Government contracting is not just for large corporations. Local construction firms, landscapers, trucking companies, cleaning crews, IT providers, security firms, caterers, repair shops, consultants, staffing companies, and professional-service providers can all compete for government work when they are properly registered, visible, compliant, and prepared to deliver.

The federal government has a formal goal of awarding 23% of prime contract dollars to eligible small businesses, and SBA works with federal agencies to support that target. In FY2024, small businesses received more than $183 billion in federal prime contracts, equal to 28.8% of all federal contracting dollars.

This guide explains how a small business owner can move from “I want government contracts” to “I am ready to compete.”

Step 1: Understand what a government contract is

A government contract is a purchase agreement. A public agency is buying a product, service, construction project, repair, technology, training, logistics support, staffing, or professional service.

That means the first question is not, “How do I get government money?” The first question is:

What does my business sell that the government already buys?

Government buyers do not award contracts because a business is local, small, veteran-owned, woman-owned, minority-owned, or well-connected. Those factors can help open doors, but the government still buys based on need, price, compliance, past performance, and ability to deliver.

Step 2: Choose your lane

Small businesses usually enter government contracting through one of four lanes.

Lane	What it means	Best for
Prime contractor	You contract directly with the government.	Businesses ready to handle paperwork, compliance, delivery, invoicing, and performance risk.
Subcontractor	You work under a larger prime contractor.	Newer government vendors that need experience and relationships.
Set-aside contractor	You compete for contracts reserved for small businesses or certified categories.	Businesses that qualify as small, 8(a), WOSB, SDVOSB, HUBZone, or similar programs.
State/local vendor	You sell to cities, counties, school districts, airports, utilities, or state agencies.	Local service providers that want smaller, more accessible opportunities.

Subcontracting is often the best first move. SBA explains that subcontractors do not work directly for the government; they work for other contractors, which allows companies not yet ready to deal directly with a federal agency to still participate in federal procurement.

Step 3: Get your business paperwork in order

Before bidding, make sure the business is contract-ready. At a minimum, you need:

1. Legal business name that matches tax and banking records.
2. EIN or tax identification.
3. Active business license where required.
4. Business bank account.
5. Insurance appropriate for your work.
6. Clear pricing structure.
7. A short capabilities statement.
8. Past-performance examples.
9. Correct NAICS codes.
10. SAM.gov registration if pursuing federal prime contracts.

Your NAICS code matters because it identifies the type of product or service your business provides. SBA says businesses need to match their products and services to a North American Industry Classification System code, and businesses may have multiple NAICS codes if they sell multiple products or services.

Step 4: Check whether your business qualifies as “small”

“Small” is not based on opinion. It depends on your industry, revenue, number of employees, and NAICS code.

SBA assigns size standards by NAICS code, and a business must meet those size requirements to qualify for contracts reserved for small businesses. SBA also notes that most manufacturing companies with 500 employees or fewer and many non-manufacturing businesses under certain annual-receipt limits may qualify, but there are industry exceptions.

Use SBA’s Size Standards Tool before claiming small-business status.

Step 5: Register in SAM.gov

For federal contracts, SAM.gov is mandatory for businesses that want to bid directly.

SAM.gov states that registration allows a business to bid on government contracts and apply for federal assistance, and that a Unique Entity ID is assigned during registration. SAM.gov also states that submitting a registration and getting a Unique Entity ID are free.

Important: Do not pay someone just because they say they can “get you registered in SAM.” SAM.gov is an official U.S. Government website, and there is no cost to use it.

Once registered, keep it active. SAM.gov states that entities must renew registration every 365 days.

Step 6: Build a strong SAM and Small Business Search profile

Your SAM profile should not be treated like a formality. SBA says your SAM profile is like a résumé, and that an accurate, appealing profile helps contracting officials find your business.

Include:

• Clear business description.
• NAICS codes.
• Keywords buyers would search.
• Past-performance examples.
• Certifications.
• Service area.
• Contact information.
• Capabilities narrative.
• Differentiators.

