The biggest working capital difference is timing. The government is a reliable payer and owes interest on late invoices, but it generally pays after you perform the work and submit a proper invoice, which means you often need capital to cover costs before payment arrives. Commercial work varies more in payment reliability but is often more flexible on terms. Planning for that gap is the key to taking on government work without straining cash flow.
September is the busiest month in federal contracting because the fiscal year ends September 30, and agencies work to put the funding available to them to use before it expires. That concentrates a large share of the year's contract activity into the final weeks, with more awards, faster timelines, and more lower-dollar, quick-turn buys. For contractors who are ready, it is one of the most active opportunity windows of the year.
A federal contractor without prior government past performance can still win a first contract by targeting purchases that do not weigh past performance heavily, such as micro-purchases under $15,000, simplified acquisitions under $350,000, and subcontracting or joint venture work, which now counts toward a small business's past performance record under federal rules. Building this record realistically costs $80,000 to $130,000 and can take up to two years before it pays off.
Setting realistic FY2027 revenue and growth goals starts with your current federal revenue, not a number you hope to hit. From there, you set a growth target your capacity and pipeline can actually support, then work backward to the pursuits and win rate it would take to get there. The federal fiscal year begins October 1, so the time to set these numbers is now.
The rules that govern how federal contracts are closed out are being simplified as part of a government-wide overhaul of acquisition regulations that began in 2025 and is rolling out through 2026. The core actions a contractor is responsible for at closeout have not changed. What is changing is the regulatory framework around them, and because agencies are adopting the changes on different timelines, the exact process can vary by agency right now.
Federal contract modifications take longer than commercial change orders because each one is a formal contract action, not a quick approval. Before anything changes, the government has to verify funding, route the change through a contracting officer with the authority to bind it, and document why the change is justified. A commercial change order can move on a conversation. A federal modification cannot.
Positioning for a new fiscal year means using the months before October 1 to put your strategy, pipeline, and compliance in place so you can compete from the start of the year instead of ramping up once it is already underway. For federal contractors, the businesses that plan ahead of FY2027 tend to move faster when agency spending picks up.
If you win a small-business set-aside, there's a rule that limits how much of that work you can hand off to a subcontractor. For most services and supply contracts, you can't pay outside subcontractors more than 50% of what the government pays you for the job. A lot of contractors have heard this as "51%." That's not right, and getting it wrong can put your award at risk. The good news: once you understand how it's actually calculated, it's very manageable to stay on the right side of it.
In government contracts, the question is usually not who owns intellectual property, but what rights the government receives to use it. As a general rule, a contractor keeps ownership of its intellectual property, while the government receives a license to use it. How broad that license is depends largely on who paid to develop the work. This differs from commercial deals, where IP terms are negotiated case by case.
August is the positioning month for federal contractors, the last full window before the September year-end surge. The highest-leverage moves now are market-facing: research the opportunities likely to move at year-end, reach out to buyers and primes while they still have time to talk, and make sure you are visible and findable. Position well in August, and you are ready when the buying rush hits in September.
