals, provide acquisition insights, and support pre-solicitation planning alongside PCRs and CORs.
They are warranted to obligate the federal government and manage solicitation releases, make award decisions, and handle legal commitments. Contact them only with specific, contract-related matters.
Handles market research, compliance, and communication. May also be assigned duties that align with an SBLO’s responsibilities, or even formally appointed as an SBS, especially in smaller agencies or teams.
Monitors performance, ensures requirements are met, and communicates updates—but cannot make official changes without CO approval.
Not directly involved in contracting but offers insight into agency needs and future requirements—valuable for shaping your proposal strategy.
Ensures agencies include small businesses in procurement plans. Reviews acquisition strategies, suggests set-asides, and helps small businesses compete more effectively.
Tip: Building relationships with contracting officers can improve your odds of success. Attend industry days and virtual agency events to connect.
Offices of Small and Disadvantaged Business Utilization help small businesses help navigate government contracts for socioeconomically owned small businesses, such as small disadvantaged or woman owned small businesses, and other small business categories. Each major agency has its own OSDBU that:
A prime contractor is a company or organization that has a direct contractual agreement with a government agency to perform work or provide goods and services. For the most part, large business prime contractors must subcontract portions of the work to smaller businesses through government subcontracting opportunities.
Startups can partner with or subcontract to primes as a path to gaining federal past performance and entering into new government markets such as DHS or VA.
Small Business Administration (SBA) helps define eligibility and provides key certifications fro socioeconomic small businesses (i.e., 8(a), SDVOSB, VOSB, WOSB, HUBZone).
APEX Accelerators (formerly PTACs) provide free support to help small businesses navigate contracting, including proposal reviews and bid strategy. There are around 90 APEX Accelerators in the U.S., with about 300 local offices throughout the 50 states, Washington D.C., Puerto Rico, Guam, the U.S. Vergin Islands, and the Commonwealth of Northern Marianas.
The GSA runs the MAS program, a major contracting vehicle for selling commercial products and services across federal agencies. GSA also manages several GWACs, identified later in this guide. If you’re eligible, having a GSA schedule or GWAC simplifies how agencies buy from you.
While not directly issuing contracts, Congress controls the federal budget, and the Office of Management and Budget (OMB) sets government-wide acquisition policy. Their priorities shape agency procurement behavior and spending focus areas.Understanding who makes purchasing decisions and when they make them is crucial for targeting your marketing efforts effectively.
Budget Cycles: The federal fiscal year runs from October 1 to September 30.Understanding this cycle is crucial because:
The Small Business Administration (SBA) establishes size standards that determine whether a business qualifies as “small” for federal contracting purposes. These standards vary by industry and are matched to the NAICS (North American Industry Classification System) codes.
The SBA uses two primary size standards to determine if a business qualifies as small:
You can find the official rules in 13 CFR Part 121 of the federal regulations.
Learn the full definitions of these terms, and others, in 48 CFR 19
If you’re new to GovCon and want a detailed roadmap, don’t miss our full guide: Government Contracting for Startups: A Step-by-Step Guide.
Government buyers evaluate vendors differently than commercial customers when reviewing government bids, with unique priorities shaped by accountability requirements and risk aversion:
Past Performance: Government buyers heavily weight past performance, particularly on similar government contracts. This creates a “chicken and egg” problem for new contractors, making it essential to start with smaller opportunities to build a track record.
Technical Capability: Buyers need confidence that you can deliver what you promise. This includes not just your solution approach, but your team’s qualifications, experience, and ability to handle government-specific requirements.
Price Reasonableness: While not always the deciding factor, price must be competitive and reasonable. Government buyers must justify their selections and often face audits, making “best value” approaches that balance price and performance common.
Responsibility and Integrity: Vendors must demonstrate financial stability, business integrity, and the organizational capability to perform. This includes having adequate facilities, equipment, personnel, and financial resources.
Compliance Capability: Government contracts include numerous compliance requirements (reporting, security, labor standards, etc.). Buyers evaluate whether vendors understand and can meet these obligations.
Federal contracting isn’t reserved for big corporations. With the right knowledge, even small businesses and early-stage startups can secure government contracts and build a steady revenue stream. By understanding the procurement process, identifying the decision-makers, and learning where your company fits, you position yourself ahead of competitors who are still avoiding this space. Start small, build your past performance, and use free resources like SBA or APEX Accelerators to guide your first steps.
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