Why Government Contracting Is Worth Pursuing
The federal government is the single largest buyer of goods and services on the planet. In FY2024, it awarded more than $700 billion in contracts, everything from IT services to office supplies, construction, healthcare, translation, cybersecurity, and professional services. State and local governments add hundreds of billions more.
By law, federal agencies are required to direct a significant portion of that spending to small businesses. The overall small business goal is 23% of prime contract dollars. Individual categories have their own targets, 5% to women-owned small businesses, 3% to service-disabled veteran-owned businesses, 3% to HUBZone businesses, and 5% to 8(a) firms.
That translates to real money: over $150 billion in federal set-aside contracts annually, before you count state, county, and city procurement. The businesses that pursue it systematically, getting registered, getting certified, and showing up consistently, win contracts.
The median first government contract for a small business is $85,000–$150,000. Many small businesses grow to seven figures entirely through government contracting within 3–5 years of their first award.
Step-by-Step: How to Get Government Contracts
The System for Award Management (SAM.gov) is the mandatory federal database for businesses eligible to receive contracts, grants, and loans. You cannot receive a federal payment without an active SAM registration, no exceptions. Registration is free and takes 1–3 weeks to process (sometimes longer if there are issues with your submitted documents).
Before registering, make sure you have: your EIN (Employer Identification Number), your Unique Entity ID (UEI, assigned during registration), your NAICS codes, your banking information for Electronic Funds Transfer (EFT), and a notarized letter if required by your entity type. You must renew your SAM registration every 12 months.
Certifications are the single biggest competitive lever for small businesses in government contracting. Certified businesses compete only against other certified businesses, not against Lockheed Martin, Booz Allen Hamilton, or any other large contractor. The major federal certifications are:
- 8(a) Business Development Program, for socially and economically disadvantaged owners; unlocks sole-source contracts up to $4.5M for services and $7M for manufacturing
- HUBZone Certification, for businesses in Historically Underutilized Business Zones; provides a 10% price evaluation preference
- WOSB / EDWOSB, for women-owned small businesses in 600+ NAICS industries
- SDVOSB / VOSB, for service-disabled and veteran-owned small businesses; strong VA procurement set-asides
State and local programs, DBE, MBE, WBE, SBE, unlock separate state and local set-asides in addition to federal opportunities.
Every federal contract opportunity is assigned a NAICS (North American Industry Classification System) code that describes the type of work being procured. Contracting officers use NAICS codes to determine set-aside eligibility, the size standards vary by code. You need to know which NAICS codes cover your work, and you should claim all that legitimately apply in your SAM registration.
You can look up NAICS codes at the Census Bureau's NAICS search tool. Pick primary and secondary codes. Your primary code determines your size standard eligibility for set-asides.
All federal opportunities above $25,000 must be posted on SAM.gov. Search by NAICS code, agency, set-aside type, and dollar threshold. Set up saved searches and email alerts so you see new solicitations as soon as they're posted.
Before chasing active solicitations, use USASpending.gov to research what agencies have historically bought. Find agencies that regularly contract for services like yours. Look up the contracting officers and small business liaisons for those agencies. This intelligence tells you where to focus your time, not all agencies are equally active buyers of your services.
Also look for Requests for Information (RFIs), these are market research notices that agencies issue before a formal solicitation. Responding to RFIs gets your business in front of contracting officers early and signals interest in the requirement.
Government contracting is relationship-driven. Contracting officers have discretion on how requirements are defined, who gets invited to bid, and whether set-asides are used. Small business liaisons at each agency are specifically tasked with helping small businesses get in front of program managers.
Attend small business industry days, agencies post these on SAM.gov. These are free events where agency staff meet potential vendors. Register for procurement conferences relevant to your industry. Schedule one-on-one meetings with small business offices. Consistent, professional relationship-building over 6–12 months dramatically increases your win rate.
Most solicitations specify exactly how proposals must be structured, page limits, sections, formatting requirements. Non-compliant proposals are rejected without evaluation, regardless of how good your work is. Read every solicitation requirement carefully before committing to bid.
A competitive proposal addresses the agency's specific stated needs, demonstrates relevant past performance, provides a realistic pricing structure, and highlights why your company specifically is the right choice. On set-asides, you still need to win on merit, certifications get you into the competition, but a strong proposal wins the work.
If you lose, request a debrief. Contracting officers are required to provide debriefs, and the feedback is invaluable for improving future bids.
