Are Startups Missing Out By Not Bidding On Federal Contracts?

By Kayleigh Alexandra

It isn’t easy to acquire a government contract, especially if your business is just getting started, but it isn’t impossible, and the benefits can be substantial.

If it’s an option you’d like to pursue in the future, make an effort to begin preparing your organizational structure to meet federal requirements, and seek out subcontracting work to help you establish the connections that could help you in the right direction.”

If you run a startup, the thought might never have crossed your mind to seek out contract work with the government. After all, it isn’t the conventional way forward, and you might well figure that federal contracts will invariably go to companies with well-established government links.

But are you missing out by not making an effort to seek out federal contract work? Let’s go through some reasons why you might want to give it more consideration.

You can’t get what you don’t apply for

The notion that government contracts will always go to giant corporations is something of a self-fulfilling prophecy, as it spurs small enterprises to hold back from applying for them. Despite this impression, it’s generally quite viable, especially since the Federal Government sets a goal every fiscal year for contracting a percentage of its work to small businesses.

In 2020, the Federal Government awarded 26.01 percent or  $145.7 billion in contract work to small businesses, exceeding the yearly goal of 23%  and at a $13 billion increase from the previous fiscal year.

Given this ongoing commitment to diversifying the awarding of government work, now is as good a time as any to pitch for available contracts. If you succeed in getting one, you may be able to parlay it into an ongoing working relationship.

The field is becoming more open

The main difficulties with landing federal contracts are not technical but procedural and organizational, and the problem with high-level bureaucracy is that it’s incredibly difficult to dislodge. The flexibility in approach, then, must stem from the applicants.

While this is undoubtedly a frustrating notion to small businesses everywhere, consider that it also wards off a lot of possible competition, and that the benefits of securing federal work are extensive.

Another thing worth noting for programs set aside for small business is that medium and large businesses are both precluded from assuming prime roles and limited in their participation as subcontractors. The government’s mandate for a small business set-aside contract caps participation by firms other than the small business prime awardee at 49% of the project effort (factoring in work scope, cost, and time). While this does mean that a small business must demonstrate (during the proposal and site survey phases) the ability to carry out 51% of the work internally to win a contract, it does ensure that a majority of the work genuinely goes to small business workers.

The advantages of government work

Even disregarding the intimidating process involved in securing government work, a lot of startups may well think that it isn’t the right fit for them, particularly given the common perception that federal contracts are dull, expensive, or overly complicated. Brand image is very important in the social media age and pitching to popular brands might feel like a better option.

The big advantage to working on government contracts is that it lends your company a great deal of credibility and cache. People understand that it’s a difficult marketplace to operate in, and will view your ability to do so as an indication of your professionalism.

Here are some more advantages:

●     Scheduling Consistency

○     A lot of contract work extends to substantial periods of time, meaning you plan your financial year around it and allocate your resources efficiently.

●     Industry Networking

○     You’ll have the chance to meet people in very important positions in your industry, providing you with the opportunity to network and establish useful contacts.

●     Financial Certainty

○     Government payments will always be issued on time and in accordance with the agreed terms. You will never face the prospect of chasing them for payment.

Meeting the requirements for contractors

There are specific requirements that prospective contract work suppliers must meet in order to be granted consideration, and meeting those requirements is the most challenging part of the process (with the possible exception of formulating the pitch).

Typically, you’ll need to ensure that your business system meets government standards for job cost accounting (each job is unique and must be costed accurately), be fully prepared to deal with thorough audit requests, and have the capacity to produce project proposals of a sufficiently-high quality and that your business system meets government standards

You’ll also want to make sure your company has adequate insurance. Basic likely won’t cut it— you should pursue a suitable custom policy that covers everything needed, such as Defense Base Act insurance if you use overseas employees. The government is very risk-averse in awarding contracts and you won’t stand a chance if your proposition seems a little rocky.