SBA also explains that Small Business Search is used by government agencies to find small business contractors, and that SAM registration information helps populate that profile.

Step 7: Learn where contracts are posted

For federal opportunities, use these tools:

Tool	Purpose
SAM.gov Contract Opportunities	Find active federal solicitations.
USAspending.gov	Research who has won contracts before.
FPDS	Review historical federal contract data.
Small Business Search	Make your company visible to buyers.
SubNet / prime contractor directories	Find subcontracting opportunities.
Agency forecasts	See what agencies plan to buy.
State/city/county portals	Find local public-sector contracts.

SBA says federal business opportunities are listed on SAM.gov, and agencies are required to use SAM.gov to advertise contracts over $25,000. SBA also notes that USAspending.gov tracks contract spending and can help identify procurement trends and potential opportunities.

Do not start by bidding on random contracts. Start by researching what agencies already buy and which companies are already winning.

Step 8: Understand set-asides

Set-asides are contracts where competition is limited to small businesses or certain certified categories. SBA explains that set-aside contracts are designed to help small businesses compete for and win federal contracts.

Under the federal “Rule of Two,” certain acquisitions are set aside for small businesses when the contracting officer expects offers from at least two responsible small businesses at fair market prices, quality, and delivery.

Set-aside categories may include:

• Small business.
• 8(a) Business Development.
• Women-Owned Small Business.
• Economically Disadvantaged Women-Owned Small Business.
• Service-Disabled Veteran-Owned Small Business.
• HUBZone small business.

The HUBZone program, for example, is designed to support businesses in historically underutilized business zones, and HUBZone-certified firms may receive set-aside access and a 10% price evaluation preference in full and open competitions.

Certifications help, but they do not replace capability. A certified business still needs competitive pricing, clean paperwork, past performance, and the ability to deliver.

Step 9: Use free help before paying consultants

Small business owners should not try to learn government contracting alone.

SBA says APEX Accelerators provide technical assistance to businesses interested in selling to federal, state, and local governments. They can help determine readiness, assist with registrations, check certification eligibility, and research past contract opportunities.

APEX Accelerators are one of the first places a community business owner should contact.

Also use:

• SBA District Office.
• Small Business Development Center.
• SCORE mentors.
• Local chamber of commerce.
• City, county, and state procurement offices.
• Agency Office of Small and Disadvantaged Business Utilization.
• Prime contractor small-business liaison officers.

Step 10: Create a one-page capabilities statement

A capabilities statement is your government-contracting résumé. Keep it to one page.

It should include:

Company overview
Who you are and what you do.

Core capabilities
The specific services or products you provide.

Differentiators
Why your business is low-risk, reliable, or specialized.

Past performance
Commercial, local, subcontracting, or government experience.

Codes and identifiers
UEI, CAGE code, NAICS codes, certifications, licenses.

Contact information
Name, phone, email, website, service area.

Do not write vague lines like “we provide excellent customer service.” Be specific: “24-hour emergency repair response,” “licensed electricians,” “five dump trucks,” “bonding capacity,” “bilingual field crews,” “DoD cybersecurity readiness,” “commercial clients served,” or “licensed armed/unarmed security services.”

Step 11: Start with subcontracting and teaming

Many businesses lose time chasing prime contracts before they are ready. Subcontracting can help you build:

• Federal past performance.
• Relationships with prime contractors.
• Knowledge of contract requirements.
• Experience with invoicing and compliance.
• A track record that supports future prime bids.

SBA states that some contracts require large businesses to subcontract with small businesses, creating more opportunities for small firms to participate.

Good targets include large primes that already hold contracts in your industry. Use USAspending.gov and SBA’s prime contractor directories to identify them.

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Step 12: Build a bid/no-bid discipline

Do not bid on everything.

Before bidding, ask:

• Does the government already buy this service?
• Is this contract in our real scope?
• Can we meet every requirement?
• Do we have enough time to prepare a compliant proposal?
• Can we price it profitably?
• Do we have past performance?
• Are there insurance, bonding, cybersecurity, clearance, or licensing requirements?
• Is there an incumbent contractor?
• Can we realistically win?