Timeline: What to Expect
Be realistic about the timeline. Here's what a typical path looks like for a new government contractor:
- Months 1–2: SAM.gov registration, NAICS code selection, initial certification applications
- Months 3–5: Certifications processed and active, agency research, attending industry days
- Months 4–8: Responding to RFIs, building relationships, bidding on first contracts
- Months 6–18: First contract award (average range for new entrants)
- Year 2–3: Using first contract as past performance to win larger follow-on and new contracts
The fastest path to a first award is usually through subcontracting, teaming with a prime contractor to fulfill part of a contract, or through sole-source 8(a) awards, which have no competition and can move much faster than competitive solicitations.
Consider Subcontracting as an Entry Point
Large prime contractors are required to submit small business subcontracting plans for contracts above certain thresholds. Many are actively looking for qualified small business subcontractors, especially certified ones. Subcontracting is an excellent way to build past performance, understand how government contracting works, and get paid before you win your first prime contract.
You can find subcontracting opportunities through:
- The Dynamic Small Business Search (DSBS) on SAM.gov, prime contractors search here for subs
- SUBNet on the SBA website
- Directly contacting large prime contractors' small business liaison offices
GovLadder checks your eligibility across 80+ programs: 8(a), HUBZone, WOSB, SDVOSB, DBE, and more.
5 Common Mistakes Small Businesses Make
Skipping SAM registration or letting it lapse. Your SAM registration must be active at the time of contract award. If it expired last month, you cannot be awarded. Set a calendar reminder 60 days before your expiration date and renew early, processing can take 1–2 weeks.
Bidding on everything instead of targeting strategically. Writing government proposals is time-intensive. New contractors often spread too thin across dozens of proposals and win nothing. Identify 3–5 agencies that are active buyers of your specific services and build relationships there first.
Not getting certified before bidding. Many small businesses spend years on open competitions, where they compete against large contractors, before realizing they qualify for set-asides. Get certified first. The application takes weeks; set-aside access lasts for years.
Ignoring past performance requirements. Most solicitations ask for 3–5 examples of similar past work. If you don't have direct federal past performance, document relevant commercial contracts in detail. Subcontracting experience also counts. Without credible past performance, proposals rarely win.
Underpricing to win. Government cost accounting requirements mean contracts that appear profitable can become money-losers when indirect costs (overhead, G&A, fringe) are properly accounted for. Understand your fully-loaded cost structure before pricing any proposal.
How GovLadder Helps
The certification and compliance side of government contracting is where most small businesses lose time and momentum. GovLadder automates the eligibility check across 80+ programs, tracks your certification status and renewal dates, and walks you through each application step-by-step, so you can focus on building the agency relationships and writing the proposals that win contracts.
Check your certification eligibility free →
Frequently Asked Questions
Getting a first government contract typically takes 6–18 months of preparation and bidding. The biggest barriers are SAM registration, getting the right certifications, and learning how to write a compliant proposal. Set-aside contracts for certified businesses reduce competition significantly, instead of competing against large defense contractors, you compete only against other certified small businesses.
There is no single "government contracting license." You need an active SAM.gov registration (free), a UEI number (assigned during SAM registration), and any industry-specific licenses your work requires, e.g., a contractor's license for construction work. Certifications like 8(a) or WOSB are optional but dramatically improve your chances.
Micro-purchases (under $10,000) and simplified acquisitions (under $250,000 for small businesses) have the least paperwork and fastest award timelines. These are common entry points. Set-aside contracts in your NAICS code, especially WOSB or SDVOSB set-asides, also have significantly less competition than full-and-open competitions.
Contract values range from a few thousand dollars to hundreds of millions. The median small business set-aside contract is $85,000–$150,000. Sole-source 8(a) contracts can be awarded up to $4.5M for services and $7M for manufacturing without competition. The federal government spent over $700 billion on contracts in FY2024, with over $150 billion going to small businesses.
Yes. Register on SAM.gov as soon as your business is formed. Get certifications like WOSB, SDVOSB, or HUBZone if you qualify. Start with smaller contracts (under $250K) where past performance requirements are lighter. Consider subcontracting to a prime contractor to build experience and establish past performance before bidding on prime contracts.
SAM.gov (System for Award Management) is the official federal database of businesses eligible to receive federal contracts, grants, and loans. Registration is mandatory, you cannot receive a federal contract without an active SAM registration. Registration is free and must be renewed annually. Processing typically takes 1–3 weeks.