To navigate those murky waters, it’s generally best to consult a specialist. This website offers a great deal of information for free, but there are also paid consultants you can hire to help get your business ready to be viable for contract bidding. Here are a couple you may wish to consider:

●     :Judy Bradt LinkedIn

●     Mark Amtower LinkedIn

Working with a prime contractor

Given the complexity and expense involved in becoming a government contractor, it’s often worth considering the option of working as a subcontractor for a prime contractor, which is a business that has been granted full control of a government contract, allowing it to delegate parts of the work should it wish to.

If your startup isn’t ready to battle with much larger companies for huge contracts, subcontracting work could be a great first step to take. Most of the advantages we covered earlier still apply, as well, so it gives you the chance to make some influential contacts.

In summary

It isn’t easy to acquire a government contract, especially if your business is just getting started, but it isn’t impossible, and the benefits can be substantial.

If it’s an option you’d like to pursue in the future, make an effort to begin preparing your organizational structure to meet federal requirements, and seek out subcontracting work to help you establish the connections that could help you in the right direction.”

ABOUT THE AUTHOR:

Kayleigh Alexandra is a content writer for Micro Startups — a site dedicated to giving through growth hacking. Visit the blog for your latest dose of startup, entrepreneur, and charity insights from top experts around the globe. Follow us on Twitter @getmicrostarted.

Your Federal Government Contracting Past Performance Record

FAR 42.1501

“Relevant information for future source selection purposes, regarding a contractor’s actions under previously awarded contracts. It includes, for example, the contractor’s record of conforming to contract requirements and to standards of good workmanship; the contractor’s record of forecasting and controlling costs; the contractor’s adherence to contract schedules, including the administrative aspects of performance; the contractor’s history of reasonable and cooperative behavior and commitment to customer satisfaction; and generally, the contractor’s business-like concern for the interest of the customer.” 

As a small enterprise enters the government contracting venue, the phrase “Past Performance” almost immediately comes to the fore. When examining government Requests for Proposal (RFP’s) a section of the award criteria is almost always specified for past performance ratings on previous similar government work.

We have discussed meeting the initial past performance challenge for companies new to government contracting in the following discussion:

The Small Business Government Contracting Past Performance Challenge

The primary purpose of past performance evaluations is to ensure that accurate data on contractor performance is current and available for use in source selections. A past performance evaluation report provides a record of a contractor’s performance, both positive and negative, on a given contract during a specified period of time.
This article will focus on accessing your past performance record, and explain how the government rates a contractor’s past performance:

ACCESS

The following is an extract from the Contractor Past Performance Information Retrieval Web Site on obtaining information on your company information there:  Contractor Past Performance Assessment Reporting System

                                               CLICK IMAGE TO ENLARGE 

PAST PERFORMANCE REVIEW CONTENTS BY KEY ASSESSMENT ELEMENT

Below are the key assessment elements required for contractor reviews of major procurement sectors in federal government contracting. 

Assessment Elements for the Systems Sector

Technical (Quality of Product) —This element is comprised of an overall rating and six sub elements.

Activity critical to successfully complying with contract requirements must be assessed within one or more of these sub-elements. The overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's technical performance or progress toward meeting requirements. It is not a predetermined roll-up of the sub-element assessments.

Product Performance—Assess the achieved product performance relative to performance
parameters required by the contract.

Systems Engineering—Assess the contractor's effort to transform operational needs and
requirements into an integrated system design solution.

Software Engineering—Assess the contractor's success in meeting contract requirements for software development, modification, or maintenance. Results from Software Capability Evaluations (SCEs) (using the Software Engineering Institute {SEI's} Capability Maturity Model {CMM} as a means of measurement), Software Development Capability Evaluations (SDCEs), or similar software assessments may be used as a source of information to support this evaluation.

Logistic Support/Sustainment—Assess the success of the contractor's performance in accomplishing logistics planning.

Product Assurance—Assess how successfully the contractor meets program quality objectives (e.g., producibility, reliability, maintainability, inspectability, testability, system safety) and controls the overall manufacturing process.

