You've heard it a hundred times. You've probably said it yourself.
"I can't win federal contracts because I don't have past performance. And I can't get past performance without winning federal contracts."
It sounds like an unbreakable loop. A catch-22 that keeps new businesses locked out of a $700 billion federal marketplace while the same established contractors win the same contracts year after year.
Here's what nobody's telling you: that narrative is wrong.
Not completely wrong. Past performance matters. Agencies do evaluate it. But the story most new contractors believe, the one where they're automatically disqualified for being new, misunderstands how federal procurement actually works.
Let's break down what past performance really means, when it's actually required, and the multiple paths forward that new contractors use every day to build federal experience.
What "Past Performance" Actually Means in Federal Contracting
Past performance isn't a simple yes-or-no checkbox. It's an evaluation of how well you've performed on previous contracts, and agencies consider multiple factors when they assess it.
Under FAR 15.305(a)(2), when agencies evaluate past performance, they look at the currency and relevance of the information, the source of the information, the context of the data, and general trends in your performance. Translation: they're not just asking "have you done federal work?" They're asking "have you done work similar to this, recently, and did you do it well?"
Relevance matters more than source. A commercial contract demonstrating the exact capabilities an agency needs can be more valuable than a federal contract in an unrelated field. A construction company that's built 50 commercial warehouses has relevant experience for a federal warehouse project, even without prior federal contracts.
Recent performance carries more weight. Work you completed last year matters more than work you completed five years ago. Your company's current capabilities and track record take priority over historical performance that may not reflect your present operations.
Trends matter. A company with improving performance over time looks better than one with declining metrics. Agencies want to see that you learn from experience and get better.
The Neutral Rating: Your Legal Protection as a New Contractor
Here's the provision most new contractors don't know exists.
FAR 15.305(a)(2)(iv) specifically addresses companies without past performance: "In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance."
Read that again. May not be evaluated favorably or unfavorably. The regulation explicitly prohibits agencies from penalizing you for being new.
What this means practically: When you submit a proposal without relevant past performance, you don't get a zero. You don't get disqualified. You receive a "neutral" rating on past performance that neither helps nor hurts your competitive position on that evaluation factor.
How this plays out in evaluations: If past performance is weighted at 20% of the evaluation, a new contractor with a neutral rating isn't losing 20% of their score. They're evaluated on other factors (technical approach, price, management capability) while past performance becomes a non-factor in their evaluation.
Where this really matters: In Lowest Price Technically Acceptable (LPTA) procurements, if your technical proposal is acceptable and your price is competitive, a neutral past performance rating doesn't knock you out. You can still win based on being the lowest-priced technically acceptable offer.
The Government Accountability Office (GAO) has repeatedly upheld this protection. In multiple bid protests, GAO has found that evaluation schemes penalizing offerors for neutral past performance ratings violate federal procurement regulations. Agencies cannot exclude you from the competitive range solely because you lack past performance.
When Past Performance Isn't Even Required
Past performance evaluation doesn't apply to every federal procurement. Understanding when it's required versus when it's not helps you target opportunities where your lack of history matters less.
Below the Simplified Acquisition Threshold (SAT):
For contracts under the simplified acquisition threshold (currently $350,000 as of October 1, 2025), agencies use streamlined procedures. Past performance evaluation requirements are relaxed. These contracts represent a substantial portion of federal buying, and they're specifically designed to reduce barriers for small businesses and new entrants.
Micro-purchases:
For purchases under the micro-purchase threshold (currently $15,000 as of October 1, 2025), agencies can buy directly from vendors without competitive bidding. No past performance evaluation required. Government purchase card holders can simply buy what they need from qualified vendors.
Commercial item acquisitions:
When agencies buy commercial products or services, simplified procedures often apply. The focus shifts more toward price and delivery capability than extensive past performance history.
Sealed bidding procurements:
In sealed bid (IFB) procurements, award goes to the lowest responsive, responsible bidder. Past performance isn't an evaluation factor in the same way it is in negotiated procurements. Responsibility determination still happens, but it's different from competitive past performance evaluation.
Commercial Experience Counts: You May Already Have Past Performance
Here's where many new-to-federal contractors underestimate themselves.
FAR 15.305(a)(2)(ii) explicitly authorizes agencies to consider "Federal, State, and local government and private" contracts when evaluating past performance. Your commercial work history isn't irrelevant. It may be exactly the relevant experience an agency needs.
