Government Contracting 101: What is Government Contracting?

The federal contracting market can be very lucrative and very attractive for businesses looking in from the outside. However, it can feel like it takes a college degree to figure out how to navigate the government contracting process and land your first contract. Government contracting is a unique process that can leave you unsure of where to start or know how to break through to decision-makers. 

The good news is that it doesn’t really take a college degree (or the accompanying student loans). And the better news is that when you have an experienced guide, winning your first government contract doesn’t have to feel insurmountable. The best news: we’re extremely experienced at navigating the complexities of government contracting, and we’re willing to help. So let’s share the basics with you here so that you can feel confident about the steps you can take to win your first government contract. 

First, the very basics: government contracting is where the federal government, state governments, or local government agencies partner with businesses to provide goods and services. These contracts cover everything (and we mean everything) from construction projects and cybersecurity to janitorial work and office supplies. If the United States government needs it, there’s a contract for it.

The federal government is one of the largest buyers of goods and services in the world, spending billions annually. And the government is often signing multi-year deals. For many small businesses (and big ones, too), winning a government contract represents a huge ability to grow revenue and establish long-term stability. But that’s why it’s also so competitive. 

In order to stand out, you need to understand what government contracting is, how to navigate it, and what it takes to stand out. That’s what we’re here for: welcome to government contracting 101.

How Do Government Contracts Work?

Because the U.S. government is one of the largest buyers in the world, they have a strict set of rules and regulations designed to ensure transparency, fairness, and accountability. And there are a lot of acronyms thrown in for good measure.

The Federal Acquisition Regulation (FAR) serves as the primary rulebook, setting guidelines for everything from contract types to dispute resolution. Contracts are often awarded through a competitive bidding process, where businesses submit proposals in response to government-issued solicitations.

The Small Business Administration (SBA) is a really helpful resource for small businesses looking to break into federal contracting. They provide guidance, certifications, and support programs to help level the playing field for smaller players competing with larger firms.

One of the most common ways to find government contracting opportunities is through the General Services Administration (GSA) Schedules program (also known as the multiple award schedule [MAS] program). The GSA helps contractors comply with federal regulations and offers streamlined purchasing options for agencies, saving time and money.

You can also explore SAM.gov (System Award Management, but everyone just calls it SAM.gov) for a wider range of federal opportunities, including solicitation notices and awards. 

Finally, the last acronym we’ll cover here is RFP, or Request for Proposal. These are formal documents issued by government agencies detailing their needs and asking businesses to submit their best solutions. Government RFPs tend to have more complex requirements than traditional enterprise or B2B RFPs. Understanding how to respond to RFPs is essential for winning contracts and growing your presence in federal contracting.

Got the basic acronyms down? Let’s talk about how they all work together. 

• Step 1: An agency finds a need. A government agency identifies a need, such as new software, construction work, or consulting services.
• Step 2: Issue the RFP. The agency posts a Request for Proposal (RFP) or Invitation for Bid (IFB) outlining their contract requirements.
• Step 3: Your business submits a proposal. Businesses respond with their proposals, detailing how they will meet the requirements and often, the cost estimates for the work.
• Step 4: Winning a contract. After evaluating submissions, the agency awards the contract to the company that provides the best value—not always the lowest bidder (although some contracts are awarded on low bid, but that’s a different topic for a different day). 
• Step 5: Fulfilling the contract. Once awarded, government contractors must comply with the terms outlined in the agreement, including timelines, deliverables, and reporting requirements. Failure to deliver can result in penalties or disqualification from future contracting opportunities.

Types of Government Contracts

We touched on this a bit above, but the government doesn’t use a one-size-fits-all approach to contracts. Instead, there are several types of government contracts, each suited for different needs and circumstances. Once you understand the different types of contract vehicles, you’ll be on a solid path to navigating federal opportunities. Some contract vehicles will likely be better suited to your business than others. Here are the different types of contracts:

• Fixed-Price Contracts: These contracts establish a set price that doesn’t change, regardless of project costs. They’re typically used on straightforward projects with clearly defined scopes.
• Cost-Reimbursement Contracts: The government reimburses the contractor for allowable costs incurred during the project. These are common in research and development projects.
• Time-and-Materials Contracts: These contracts pay for labor and materials at agreed-upon rates. They’re usually used when project requirements are uncertain, like for large-scale construction projects.  
• IDIQ: Indefinite Delivery/Indefinite Quantity Contracts: Flexible contracts that allow government agencies to order goods or services as needed within a specific timeframe. This could be used for agencies providing a human capital service like training or consulting and the agency can utilize hours as needed.
• Subcontracts: These are used when large prime contractors hire smaller subcontractors to fulfill specific portions of a government contract. Subcontractors are very common in government contracting and this is often a great entry point for small businesses looking to break into federal contracting.

How to Get Started as a Government Contractor

Getting started doesn’t mean just finding an RFP and responding to it. Before you go after your first federal contracting opportunity, you need to lay a foundation that will set your company up to win proposals. 

First, register your business with the System for Award Management (SAM). This is required for any business looking to work with federal agencies. Then, learn the rules. Familiarize yourself with the Federal Acquisition Regulation (FAR) to understand your responsibilities and rights as a government contractor.

If you have the resources and time, you can make your proposals stand out during the solicitation and procurement process by obtaining certifications. Small businesses can gain a competitive edge by obtaining certifications like 8(a), HUBZone, or Women-Owned Small Business (WOSB). The SBA offers guidance on eligibility and application processes. The certifications can take time, but they can be worth the investment for your federal business development program. 

Once you have these steps covered where you can, start networking. Attend industry events and connect with procurement officers, subcontractors, and other federal contractors to discover upcoming opportunities. This will give you a leg up once a solicitation is issued.

Finding Opportunities

The first step in getting a contract is to find the right opportunities to go after. You need to think carefully about your business, what you offer, what you’re truly capable of, and find opportunities that align with your services. Take advantage of SBA resources to help you figure these things out. Other resources include agencies and consultants with government procurement experience that can guide you through the process. 

Then you can focus your resources on preparing a custom, detailed, and winning proposal. Find subcontracting and contracting opportunities with these resources: 

• SAM.gov
• Agency Websites: Many federal agencies, such as the Department of Defense or the GSA, post opportunities directly on their websites.
• Industry Events: Attend government contracting conferences and tradeshows to network and gain insights into upcoming opportunities.

The key to success is persistence and research. The more you understand the federal marketplace and the agency needs you can solve, the better positioned you are to win contracts.

Win Government Contracts with Summit Strategy

You have the information you need to navigate the federal marketplace and find contracts your company can win. We believe in you and your team. But we also know it’s not an easy climb all by yourself. That’s why we’re here. 

Working with a team of experienced government business development, marketing, and proposal experts can help you navigate this challenging path and make sure your team is equipped with everything you need to succeed. 

Whether you’re a small business trying to land your first subcontract or an experienced contractor aiming for a prime position, we’re here to guide you every step of the way.

Our team specializes in proposal development, business development, marketing, and compliance. We help you identify the best opportunities, craft winning proposals, and meet all the regulatory requirements to secure government contracts. And we have a solid track record of helping our clients find success. 

Ready to take the next step? Let Summit Strategy be your guide to navigating the complexities of government contracting. Reach out today, and let’s start winning together.