Other Technical Performance—Assess all the other technical activity critical to successful contract performance. Identify any additional assessment aspects that are unique to the contract or that cannot be captured in another sub-element
.
SCHEDULE—Assess the timeliness of the contractor against the completion of the contract, task orders, milestones, delivery schedules, administrative requirements, etc.

COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.

 Management—This element is comprised of an overall rating and three sub-elements. Activity critical to successfully executing the contract must be assessed within one or more of these sub-elements. This overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's performance in managing the contracted effort. It is not a predetermined roll-up of the sub-element assessments.

 Management Responsiveness—Assess the timeliness, completeness, and quality of problem identification, corrective action plans, proposal submittals (especially responses to change orders, engineering change proposals, or other undefinitized contract actions), the contractor's history of reasonable and cooperative behavior, effective business relations, and customer satisfaction.

Subcontract Management—Assess the contractor's success with timely award and management of subcontracts, including whether the contractor met or exceeded small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.

Program Management and Other Management—Assess the extent to which the contractor discharges its responsibility for integration and coordination of all activity needed to execute the contract, identifies and applies resources required to meet schedule requirements, assigns responsibility for tasks/actions required by contract, and communicates appropriate information to affected program elements in a timely manner. Assess the contractor's risk management practices, especially the ability to identify risks and formulate and implement risk mitigation plans. If applicable, identify and assess any other areas that are unique to the contract or that cannot be captured elsewhere under the Management element.
Assessment Elements for the Services, Information Technology, and Operations Support Sectors

QUALITY OF PRODUCT OR SERVICE—Assess the contractor's conformance to contract requirements, specifications, quality of software product and development, and standards of good workmanship (e.g., commonly accepted technical, professional, environmental, or safety and health standards).

SCHEDULE—Assess the contractor’s timeliness against the completion of the contract, task orders, milestones, delivery schedules, and administrative requirements (e.g., efforts that contribute to or effect the schedule variance).

COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.

 BUSINESS RELATIONS—Assess the integration and coordination of all activity needed to execute the contract, specifically the timeliness, completeness, and quality of problem identification, corrective action plans, proposal submittals, the contractor's history of reasonable and cooperative behavior, customer satisfaction, timely award and management of subcontracts, and whether the contractor met small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.

MANAGEMENT OF KEY PERSONNEL (for Services and Information Technology business sectors only)—Assess the contractor's performance in selecting, retaining, supporting, and replacing—when necessary—key personnel.

SUMMARY

Regular review of your past performance information system data is vital to your future marketing efforts. Please feel free to download the Guide to the Past Performance Retrieval System in the second, vertical Box Net "References" cube in the right margin of this site.

Why Social Network To Promote Your Small Business?

                                                              

INTRODUCTION:

Personal, professional and business branding is occurring regularly, whether or not we are aware of it.

From our web site presence to our postings on the sites of others, from our credit ratings to our cell phone records and application navigation, we are tracking others and being tracked ourselves.
 
Deciding to become active in social networking is really a matter of managing personal, professional and business images/brands or having them manage us. 

THE INTEGRATED SOCIAL NETWORK

Networking is a vital tool in achieving an image/brand. Establish a network like a wheel. The hub is core content (web site, blog, books, articles, useful materials). The spokes leading from the hub are the tools to network content that is linked to the hub.
 
Contacts are the engines that power the wheel.

Content is the fuel that feeds the social networking contacts and powers the wheel. 

As the wheel turns, the quality of the networking improves with feedback and the wheel climbs the optimization hill of the major search engines (SEO).
 
Limiting factors are the quality of the core content and knowledge/persistence in networking.

CONTRIBUTE TO OTHERS

Blog, post and contribute to Q&A features on several sites:

1. It allows insight in solving the difficulties of others; always a satisfying achievement, dovetailing with professional endeavors and creating a positive image.

