The U.S. government awards hundreds of billions of dollars in federal contracts each year, and a portion often goes to small businesses. In 2023, the federal government awarded $178 billion in federal contracting opportunities to small businesses. Let’s look at the steps you can take to prepare your business to bid on a government contract.
[Read more: How to Register Your Business With the Federal Government]
Assess your business readiness
The first step is to ensure your business is ready to bid on a federal contract. According to the Small Business Administration (SBA), the government favors working with established businesses with a track record of delivering goods and services on time and within budget.
One way to demonstrate a strong track record is through subcontracting. Businesses that have previously worked on federal contracts as subcontractors tend to have more success getting other government contracts. Networking in the federal contracting community can also help.
However, landing government contracts can be a time-consuming and expensive process. The SBS estimates that some businesses spend between $80,000 and $130,000 to earn their first contract. And it could take up to two years to see a return on your investment.
Find your NAICS code and business size
Government contracts will ask that you submit your North American Industry Classification System (NAICS) code as part of your application. This code is used by the federal government to classify businesses for statistical purposes related to the U.S. business economy.
The NAICS Association website offers a free search tool that can help you determine which NAICS codes apply to your business. Codes are categorized by what your business offers, and it can take some work to find the right code for your business. Some entrepreneurs prefer using the U.S. Census Bureau code lookup tool to find the best code.
Once you have your code, check the SBA website to determine the small business size standard that applies to your specific NAICS code. Each industry has different standards for what qualifies as “small.” This standard will help you determine which contracts to bid on, as some contracts are only open to small businesses by the NAICS code definition.
Bidding on government contracts can be complex since the government has a strict process for vetting its contractors.
Begin bidding on federal contracts
Once you’ve accessed your business’s readiness and obtained your NAICS code, you’re ready to start bidding on federal contracts. Here are some of the best places to find these opportunities:
- SAM.gov: This is the official database of federal contracting opportunities over $25,000, and you must register in SAM in order to participate in government contracting. With so many contracts listed in the directory, it can be tricky to find what you need. But overall, SAM is the best resource for finding and bidding on government contracts.
- The DSBS: The Dynamic Small Business Search (DSBS) allows contractors and government agencies to search for small businesses that can meet their procurement needs. Getting listed on the DSBS can help prime contractors find your small business.
- The GSA: The General Services Administration (GSA) offers a contracting program through its Multiple Award Schedule (MAS), which allows companies to sell products and services to government agencies.
- SBA SubNet: The SBA’s Subcontracting Network System (SubNet) is a database of subcontracting opportunities where a large enterprise looks to partner with a small business on a government contract. This could be a good option if you’ve never worked on a government contract before and want an experienced enterprise to show you the ropes.
Common mistakes in federal contract bids
Bidding on government contracts can be complex since the government has a strict process for vetting its contractors. Here are the biggest mistakes to avoid during the bidding process:
- Bidding on the wrong contracts: Bidding on contracts your business isn’t qualified to handle will damage your reputation. Anytime you’re bidding on a contract, you should think about whether you have the time and resources to deliver on that project.
- Bidding too high or too low: If you bid too high on a contract, you’ll automatically disqualify your business from consideration. But by bidding too low, you risk losing credibility with that agency.
- Submitting a weak proposal: Submitting a proposal that’s poorly written or full of errors will likely lead to an immediate rejection. And if your proposal is vague and lacks specifics, it may look like you don’t have the skills to meet the project requirements.
- Missing the submission deadline: It’s important to pay attention to the submission deadline for every contract you bid on. Submitting your proposal late will automatically disqualify your business from consideration.
How to increase your chances of winning a federal contract
Fortunately, there are steps you can take to increase your business’s odds of winning a federal contract. The best thing you can do is to focus on building relationships with contracting officers. Every time you submit a proposal, make sure to follow up and ask for feedback so you can start building a relationship with those individuals. You can also network with contracting officers at government-sponsored events and trade shows.
You should also customize each proposal so it meets the specific needs of each contracting agency. Doing this shows you have a clear understanding of the project and have thought carefully about how your business can fulfill it. Bid an amount that’s competitive but realistic, given the scope of the project.
Finally, it’s a good idea to partner with other individuals who have experience bidding on government contracts. For example, hiring an experienced proposal writer can make it easier to navigate this process and submit bids that really stand out.
Emily Heaslip also contributed to this article.
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