What counts as relevant experience:
Work in the same industry or service area as the federal requirement. Contracts of similar size, scope, and complexity. Projects demonstrating the specific capabilities the agency is seeking. Performance for clients with high standards and accountability requirements.
How to present commercial experience effectively:
Document your commercial contracts with the same rigor you'd use for federal past performance. Include client references who can speak to your performance quality. Quantify results wherever possible: on-time delivery rates, quality metrics, customer satisfaction scores. Demonstrate that your commercial work required the same capabilities the federal contract demands.
The key question agencies ask: Can this contractor perform this work successfully based on what they've done before? If your commercial experience demonstrates yes, that's relevant past performance, even without a single federal contract.
Building Past Performance: Five Strategic Paths Forward
If you want federal past performance to strengthen future bids, here are the proven paths contractors use to build their record.
Path 1: Subcontracting Under Prime Contractors
Large federal contractors are required to subcontract work to small businesses. Under FAR 19.702, prime contractors receiving contracts over certain thresholds must develop small business subcontracting plans. This creates opportunities for new contractors to perform federal work and build documented experience.
Recent regulations have enhanced subcontractor past performance recognition. Small business first-tier subcontractors can now request past performance ratings from prime contractors, creating documented federal performance history you can use in future prime contract bids.
How to pursue subcontracting: Search the SBA's SubNet database for prime contractors seeking small business subcontractors. Identify large contract awards in your industry and approach the prime contractors. Build relationships with established federal contractors in your field. Perform excellently when you get opportunities, because this experience becomes your portfolio.
Path 2: Start Below the Simplified Acquisition Threshold
Contracts under $350,000 face streamlined evaluation procedures. Agencies must set aside contracts in this range for small businesses. Competition may be less intense, and past performance requirements are often reduced or simplified.
Strategy: Target opportunities in the $25,000 to $350,000 range where your commercial experience and competitive pricing can overcome any past performance concerns. Each successful contract becomes documented federal experience for larger future opportunities.
Path 3: Pursue Micro-Purchases
The micro-purchase threshold ($15,000) represents the simplest entry point. Government purchase card holders can buy directly from vendors without extensive evaluation. If you can get on agency vendor lists and be responsive to small requirements, you build relationships and documented performance.
Path 4: Mentor-Protégé Program
The SBA's Mentor-Protégé Program allows small businesses to partner with experienced federal contractors. When you form a joint venture with your mentor, the joint venture can use the mentor's past performance to compete for contracts.
The strategic advantage: As a protégé, agencies cannot require you to individually meet the same past performance criteria as other offerors. The joint venture demonstrates capability through the mentor's experience while you gain hands-on federal contracting experience. Your performance on joint venture contracts becomes past performance you can eventually use independently.
Recent clarification: SBA's 2025 regulations specify that if an agency requires past performance from a protégé partner, it must be at a reduced level compared to what's required of other offerors. You're not expected to match established contractors' history immediately.
Path 5: GSA Schedule Contract
A GSA Schedule isn't a federal contract award in the traditional sense, but it's a federally recognized qualification demonstrating your capability to serve government buyers. GSA evaluates your financial stability, past performance (including commercial), and ability to perform.
Once you hold a GSA Schedule, agencies can purchase from you using streamlined ordering procedures. Each GSA order becomes documented federal performance. Your Schedule Contract itself demonstrates that GSA has vetted your company's capability.
What Evaluators Actually Look For
Understanding how evaluators think about past performance helps you present whatever experience you have more effectively.
They're assessing risk, not just checking boxes. Past performance evaluation is fundamentally about predicting future performance. Evaluators want confidence that you'll deliver successfully. Any evidence that reduces their perceived risk improves your position.
Quality matters more than quantity. Three excellent past performance references demonstrating relevant capabilities beat ten mediocre references in unrelated work. Focus on presenting your strongest, most relevant experience rather than padding your proposal with marginal examples.
How you handled problems matters. Evaluators look at how contractors responded when things went wrong. Documented corrective actions and recovery from challenges can actually strengthen your past performance narrative. It shows you're capable of solving problems, not just performing when everything goes smoothly.
References matter. Your past performance is only as strong as the references who can verify it. Choose references who will enthusiastically speak to your capabilities. Brief them on the specific contract you're pursuing so they can address relevant points.
How to Document and Present Limited Experience
Even with limited federal experience, presentation matters. Here's how to maximize what you have.