A bad bid wastes time. A good bid is targeted, compliant, priced correctly, and built around proof that your business can perform.

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Step 13: Know the compliance burden

Government contracting comes with rules. SBA notes that businesses participating in government contracting must comply with laws and regulations, including the Federal Acquisition Regulation.

Depending on the work, compliance may involve:

• Wage requirements.
• Insurance.
• Bonding.
• Cybersecurity.
• Background checks.
• Buy American rules.
• Safety rules.
• Subcontracting limits.
• Invoicing requirements.
• Recordkeeping.
• Audit readiness.
• Conflict-of-interest rules.

Defense work may have additional requirements. SBA states that small businesses seeking Department of Defense contracts may need to show the ability to safeguard systems and data, and that each DoD request for proposal will list the required CMMC level.

Special note for security, defense, logistics, and overseas work

Businesses in security, defense support, emergency response, overseas logistics, evacuation, demining, or reconstruction must be especially careful with legal language and compliance. “Contractor,” “private security company,” “trainer,” “logistics provider,” “PMSC,” and “mercenary” are not interchangeable terms. Research on modern private military and security companies emphasizes that regulated contractors operate within procurement, licensing, contract, insurance, and oversight systems, while “mercenary” is a narrower and politically charged legal label.

The Ukraine contractor research also shows that the word “contractor” can cover very different roles, from reconstruction implementers and humanitarian demining operators to private evacuation/security providers and armed state-linked groups.

For community businesses pursuing defense or security-related contracts, get legal review before bidding, especially where weapons, overseas operations, cybersecurity, export controls, classified information, or human-risk services are involved.

30-day action plan for a community small business

Week 1: Get organized

• Confirm your legal business name, EIN, licenses, insurance, and banking.
• Identify your NAICS codes.
• Check SBA size standards.
• Write a basic list of products and services.
• Gather past-performance examples.

Week 2: Register and build visibility

• Create or update your SAM.gov registration.
• Confirm your Unique Entity ID.
• Build a strong SAM profile.
• Prepare a one-page capabilities statement.
• Add keywords that buyers would actually search.

Week 3: Research the market

• Search SAM.gov for active opportunities.
• Search USAspending.gov for past awards.
• Identify five agencies that buy what you sell.
• Identify five prime contractors in your industry.
• Contact your local APEX Accelerator.

Week 4: Start outreach

• Send your capabilities statement to targeted buyers and primes.
• Register with local city, county, school district, and state vendor portals.
• Attend one procurement event or webinar.
• Review one real solicitation.
• Decide whether to pursue prime bids, subcontracting, certifications, or local contracts first.

Common mistakes to avoid

Mistake 1: Paying for SAM registration without understanding that SAM.gov is free.
SAM.gov is an official government site, and there is no cost to use it.

Mistake 2: Thinking certification guarantees contracts.
Certification can create access. It does not replace performance, pricing, compliance, or relationships.

Mistake 3: Bidding before researching the buyer.
Use SAM.gov, USAspending.gov, and FPDS to understand who buys your service and who currently holds the work. SBA specifically identifies these databases as tools for finding contracts and researching the marketplace.

Mistake 4: Ignoring subcontracting.
Subcontracting is often the most practical first step for small businesses that are not ready to manage federal prime contract obligations.

Mistake 5: Submitting weak, generic capabilities statements.
Government buyers need specifics: codes, capacity, past work, certifications, service area, and proof.

Bottom line

Government contracting is a real opportunity for community businesses, but it is not a shortcut. It is a disciplined sales channel with rules, paperwork, competition, and accountability.

The businesses that win are usually the ones that:

• Know exactly what they sell.
• Register correctly.
• Research buyers before bidding.
• Build relationships before solicitations drop.
• Use certifications strategically.
• Start with subcontracting when appropriate.
• Submit compliant proposals.
• Deliver cleanly after award.