Before diving into the how, it is worth understanding why government contracting deserves a place in your growth strategy.
Scale. The federal government alone awards over $150 billion to small businesses annually. Add state and local government spending, and the total small business opportunity exceeds $300 billion. No private sector customer comes close to this volume.
Stability. Government agencies plan procurement years in advance. Multi-year contracts, option periods, and indefinite delivery/indefinite quantity (IDIQ) vehicles provide predictable revenue streams that most small businesses can only dream of.
Payment reliability. Government agencies pay their invoices. The Prompt Payment Act requires federal agencies to pay within 30 days of receiving a proper invoice, with interest penalties for late payments. Compare this to the private sector, where net-60 or net-90 payment terms are common and collections are a constant challenge.
Legal mandates for small business participation. The federal government has statutory goals for small business contracting:
| Category | Federal Goal |
|---|---|
| Overall small business | 23% of all contracts |
| Small Disadvantaged Business (SDB) | 5% |
| Women-Owned Small Business (WOSB) | 5% |
| HUBZone | 3% |
| Service-Disabled Veteran-Owned (SDVOSB) | 3% |
These are not suggestions — they are legal requirements that agency contracting officers are evaluated against. Agencies actively seek small businesses to meet these goals.
The System for Award Management (SAM.gov) is the federal government's official database of businesses eligible to receive federal contracts. You cannot receive a federal contract without an active SAM.gov registration.
Registration is free and takes 30 to 60 minutes to complete. Here is what you need:
Important: SAM.gov registration must be renewed annually. If your registration lapses, you cannot receive new contract awards. Set a reminder to renew at least 30 days before expiration.
The North American Industry Classification System (NAICS) is how the government categorizes businesses by industry. Your NAICS codes determine which contracts you are eligible to bid on, what size standards apply to your business, and which set-aside programs you can access.
Every business has a primary NAICS code and may list additional codes that reflect other services or products they offer. For example:
| NAICS Code | Industry | SBA Size Standard |
|---|---|---|
| 236220 | Commercial building construction | $45M annual revenue |
| 541330 | Engineering services | $25.5M annual revenue |
| 541512 | Computer systems design | $34M annual revenue |
| 484110 | General freight trucking (local) | $34M annual revenue |
| 561210 | Facilities support services | $47M annual revenue |
Choosing the right NAICS codes is important. Listing codes that do not match your actual capabilities wastes your time and can raise integrity concerns. Listing too few codes limits the opportunities you see. Review the full NAICS list at census.gov and select codes that accurately reflect the work your business performs today.
Set-aside programs are the engine that drives small business participation in government contracting. A set-aside restricts competition for a specific contract to businesses that hold the applicable certification or designation.
Any contract under $250,000 is automatically reserved for small businesses under the simplified acquisition threshold. For contracts above that threshold, contracting officers can set aside procurements for small businesses if they believe at least two small businesses will submit competitive offers.
The 8(a) program benefits is the most powerful set-aside vehicle available. Certified firms can receive sole-source contracts up to $4.5 million (or $8 million for manufacturing) without competitive bidding. They also compete in 8(a) set-asides where only other 8(a) firms participate.
The 8(a) program requires social and economic disadvantage, U.S. citizenship, 51% ownership and control by a disadvantaged individual, a personal net worth under $850,000, and at least two years in business.
The WOSB program sets aside contracts in industries where women-owned businesses are underrepresented. Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) can also receive sole-source awards up to $4.5 million for goods and services.
The Historically Underutilized Business Zone program provides set-asides and sole-source opportunities for businesses located in designated economically distressed areas and that employ residents of those areas.
Set-asides and sole-source contracts for businesses owned and controlled by service-disabled veterans.
The DBE program focuses on transportation contracts funded by the U.S. Department of Transportation. State DOTs and transit agencies set DBE participation goals on federally funded projects.
Once registered in SAM.gov, you can search for contract opportunities through several channels:
SAM.gov Contract Opportunities (formerly FBO/FedBizOpps): This is the primary portal for federal contract solicitations. You can search by NAICS code, agency, keyword, set-aside type, and location. Set up saved searches and email notifications for your NAICS codes.
USASpending.gov: Research historical contract awards to understand which agencies buy what you sell, how much they spend, and which companies currently hold contracts. This intelligence helps you target the right agencies and understand competitive dynamics.
Agency forecast portals: Many federal agencies publish procurement forecasts listing upcoming contract opportunities. These give you advance notice — sometimes 6 to 12 months — so you can prepare before the solicitation drops.