2. The manner in which a response is worded conveys values, expression, opinion, and insight to others who may wish to team, counter with a disagreement or pass on a reference to others; all healthy forms of communication.

3. Ratings features allow evaluation of responses by a large peer group.

4. With the growth of social networking international participation increasing dramatically, it provides insights into perspectives from other nations and cultures; a valuable input in the wired global economy these days.

5. The historical record of questions and answers, posting content and feedback is searched regularly by a large, world-wide community and draws others to profiles and web sites long after the initial dialogue has occurred.

MAKE PRUDENT JUDGEMENTS

Evaluate other net-workers for consistency. Value the participants who realize these are huge and open forums and who keep an open mind to input.
 
Do not value narrow minded use of these features for exclusively personal or business gain, control freak attitudes, and those who delete replies or answers because they disagree with the responses they are getting or are not getting what they perceive to be desirable results. 

THE END PRODUCT:

A brand, an image and valued content, carefully cultivated,  exchanged and viewed regularly with others and communicated for success. 

Please see the below link for an example of how the above principles are applied.

Integrated Utilities Linked as a Composite on "About Me"

Appreciating SCORE & MicroMentor During National Mentoring Month

During the January 2026 National Mentoring Month, my thanks to the SCORE and MicroMentor organization teams with whom I have worked for 20 Years.

Small business volunteering has kept me active in retirement, in touch with my profession and engaged in a continuous learning mode. The SCORE and MicroMentor platforms have been my “Windows On The World” in pursuing those objectives.

I believe we are growing entrepreneurs more than growing monumentally successful enterprises. Each, in turn, will grow a unique form of business using their efforts, not ours. We do not do it for them. They do it for themselves. 

Hopefully our suggestions help. I have been pleased again and again when a small business owner took my basic suggestions, put their own unique twists on them and developed a thriving business. That is the ultimate reward.

Thank you, SCORE and MicroMentor for supporting that type of success.

Ken Larson

SCORE        MICROMENTOR

Managing Teaming Relationship Risk in Small Business Federal Government Contracting

Most small businesses, particularly those selling services, will encounter the need to team with industry partners in small business federal government contracting. 

As a prime contractor, a supplier or a subcontractor, the need to carefully develop stable relationships is a prime driver for success in the government contracting venue. 

Small Business Teaming

Managing Subcontractors And Independents As A Small Business Prime Contractor

HARD FACTS ABOUT THE ENVIRONMENT

Be prepared to encounter challenges in the areas discussed below. They are presented because they occur enough that you should be aware of them.  It is astute to manage the associated risks.

Initial challenges for the small business in government contracting are not so much in the areas of barriers as they are in lack knowledge (which I concede is a form of barrier but one that can be dealt with). In short, be aware of what you do not know you do not know.

Lack of knowledge goes all the way from local and state employment law to federal  contracting rules. Enough small businesses have succeeded in the venue that it has proven small enterprise education, with trained personnel in government and prime contractors to do so, greatly enhances success.

Contracting officer's, either government or corporate, and their staffs are often not equipped in the skills necessary to guide the small business. 

Large business and government agencies often inadvertently take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows. This can lead directly to abusive practices.

A prime example of an abusive practice is large corporations signing teaming agreements during proposal efforts and then not awarding subcontracts to the small enterprise as agreed, keeping the majority of work for themselves.  They then recruit the help away the small enterprise.

Agencies often take extended time frames to put in place prime contracts after source selection and award to a small business. They do not realize that a small enterprise does not have deep pockets and must have cash flow to sustain a new program with new employees.

Funding levels on programs are often insufficiently committed and the small enterprise is not adequately informed about limitation of funds and funding exposure

Managing Government Contract Limitation of Funds and Funding Exposure

One of the most common traumatic situations is newly established enterprises having no job cost government compliant business system in place. The industry partner(s) or the government have assumed that capability will materialize and when it does not the government audits the bills, finds no backup and shuts down the cash flow until the system is fixed. At that point the business can fail. The company should have become educated much earlier in the process about these requirements.

