Jan 18, 2023

How to win small business Government contracts

Updated: Feb 10, 2023

Learn how to find and win small business government contracts.

Assess your business: Evaluate your small business to see if it has what it takes to win a government contract.

Market research

In order to bid on and win government contracts, you’ll have to sell products or services that the government buys — and at a competitive price. Use the resources below to see if there’s a market for your product or service, determine how big the market is, and find potential buyers.

Federal Procurement Data System

Federal Procurement Data System – Next Generation is the repository of all federal contracting data for contracts over $25,000. With this system, you can see which agencies have contracts and with who, what agencies buy, and which contractors have contracts.

USASpending.gov

USASpending.gov tracks government spending through the contracts it awards. This searchable database contains information for each federal contract. You can use this information to help identify government purchasing trends

Federal agency procurement forecasts

Each government agency releases a procurement forecast that includes contracting opportunities for small businesses. You can review these Agency Recurring Procurement Forecasts to find out if there are agencies that are buying what you sell.

What makes a successful contractor?

The government prefers to work with established, reliable businesses. Do you have a track record of delivering quality goods and services on time and within budget? Is your reputation within your industry strong?

Not only can it take a long time to win your first government contract, it can take a significant amount of money. Some businesses spend between $80,000 and $130,000 to earn their first contract.

Also, it could take up to two years to start making a return on your investment. You’ll need to have enough cash flow to sustain your business. Maintaining a diverse list of private-sector clients can help offset any potential initial losses.

Being e-commerce savvy is very important in government contracting. For example, if you want to work with the Department of Defense, you must be able to invoice and receive payments electronically.

Basic requirements: Your small business must meet some basic requirements before you can compete for government contracts.

Get proper registrations and ID numbers

In order to sell goods and services to the government, you’ll have to register your small business.

Unique Entity Identifier

Before you can bid on government proposals, you need to get a Unique Entity Identifier (UEI). A UEI is a unique 12-character, alpha-numeric value.

You will receive a UEI when you register with SAM at SAM.gov. Entities doing business with the federal government must use the UEI created by the system.

Businesses no longer have to go to a third-party website to obtain their identifier (DUNS number). This transition allows the government to streamline the entity identification and validation process, making it easier and less burdensome to do business with the federal government.

If your entity is already registered with SAM, your UEI has already been assigned to you. Learn how to view your UEI within SAM at the Federal Service Desk.

Refer to the Guide to Getting a UEI if you want to get a UEI for your organization without having to complete a full entity registration. If you only conduct certain types of transactions, such as reporting as a sub-awardee, you may not need to complete an entity registration. Your entity may only need a UEI.

NAICS code

You’ll also need to match your products and services to a North American Industry Classification System (NAICS) code. NAICS codes classify businesses based on the particular product or service they supply. A business will generally have a primary NAICS code, but it can also have multiple NAICS codes if it sells multiple products and services.

To find your NAICS code, view the NAICS code list at the U.S. Census Bureau.

Meet size standards

To be eligible for government contracts reserved for small businesses, your business must meet size requirements set by the SBA. These size standards define the maximum size that a business — and its affiliates — can be to qualify as a small business for a particular contract.

The SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.

However, there are exceptions by industry. You can view these in Title 13 Part 121.201 of the Code of Federal Regulations (CFR) or in the SBA’s table of small business size standards.

To determine if your business qualifies as "small" for government contracting purposes, use the SBA’s Size Standards Tool.

To participate in government contracting, you must register your business in the federal government’s System for Award Management (SAM). SAM is a database that government agencies search to find contractors.

Using SAM, you’ll able to certify that your business is eligible for contracts that are reserved for small businesses. You’ll also be able to represent if your business is eligible for contracts under an SBA contracting program because it is disadvantaged, women-owned, veteran owned, or located in an underutilized area.

Your small business’ profile in SAM is like a résumé. Creating a profile that’s accurate and appealing is important to winning a government contract. Make sure to use accurate, descriptive terms about your business so that contracting officials will be able to find you in search results.

Maintain compliance

In order to participate in government contracting, you must comply with all laws and regulations. The federal government's purchasing process is governed by the Federal Acquisition Regulation.

Regulations covering government contracting programs for small businesses are listed in 13 CFR 125.

