What is Federal Contracting? The Simple Guide to Federal Contracting.

May 23, 2023 8:09:27 AM / by USFCR


Welcome to the world of federal contracting. This vast and diverse sector is where the U.S. government, the world's largest consumer, purchases goods and services from businesses of all sizes. These purchases can range from everyday office supplies to complex technology systems or specialized consulting services. The process may seem intricate at first, but with the right guidance, it's a path well worth exploring for the potential benefits it can bring to your business.

The value of winning a Federal Contract Award for a business can't be overstated. It's not just about the financial gains; it's about stability and growth. Federal contracts can provide a reliable revenue stream and expose your company to a vast market, positioning your business for long-term success.

This guide aims to simplify the fundamentals of federal contracting, giving you a broad understanding and making it less daunting for newcomers. It will walk you through what federal contracting is, how the process works, and the steps your business needs to take to become a federal contractor. By the end of this guide, you'll have a solid foundation of knowledge to help you decide whether federal contracting is the right move for your business.


1. What is Federal Contracting? Federal Contracting is the process by which the U.S. government purchases goods and services from private businesses. Here's a quick look:

  • It is a method for the government to acquire goods and services.
  • It allows businesses to grow by securing stable, recurring revenue.
  • It covers a wide range of industries, from IT to construction, healthcare, and more.

Key Takeaway: Federal Contracting opens the door for businesses to provide goods and services to the U.S. government, which can lead to substantial growth and stability.

2. The Federal Contracting Process Understanding the federal contracting process can help you bid effectively and increase your chances of success. Here are five simple steps involved:

  1. The government identifies a need and drafts a solicitation.
  2. The solicitation is made public for businesses to view.
  3. Businesses prepare and submit proposals in response to the solicitation.
  4. The government evaluates the proposals and selects a contractor.
  5. The contract is awarded, and work begins.

Key Takeaway: Familiarity with the federal contracting process is crucial to engage in and navigate the bidding process effectively.

3. Registering as a Federal Contractor To become a federal contractor, you must register your business with the System for Award Management (SAM). Here are the basic steps:

  1. Obtain a Unique Entity Identifier (UEI).
  2. Register with the System for Award Management (SAM) at sam.gov.
  3. Maintain an active SAM registration.

Key Takeaway: Registering as a federal contractor with SAM is a necessary step to bidding on and being awarded federal contracts. Consider seeking professional assistance like SAM Registration Assistance to ensure a smooth and compliant registration process.

4. Understanding the Federal Acquisition Regulation (FAR) The FAR is the primary regulation for use by all federal executive agencies in their acquisition of supplies and services.

  • It's essentially the rulebook for federal procurement.
  • It ensures that all federal procurements are conducted fairly and transparently.
  • It contains provisions that contractors must follow to be in compliance.

Key Takeaway: Understanding the Federal Acquisition Regulation (FAR) is vital for compliance and successful navigation of the federal marketplace.

5. Small Business Set-Asides The federal government sets aside certain contract bid opportunities exclusively for small businesses.

  • Programs are in place to ensure a percentage of federal contracts are awarded to small businesses.
  • The government sets aside certain contracts exclusively for small businesses.
  • This includes special designations such as:
    • Women-Owned Small Businesses (WOSB)
    • Veteran-Owned Small Businesses (VOSB)
    • Service-Disabled Veteran-Owned Small Businesses (SDVOSB)
    • Historically Underutilized Business Zones (HUBZone)
    • 8(a) Business Development Program
  • Large businesses that win federal contracts are often required to subcontract a portion of the work to small businesses. They must meet these subcontracting quotas to stay in compliance with their contract.

Key Takeaway: Small Business Set-Asides are an essential part of the federal contracting landscape. Not only do they ensure a fair share of contracts goes to small businesses, but they also compel larger contractors to subcontract with smaller ones, driving growth across the entire business ecosystem. Exploring these designations could greatly increase your chances of securing a federal contract. Check your eligibility for these programs to maximize your award potential.

6. Searching for Federal Contracting Opportunities Finding federal contracting opportunities involves diligent research and strategic planning. Here's how you can get started:

  1. Visit SAM.gov or APP to search for federal contracting opportunities.
  2. Filter your search based on your business capabilities and goals.
  3. Look for contracts that match your business size, industry, and services.