Create detailed project descriptions. For every relevant contract (commercial or government), document: the scope and complexity, your specific role and responsibilities, measurable performance outcomes, challenges encountered and how you resolved them, and client contact information for reference.
Quantify everything possible. Instead of "completed project successfully," provide "delivered 98% of milestones on schedule with zero quality defects." Numbers give evaluators something concrete to assess.
Address relevance directly. Don't make evaluators guess why your experience matters. Explicitly connect your past work to the requirements of the current opportunity. "Our commercial warehouse construction projects required the same structural engineering capabilities, safety protocols, and project management discipline specified in this solicitation."
Acknowledge your status strategically. In some situations, directly acknowledging that you're a newer contractor pursuing federal work can be effective. Frame it as: "While [Company] is newer to federal contracting, our team brings [X] years of combined commercial experience in [relevant area], demonstrated through [specific accomplishments]."
Focus proposal strength elsewhere. If past performance isn't your strongest evaluation factor, make sure your technical approach and pricing are exceptional. Evaluators using a neutral past performance rating will weight other factors more heavily in their decision.
The Real Competitive Landscape
Here's the truth about competing without extensive past performance: it's harder, but it's done successfully every day.
New contractors win federal contracts. Small businesses without long federal track records win set-aside competitions. Companies leveraging commercial experience successfully compete against established federal contractors.
The contractors who succeed understand several key principles. They target opportunities where their experience is relevant, even if it's commercial. They pursue entry points designed for new market participants. They build relationships through subcontracting before pursuing prime contracts. They present whatever experience they have with maximum effectiveness. They compete on technical excellence and pricing when past performance isn't their strength.
The contractors who fail usually do so because they never tried. They accepted the "catch-22" narrative and decided federal contracting wasn't accessible. They waited for permission that was never required.
What This Means for Your Federal Strategy
Past performance is one factor in federal contracting success. It's not the only factor, and it's specifically designed to not disqualify new entrants.
If you have commercial experience: Document it thoroughly. Present it as the relevant past performance it may be. Target opportunities where your commercial work demonstrates exactly the capabilities agencies need.
If you're truly starting fresh: Begin building federal experience through subcontracting,
micro-purchases, and simplified acquisition opportunities. Consider the Mentor-Protégé Program. Each small success builds toward larger opportunities.
If you've been avoiding federal contracting because of past performance concerns: Reconsider. The barrier you believe exists is often smaller than you think, and multiple paths exist to address it.
USFCR has helped over 300,000 businesses position for federal contracting success. Our clients have won over $1.8 billion in federal contracts, including many businesses that started without federal past performance and built successful government practices from the ground up.
Speak to a USFCR Registration & Contracting Specialist →
Frequently Asked Questions
Is past performance always required to win federal contracts?
No. Past performance evaluation requirements vary based on contract type and dollar value. Contracts below the simplified acquisition threshold ($350,000) have streamlined requirements. Micro-purchases (under $15,000) typically require no formal past performance evaluation. Even for larger contracts, FAR requires agencies to give new contractors a "neutral" rating rather than penalizing them for lack of history.
Can my commercial experience count as past performance for federal contracts?
Yes. FAR 15.305(a)(2)(ii) explicitly authorizes agencies to consider Federal, State, local government, and private contracts when evaluating past performance. If your commercial work demonstrates relevant capabilities for the federal requirement, it can serve as meaningful past performance evidence.
What's a "neutral" past performance rating and how does it affect my competitiveness?
Under FAR 15.305(a)(2)(iv), contractors without relevant past performance receive a neutral rating, meaning they cannot be evaluated favorably or unfavorably on past performance. This keeps you in the competition while being evaluated on other factors like technical approach and price. In LPTA procurements, a neutral rating with a technically acceptable proposal and competitive price can still win.
How can I build federal past performance if I don't have any federal contracts?
Several paths exist: subcontracting under prime contractors to perform federal work, pursuing contracts below the simplified acquisition threshold where requirements are streamlined, targeting micro-purchase opportunities, joining the SBA's Mentor-Protégé Program to leverage a mentor's past performance in joint ventures, or obtaining a GSA Schedule Contract and building performance through GSA orders.
How long does it take to build meaningful federal past performance?
Timeline varies based on strategy and industry. Subcontracting can generate documented performance within months. A successful contract below the SAT becomes usable past performance immediately upon completion. Most contractors building federal presence through deliberate strategy develop meaningful past performance portfolios within 1-3 years.
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