What Small Business Should Know About FAR and CAS

The number of poorly performing SETA contractors in roles not suited to them in government contracting officer support is increasing in federal agencies. These firms need to be vetted and better managed for the omissions and commissions they contribute to the above. 

Not every small enterprise can get into a class on government contracting at George Washington University, The Defense Acquisition University or send their personnel to lengthy and costly seminars conducted by organizations like the National Contract Management Association. These are all great education sources but do not come close to filling the complete requirement and cost time and money.

PROTECT INTELLECTUAL PROPERTY, RATES AND PERSONNEL

The nature of the government contracting venue is that you may very well find yourself teaming with a company on a major, long term project and competing against them on another project where the team makeup is different. It is therefore essential to protect your intellectual property, your rates and your personnel.

Practical Intellectual Property Management for Small Business Federal Government Contractors

VET PROSPECTIVE INDUSTRY PARTNERS CAREFULLY

Not every company that approaches you with a suggested teaming arrangement will be ethical, straight forward and honest. Vet them carefully through the Better Business Bureau, a Dunn and Bradstreet Report, references and searches on their prior business arrangements, contract awards, business activities, subsidiaries and history. 

How Crazy Subcontractors Can Kill Your Bid

ACQUIRE ADVISERS AND SPECIALIZED HELP WHEN YOU NEED IT

There are free or very low cost resources through local government organizations who can assist the small business in understanding the government contracting venue.

Small Business Administration (SBA)

SCORE - Free Small Business Advice

REMEMBER:

Be straight-forward and honest with your industry teaming partners.

Do not violate share arrangements, teaming agreements or non-disclosure agreements. Such violations are a death knell for your reputation in the business.

Do not become known as a resource raider by hiring away from other firms with whom you have teamed.

Give it your best shot as a prime or a sub but involve the government contracting officer if you must resolve industry teaming disputes that may damage your past performance record.

Exclusivity is the practical way to go on any given program. Team early and exclusively then give it your all and be a winner. Your reputation is key, ethics count and your customers as well as your industry are observing you.

Understanding The Federal Government Contract Format

The Federal Acquisition Regulation (FAR) 15-204-1 specifies a uniform contract format for federal government contracts. You have encountered this format during the RFP stage of your procurement since the government is required to utilize it in structuring the request for proposal (RFP), leaving blank those items, which are subject to negotiation such as final contract pricing. Your contract is divided into four parts, with various sections within each part. Prime contractors issue subcontracts flowing down terms and conditions, pricing and other topics in an identical format.

Like any other contractual document in the business world, the quality and content of this format may vary by agency and with the experience and knowledge of the contracting officer and the government administrative and technical support personnel preparing it or the prime contractor. It behooves your small business to examine the contents, research the appropriate sections of the FAR that may govern them and review them as commitments to which your organization can conform and perform before you sign your contract.

The following is a listing of the topics making up this format with a brief description of the contract parts and sections and some tips regarding each from a project management perspective.

PART I - THE SCHEDULE

SECTION A - SOLICITATION/CONTRACT FORM

Standard Form 33 or Optional Form 308 are the most common formats utilized by government agencies.  (click below image to enlarge)

These forms contain the following:

Name, Address, and Location of Issuing Activity, Including Room and Building.

Contract Number/Modification or Revision Number

Date

Request for Proposal (RFP) Number

Number of pages

Requisition or Other Purchase Author

Brief Description of Item or Service

Requirement for the offeror to provide its name and complete address, including street, city, county, state, and zip code, and electronic address (including facsimile address), if appropriate

Other Agency-unique data such as priority ratings, security classification and similar data

Signature blocks for the government and the contractor at contract

Section B - SUPPLIES OR SERVICES AND PRICES/COSTS

This is a listing by contract line item of the negotiated products or services and the prices for them in your contract. This section is very critical for billing purposes in your accounting system. Invoices to the government for supplies or services delivered must reference the items and all detail for the items contained in this section. Government requisition and appropriation data are contained in the contract line item detail and are carried throughout the government finance and accounting systems, to include the operations that make payment on your invoices.