Subcontracting opportunities: Prime contractors on large federal contracts are required to subcontract to small businesses. SubNet (accessible through SAM.gov) lists subcontracting opportunities posted by prime contractors.
State and local portals: Each state has its own procurement portal. Texas uses the Electronic State Business Daily (ESBD). New York uses the New York State Contract Reporter. California uses Cal eProcure. Register in every state where you do or want to do business.
Many government contracts — especially in construction — require surety bonds. There are three types:
For small businesses, obtaining bonds can be challenging because bonding companies (sureties) evaluate your financial strength, experience, and track record. The SBA's Surety Bond Guarantee Program helps by guaranteeing up to 90% of bond losses for contracts up to $6.5 million. This significantly reduces the surety's risk and makes them more willing to bond smaller firms.
If you plan to pursue construction contracts, establish a relationship with a surety company early — before you need a bond for a specific bid. Building your bonding capacity over time (starting with smaller contracts and growing) is a proven strategy.
Federal contracting officers evaluate past performance as a major factor in source selection. If you have never held a government contract, this creates a classic chicken-and-egg problem.
Here is how to build past performance from zero:
Start with subcontracting. Work as a subcontractor on a government contract. Your performance on the subcontract counts as past performance when you later bid as a prime.
Pursue micro-purchases. Federal agencies can make purchases under $10,000 without formal solicitation. These small transactions do not require competitive bidding and can give you initial contract references.
Use the simplified acquisition threshold. Contracts under $250,000 have streamlined procurement procedures and lower barriers to entry.
Leverage commercial past performance. While government experience is preferred, contracting officers can consider relevant commercial work. Document your commercial contracts thoroughly — scope, performance, client references, and outcomes.
8(a) sole-source contracts. If you qualify for 8(a) certification, sole-source awards bypass the competitive process entirely and do not weight past performance the same way. This is one of the most effective ways to get your first government contract.
Business certifications are not required to pursue government contracts, but they are the single most effective way to improve your odds. Here is why:
Reduced competition. A contract set aside for 8(a) firms might attract 5 bidders instead of 50. A sole-source award has zero competitors. Certifications dramatically shrink the competitive field.
Mandatory goals. Contracting officers must meet small business subcontracting goals. When they need to award contracts to certified businesses, they search the databases — and certified firms come up first.
Stacking certifications. A minority woman who owns a small business could hold 8(a), DBE, WBE, MBE, and WOSB certifications simultaneously. Each certification opens a different pool of set-aside contracts, multiplying her total opportunity.
Prime contractor demand. Large companies with government contracts actively seek certified small businesses as subcontractors to meet their own subcontracting plan commitments. Your certification makes you a valuable partner.
Trust signal. Certification tells contracting officers that your business has been independently verified — ownership, control, finances, and operational capability have all been reviewed. This reduces perceived risk.
1. Not registering in SAM.gov. You cannot get paid without it. Register first, pursue contracts second.
2. Bidding on everything. Focus on your core capabilities and target agencies that buy what you sell. Spreading yourself across too many solicitations produces low-quality proposals.
3. Ignoring the relationship side. Government contracting is not just about proposals. Building relationships with contracting officers, attending industry days, and meeting prime contractors is essential. The best opportunities often come through relationships, not cold solicitations.
4. Underpricing. Winning a contract at a price that does not cover your costs is worse than losing. The government evaluates "best value," not just lowest price. Understand your costs, price accordingly, and compete on quality and capability.
5. Skipping certifications. Competing in the open market against established firms with decades of past performance is the hardest path to your first contract. Certifications level the playing field by giving you access to restricted competition.
6. Poor proposal quality. Government proposals have specific format requirements, evaluation criteria, and compliance standards. A well-written proposal that addresses every evaluation factor will beat a better-qualified firm with a sloppy submission.
Government contracting is one of the most underutilized growth strategies available to small businesses. The market is enormous, the demand for small business participation is legally mandated, and the barriers to entry — while real — are surmountable with the right preparation.
The fastest way to improve your odds is to get certified. At certs.bizplaneasy.com, we prepare complete, professional certification applications for the programs that matter most:
Our free eligibility tool tells you which certifications you qualify for in minutes — no commitment, no sales call.
Check Your Certification Eligibility
*BizPlanEasy has been helping small businesses with business planning, certifications, and compliance since 2010. Our certification preparation service combines AI-powered document analysis with expert review to deliver professionally prepared applications at a fraction of traditional consulting fees.*