Key Takeaway: Try the USFCR Advantage (APP) tool for FREE. APP will simplify the process and notify you of new opportunities that match your business profile.

7. Reading and Understanding Solicitations Solicitations are the government's way of announcing what they need. Understanding them is crucial to a successful bid. Key components include:

  1. Description of the goods or services needed.
  2. Submission deadlines.
  3. Evaluation criteria.

Key Takeaway: Time spent understanding solicitations is an investment in your bid's success. Use the USFCR Learning Center resources in APP to familiarize yourself with the format and language of solicitations.

8. Writing and Submitting a Proposal Writing a federal contract proposal requires precision, detail, and a deep understanding of the solicitation requirements. Key elements include:

  1. Executive summary.
  2. Approach and methodology.
  3. Pricing structure.

Key Takeaway: Writing a compelling proposal increases your chances of winning a contract. Consider using Proposal & Bid Review Services to ensure your proposal is compliant and competitive.

9. Evaluation and Contract Award After proposals are submitted, the government evaluates them based on the criteria specified in the solicitation.

  • The most advantageous proposal, considering price and other factors, wins the contract.
  • Unsuccessful bidders can often request a debriefing to understand why they weren't selected.

Key Takeaway: Understanding the evaluation process can help you refine future bids and increase your chances of success.

10. Performing on a Contract Once a contract is awarded, delivering the promised goods or services is critical. Key points include:

  • Maintaining open and clear communication with the contracting officer.
  • Meeting all deadlines and deliverables.
  • Managing modifications and addressing disputes promptly.

Key Takeaway: Successful performance on a contract can lead to future opportunities and a strong reputation within the federal marketplace.

11. GSA Schedules are long-term governmentwide contracts with commercial firms.

  • They provide access to millions of commercial products and services at volume discount pricing.
  • Businesses need to apply and get approved to be on a GSA Schedule.
  • Being on a GSA Schedule can provide greater exposure to contracting opportunities.

Key Takeaway: Getting on a GSA Schedule can provide significant advantages for businesses seeking federal contracts.

12. Grant Writing Some federal agencies offer grants businesses can apply for.

  • Grants are non-repayable funds or products disbursed by grant makers.
  • Writing a grant proposal requires detailing the planned use of the funds.
  • Grant proposals are often competitive and require a strong case for the award.

Key Takeaway: Grant Writing services can increase your chances of securing federal grants.

13. Contract Compliance involves adhering to the terms and conditions of the contract and any applicable laws, regulations, and industry standards.

  • Non-compliance can result in penalties, termination of the contract, or legal action.
  • Compliance often requires regular reporting and documentation.
  • Understanding the FAR and other relevant regulations is crucial.

Key Takeaway: Maintaining contract compliance is crucial to avoid penalties and ensure the successful completion of your contract. Consider seeking expert guidance, such as Turn-Key Consulting, to ensure your operations are compliant.

14. Contract Modifications are changes made to the contract after the award.

  • They can be unilateral (made by the government) or bilateral (agreed upon by both parties).
  • Modifications can change the scope of work, price, or terms and conditions.
  • Managing contract modifications requires clear communication and thorough documentation.

Key Takeaway: Properly managing contract modifications is essential to maintaining good relationships with contracting officers and ensuring the successful delivery of your contract.

15. Federal Contract Disputes Disputes can arise during the performance of a federal contract.

  • They can be resolved through negotiation, alternative dispute resolution, or litigation.
  • It's essential to understand your rights and obligations under the contract and the FAR.
  • Promptly addressing disputes is crucial to maintaining good relationships and protecting your interests.

Key Takeaway: Understanding how to navigate federal contract disputes can protect your business interests and maintain positive relationships within the federal marketplace.

16. Debriefings After a contract award decision is made, unsuccessful offerors can request a debriefing.

  • Debriefings provide insight into why a proposal wasn't selected.
  • They offer an opportunity to learn and improve future proposals.
  • Debriefings can be oral, written, or in the form of a video or audio recording.

Key Takeaway: Requesting a debriefing after an unsuccessful bid can provide valuable insights for improving future proposals and understanding the evaluation process.