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

Perhaps the most critical section of the contract in terms of technical performance, this section describes the work to be performed and references requirements for the end product, including product performance. A tight, thorough statement of work (SOW) is the key to a well-understood relationship with your COTR, who will approve your performance against the SOW and sign off on your billings and invoices based on said approval. The SOW contains the benchmarks for defining the baseline effort required for the current contract price. One of the highest risks in government contacting is performance outside the statement of work, either due to a very general and loose SOW or by taking direction for added scope from government representatives without getting a contact change order modifying the SOW and increasing the price of the contract.

SECTION D - PACKAGING AND MARKING

With the vast amount of procurement the U.S. Government performs and the many locals to which the government directs shipments, it is necessary to specifically establish specifications for packaging and identification of products. The government considers this information important enough to establish a separate contract section for it. Your company should closely examine and comply with the instructions therein.

SECTION E - INSPECTION AND ACCEPTANCE

This section identifies the government criteria for an acceptable product under your contract and the methodology that will be utilized by the government to perform inspection to insure the product quality. In many cases a specification will be called out. The place of delivery will also be specified.


SECTION F - DELIVERIES OR PERFORMANCE
A discrete schedule by contract line item will be contained in this section. Requirements for time, place and method of delivery or performance will be specified.

SECTION G - CONTRACT ADMINISTRATION DATA

This section will contain required accounting and appropriation data and any contract administration information or instructions other than those on the contract form. It will specify your payment address if it is different than your company street address.

SECTION H - SPECIAL CONTRACT REQUIREMENTS

Special contract requirements that are not included in Section I, Contract Clauses, or in other sections of the uniform contract format will be specified in this section.

PART II - CONTRACT CLAUSES

SECTION I - CONTRACT CLAUSES

This section includes the clauses required by law or by this part and any additional clauses if these clauses are not required in any other section of the uniform contract format. An index may be inserted if this section’s format is particularly complex. The index normally makes reference to FAR clauses, or FAR Agency Supplements. They may index  the FAR and FAR Agency Supplement web sites to which you should direct your attention, depending on the agency with whom you are doing business. The FAR Agency Supplements are intended to support the FAR by applying overall FAR guidance with specific agency details regarding implementation:

PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

SECTION J - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

This section lists the title, date, and number of pages for each attached document, exhibit, and other attachment. The government may include documents that clarify or further define the contract. A commonly attached item is the DD Form 1423, "Contract Data Requirements List", that specifies for all data deliverables the Data Item Descriptions (DID's) and their delivery schedules. Lists of government furnished property in support of contractor performance on the contract are contained in this section if such equipment is provided.

PART IV - REPRESENTATIONS AND INSTRUCTIONS

SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS

The federal government requires the contractor to certify to certain statements in bidding and performing government contracts. These signed documents become a part of your government contract when it is executed. Many of these "Certs and Reps", as they are commonly called, establish compliance with conflict of interest laws and establish the identity of the contractor by specifying information unique to the company such as NAICS Codes, CCR registration numbers, D&B Numbers, CAGE Codes and similar data. Minority-Owned Business and HUB Zone Business certification numbers are specified in this section, together with other small business self-certifications, such as Woman-owned, Veteran-Owned or Disabled-Veteran-Owned designations. Certain representations regarding sources for raw materials may also be required in Section K together with other agency-unique certifications such as facility and security officer information, security classification data and the like.

With the advent of internet use for record retention, the federal government now requires that contractors maintain certain standard certifications and representations at a government web site and update them annually for any changes:

System for Award Management

You should establish and maintain your registration,  certifications  and representations, update them whenever necessary and insure that signed, paper copies of them are included in all your proposals for new work and in your contracts to the government.