Cybersecurity requirements

Small businesses looking to contract with the U.S. Department of Defense (DoD) will have to show the ability to safeguard their systems and data. Each DoD request for proposal will list a Cybersecurity Maturity Model Certification (CMMC) level required to bid the work.

To help small businesses with the tools and training to meet this standard, DoD developed Project Spectrum, a free platform that:

Assists in CMMC certification

Provides tools and training for cybersecurity awareness

Educates users on risk management

Helps small businesses install or boost cybersecurity hygiene

Visit Project Spectrum to sign up, learn about what you need to get certified, or to complete a self-assessment of your company’s cyber readiness.

How to win contracts: You can increase your chance of winning a government contract by researching the federal marketplace and taking advantage of SBA resources.

Find contracts

There are a number of databases you can use to find federal contracts to bid on. Similarly, there are multiple databases that government agencies use to find contractors.

https://sam.gov/content/home

Dynamic Small Business Search

Dynamic Small Business Search (DSBS) is a database that government agencies use to find small business contractors for upcoming contracts. Small businesses can also use DSBS to find other small businesses to work with. SBA maintains the DSBS database. The information you provide when you register your business in the System for Award Management (SAM) is used to populate DSBS, so you should create a comprehensive business profile.

Contract Opportunities

Federal business opportunities for contractors are listed at SAM.gov. Government agencies are required to use SAM to advertise all contracts over $25,000.

FIND CONTRACTS

GSA Schedules

If you want to sell to the government, securing a contract with the U.S. General Services Administration (GSA) — the government agency that connects government buyers with contractors — is a great way to start. Securing a contract with the GSA is also called “getting onto the GSA Schedule,” which means you’ve been approved to do business with the government.

Subcontracting opportunities

SubNet is a database of subcontracting opportunities posted by large contractors looking for small businesses to serve as subcontractors. SBA maintains a directory of federal government prime contractors with subcontracting plans. The GSA publishes a subcontracting directory for small businesses that are looking for subcontracting opportunities with prime contractors. The directory lists large business prime contractors that are required to establish plans and goals for subcontracting with small businesses. The U.S. Department of Defense (DoD) maintains a similar directory of large prime contractors that small businesses can use to find subcontracting opportunities.

Marketing to the government

You may want to market your small business directly to a government agency or prime contractor. You can do that by learning what agencies or prime contractors need, and then showing them how your business can fulfill that need.

Federal Procurement Data System

Federal Procurement Data System – Next Generation is the repository of all federal contracting data for contracts over $25,000. With this system, you can see which agencies have contracts and with whom they have contracts, what agencies buy, and which contractors have contracts.

USASpending.gov

USASpending.gov tracks government spending through contracts awarded. This searchable database contains information for each federal contract. You can use this information to help identify procurement trends within the government and potential opportunities.

Small business offices

Many federal agencies have what’s called an Office of Small and Disadvantaged Business Utilization (OSDBU) or an Office of Small Business Programs (OSBP). These offices work to identify opportunities to contract with small businesses.

Each agency releases a procurement forecast that includes contracting opportunities for small and disadvantaged businesses. Once you’ve reviewed an agency forecast and used systems like the Federal Procurement Data System and USASpending.gov to identify opportunities at a specific agency, you can contact that agency’s small business office. Also, each office hosts training and networking events to help small businesses identify contract opportunities.

Handling protests

When the government awards a contract, someone may allege that a winning business misrepresented itself, causing the contract to be awarded unfairly.

Size and status protests

A losing bidder, contracting officer, SBA, or another interested party or government official can file a protest, questioning a winning business’ size or socio-economic status. In the event of a protest, SBA will determine the size or status of the winning small business. If SBA determines that the business did not qualify for the set-aside, the business is no longer eligible for that contract. Any of the interested parties can appeal SBA's size determination to SBA’s Office of Hearings and Appeals, which issues a final decision.

Certificate of Competency

If a federal contracting officer rejects a low bid from a small business because of questions about the business’ ability to fulfill the contract, the case is referred to SBA. SBA will then offer the small business a chance to apply for a Certificate of Competency (COC). If the small business applies for a COC, SBA will review the business’ ability to fulfill the contract. If the business demonstrates the ability to fulfill the contract, SBA will issue a COC to the contracting officer, requiring the award of that contract to the small business. A COC is valid only for the specific contract for which it is issued. A small business that’s capable of handling one contract may not be qualified to handle another.