17. Teaming Arrangements entail companies forming partnerships or joint ventures as potential prime contractors or engaging other companies as subcontractors under a specified Government contract or acquisition program.

  • They can be beneficial for handling large contracts or combining different expertise.
  • Teaming arrangements can be formalized through a teaming agreement.
  • They require careful planning and clear communication to be successful.

Key Takeaway: Teaming arrangements can enhance your capacity to win and perform on larger or more complex federal contracts.

18. Mentor-Protégé Programs Mentor-Protégé Programs are designed to motivate larger companies to help smaller businesses enhance their capabilities.

  • The mentor provides developmental assistance to the protégé.
  • The program can provide benefits to both parties.
  • Participation can increase a small business's competitiveness in the federal marketplace.

Key Takeaway: Participating in a Mentor-Protégé Program can provide valuable guidance and support for small businesses entering the federal marketplace.

19. Joint Ventures A joint venture is a business arrangement where two or more parties agree to pool their resources to accomplish a specific task.

  • In federal contracting, joint ventures can bid on contracts.
  • Joint ventures can be useful for sharing risks and resources.
  • They require careful planning and clear agreements to be successful.

Key Takeaway: Joint ventures can provide a strategic advantage in bidding on and performing federal contracts by pooling resources and expertise.

20. Subcontracting Subcontracting involves a business (the prime contractor) contracting out part of its contract to another business (the subcontractor).

  • It allows businesses to participate in federal contracting without being the primary contractor.
  • Prime contractors often have subcontracting plans to provide opportunities to small businesses.
  • Subcontracting can be a stepping stone to becoming a prime contractor.

Key Takeaway: Subcontracting can provide an opportunity to participate in federal contracting and gain experience in the federal marketplace.

21. Contract Closeout is the process of finalizing all tasks and obligations at the end of a contract.

  • It includes verifying all work has been completed, payments have been made, and all administrative matters have been settled.
  • A successful contract closeout requires careful record-keeping and communication.
  • The process can vary depending on the type and complexity of the contract.

Key Takeaway: Proper contract closeout is essential to maintaining a good reputation in the federal marketplace and setting the stage for future contracting opportunities.

22. Compliance in Federal Contracting comes with a set of rules and regulations that businesses must comply with. These rules are in place to ensure fair competition, prevent fraud, and protect the government's interests.

  • Understand the Federal Acquisition Regulation (FAR), the primary regulation for use by all Federal Executive agencies in their acquisition of supplies and services.
  • Be aware of specific contract clauses and conditions, labor laws, and reporting requirements.
  • Non-compliance can result in penalties, including fines, contract termination, and even debarment from future contracts.

Key Takeaway: Compliance is non-negotiable in federal contracting. Take the time to familiarize yourself with the regulations and consider seeking expert advice to ensure you meet all the necessary requirements.

23. Federal Contracting Resources and Support Navigating federal contracting can be challenging, but there are numerous resources available to support businesses.

  • Websites like SAM.gov provide a wealth of information and are where you will find available contract opportunities.
  • Organizations like the Small Business Administration (SBA) offer resources and programs to support small businesses in federal contracting.
  • Companies like US Federal Contractor Registration (USFCR) can provide expert assistance and services to help businesses succeed in the federal marketplace, from SAM registration assistance to proposal and bid review services.

Key Takeaway: Leveraging available resources and support can greatly enhance your success in federal contracting. Don't hesitate to seek help when you need it.

Federal contracting can be a complex process, but with the right knowledge and tools, it can provide significant opportunities for your business. Whether starting from scratch or looking to improve your bidding success rate, understanding these facets of federal contracting is your first step toward success. And remember, you don't have to go it alone - there are resources and services available to help you navigate this process with confidence.

Download Our Free Complete Guide to Federal Contracting.

To speak with a Registration & Contracting Specialist, Call: (866) 216-5343

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Written by USFCR

US Federal Contractor Registration (USFCR) is the largest and most trusted full-service Federal consulting organization. USFCR also provides set-aside qualifications, including women-owned, veteran-owned, disadvantaged (8a), HUBZone, and other federal contracting services, technology, and training.