Bundling and consolidation

If you think a federal agency has engaged in bundling or consolidation practices that keep a small business from competing for a contract, contact your local Procurement Center Representative (PCR). Bundling and consolidation are defined in Title 13 Part 125.1 of the Code of Federal Regulations (CFR).

Handling protests

When the government awards a contract, someone may allege that a winning business misrepresented itself, causing the contract to be awarded unfairly.

Size and status protests

Certificate of Competency

Bundling and consolidation

Types of contracts: There are several different ways of contracting that can help you win awards from the federal government. Content

Set-aside contracts for small businesses
Set-asides for government contracting programs
Joint ventures

Set-aside contracts for small businesses

To help provide a level playing field for small businesses, the government limits competition for certain contracts to small businesses. Those contracts are called “small business set-asides,” and they help small businesses compete for and win federal contracts. There are two kinds of set-aside contracts: competitive set-asides and sole-source set-asides.

Competitive set-aside contracts

When at least two small businesses could perform the work or provide the products being purchased, the government sets aside the contract exclusively for small businesses. With few exceptions, this happens automatically for all government contracts under $150,000. Some set-asides are open to any small business, but some are open only to small businesses who participate in SBA contracting assistance programs.

Sole-source set-aside contracts

Most contracts are competitive, but sometimes there are exceptions to this rule. Sole-source contracts are a kind of contract that can be issued without a competitive bidding process. This usually happens in situations where only a single business can fulfill the requirements of a contract. To be considered for a sole-source contract, register your business with the System for Award Management (SAM) and participate in any contracting program you may qualify for. In some cases, sole-source contracts must be published publicly, and will be marked with an intent to sole source. Potential vendors can still view and bid on these contracts. Once the bidding process begins, the intent to sole-source may be withdrawn.

Set-asides for government contracting programs

Some set-asides are for small businesses in certain socio-economic categories. You can bid on these set-aside contracts by participating in any of the SBA's contracting assistance programs listed below:

8(a) Business Development The federal government tries to award at least 5% of all federal contracting dollars to small disadvantaged businesses each year. Participate in the 8(a) Business Development program

HUBZone The federal government tries to award at least 3% of all federal prime contracting dollars to HUBZone-certified small businesses each year. Become a HUBZone-certified business

Women-Owned Small Business The federal government tries to award at least 5% of all federal contracting dollars to women-owned small businesses each year. Get certified as a women-owned small business

Service-Disabled Veteran-Owned The federal government tries to award at least 3% of annual federal contracting dollars to service-disabled veteran-owned small businesses. Join the disabled veterans’ business program

Participating in one of these SBA programs means you’ll have fewer businesses to compete with to win a government contract. However, you must meet eligibility requirements and certify your business’ socio-economic status before you can bid on a set-aside contract.

How to certify

The certification process may vary depending on the SBA contracting program. For some, you can self-certify just by updating your business profile in the System for Award Management (SAM). For other programs, you have to apply for certification. As part of the application, you’ll answer questions about your business and its ownership, and upload supporting documents. Check each contracting program’s page for specific details about eligibility requirements and the certification process.

Joint ventures

Two or more small businesses may pool their efforts by forming a joint venture to compete for a contract award. A joint venture of multiple small businesses still qualifies for small business set-aside contracts if its documentation meets SBA requirements. Small businesses that have a mentor-protege relationship through the All Small Mentor-Protege program can form a joint venture with a mentor (which can be a large business). These joint ventures can compete together for government contracts reserved for small businesses. A joint venture can also bid on contracts that are set aside for service-disabled veteran-owned, women-owned, or HUBZone businesses, if a member of the joint venture meets SBA requirements to do so.

Resources:

View Government Contract Opportunities: https://beta.sam.gov/

SBA Guide for Federal Contracts: https://www.sba.gov/federal-contracti...

Find your NAICS number: https://www.census.gov/eos/www/naics/

Apply for Employer Identification Number (EIN): https://www.irs.gov/businesses/small-...